Retail assets in private markets represent a $1.7 trillion opportunity; asset allocation models will play an important role in asset gathering  

As the concept of raising capital via retail segments gains steam, asset allocation models will offer the greatest support in serving as an entry point to private markets product, according to Cerulli’s latest research, U.S. Private Markets 2025: Incorporating Private Market Investments into Model Portfolios.

Retail assets in private capital strategies are growing. Cerulli estimates that U.S. financial advisors currently allocate $1.9 trillion to less than fully liquid private market strategies and projects this portion to grow to $3.7 trillion through 2029—representing a $1.7 trillion opportunity over the next several years. “Advisors are contributing pools of assets amounting to tens of billions of dollars to individual managers,” comments Daniil Shapiro, director.

As asset and wealth managers look to their next leg of growth, mainstreaming product and simplifying access, many are turning to asset allocation models. The push to create and distribute these models—integrating private market strategies—involves a broad range of participants across the financial ecosystem. “Although asset and wealth managers will be the primary drivers of the effort to increase model use, turnkey asset management platforms (TAMPs) and alternative investment distribution platforms will play a critical role thanks to their provision of infrastructure across channels,” notes Shapiro.

Asset managers are pursuing three key avenues to securing placement in models, perceiving opportunity in several areas. According to the research, 48% perceive an opportunity in model-adjacent multimanager product, while 44% seek inclusion in paper models and 41% seek inclusion in unified managed accounts (UMA) platforms.

The inclusion of private market strategies via semi-liquid products alongside more liquid offerings in UMAs is a key implementation avenue for models with alternatives. Still, other solutions such as paper models or single-ticket solutions should not be ignored as they have the potential to serve as likely avenues for financial advisor access. “Advisors are looking for help in understanding how multiple private market asset classes can come together and complement one another. Such tools can be extremely helpful even if advisors do not subscribe to them outright,” concludes Shapiro.

Source: Cerulli