Private Wealth Managers Race to Close Massive Private Markets

In Brief:

Private markets have become essential for modern portfolio construction as public companies have declined substantially over the past decade and interesting innovation increasingly happens on the private side, yet wealthy individuals remain dramatically underallocated to alternatives compared to institutions. Kyle D. Kniffen, Managing Director and Global Head of Alternatives for Third Party Wealth at Goldman Sachs Asset Management, sat down with Ross Bulter's Fund Shack podcast at SuperReturn in Berlin to discuss how his firm is democratizing access to private markets for wealth managers and their clients. With over $500 billion in alternatives assets under management spanning nearly 40 years of investing experience, Goldman Sachs is leveraging both proprietary expertise and open-architecture platforms to deliver institutional-grade private market access to a growing but underserved wealth channel that represents approximately 5% exposure to alternatives compared to mid-20% allocations among large institutions.

Big Picture Drivers:

• Market Evolution: The number of public companies has decreased substantially while companies stay private longer before going public, concentrating innovation and growth opportunities in private markets

• Structural Opportunity: Wealth as a channel represents a large, growing pool of capital that is historically underallocated to alternatives compared to institutional investors

• Product Innovation: Investment managers are introducing evergreen structures with lower minimums, simplified administration, and liquidity options to address traditional barriers

• Education Gap: The wealth segment requires comprehensive education on alternative investments, creating both challenge and opportunity for managers

Key Topics Covered:

• Platform Breadth: Goldman's unique combination of proprietary investing businesses and open-architecture third-party manager selection across all alternative asset classes

• Evergreen Innovation: New fund structures that eliminate capital calls, provide quarterly liquidity options, simplify tax reporting, and lower minimum investments

• Education Strategy: Three-tiered approach covering basic asset class education, implementation mechanics, and ongoing market perspective

• Risk Management: Portfolio diversification principles, adequate liquidity management, and significant firm alignment through balance sheet and employee investments

Key Insights:

• Allocation Gap: Individual investors globally have approximately 5% exposure to alternatives while large institutions typically allocate in the mid-20% range, representing a massive opportunity for growth in the wealth channel.

• Innovation Necessity: Evergreen fund structures with lower minimums and simplified administration are reaching a much bigger pool of first-time alternative investors who weren't eligible for traditional vehicles.

• Education Imperative: The first stage of alternative investment education is often the hardest, but once wealth managers understand the value proposition, they typically want to learn about implementation and ongoing market developments.

• Liquidity Balance: Evergreen vehicles provide liquidity options but still require long-term thinking, as managers must carry liquidity sleeves that can dilute returns compared to traditional drawdown structures.

• Market Timing: Private credit benefits particularly well from evergreen structures because it's naturally more liquid than equity strategies, and institutions want full capital deployment in attractive rate environments rather than waiting for drawdowns.

• Competitive Advantage: Goldman's combination of top-five private markets capabilities with top-ten public asset management allows for comprehensive client conversations across both asset classes and relative value analysis.

Memorable Quotes:

• "Much of the interesting things that are happening in the marketplace are happening on the private side considerably more than they were 10 years ago" - Kyle Kniffen, explaining why private market exposure is becoming essential for modern portfolios

• "We're not a single topic partner" - Kyle Kniffen, describing Goldman's comprehensive approach to serving wealth intermediaries across multiple asset classes and investment strategies

• "It's not look at this really interesting asset class that is now like entirely liquid and you don't need to commit more thought to what this could mean for your liquidity" - Kyle Kniffen, cautioning against overselling liquidity features in evergreen alternative vehicles

• "Very very early" - Kyle Kniffen, when asked about where the private wealth segment stands in the education process for alternative investments

• "If we do something really world class now in terms of how we educate the marketplace of wealthy investors, that's going to set us on a course where people feel really informed about what they're doing" - Kyle Kniffen, on the opportunity created by being early in wealth adoption of alternatives

The Wrap: 

Goldman Sachs is positioning itself at the forefront of a structural shift as private markets become mainstream for wealth management, leveraging product innovation and comprehensive education to capture a massive allocation opportunity. The firm's dual approach of simplifying access through evergreen structures while maintaining high standards of care and transparency reflects the broader industry transformation needed to serve sophisticated but underallocated wealth clients in an environment where private markets have become essential for capturing innovation and growth.