The adoption of alternative investment strategies has accelerated in the private wealth distribution channel in recent years with most people expecting this to continue. Managers with existing market share have expanded their retail distribution efforts, and there are many new entrants who have established specialized distribution teams for the intermediary channel. Firms with established teams like Blackstone and KKR have continued to scale their roster of private wealth distribution talent, in particular Blackstone, and firms like Apollo, Blue Owl, TPG, Partners Group, Golub Capital, and others have more recently scaled their retail distribution effort.
Alternatives penetration at the large wirehouses is expected to grow substantially in coming years, as nearly every major platform has made alternatives a priority and projected meaningful uptick in allocation to alts in the near-term. According to a recent poll conducted by CAIS and Mercer, “88% of financial advisors intend to allocate more to alternatives over the next two years” across real assets, private equity, and private credit strategies in particular. Firms are moving into this untapped market as a wave that many are calling the “democratization of alternatives,” bringing these lucrative strategies that were once reserved only for institutional investors to the broader retail channel. Much of the institutional community is already fully allocated to alts, leaving less market share to be captured by new products. In contrast, the opportunity to raise meaningful assets from private wealth clients is very attractive and supported by sticky assets in vehicles like non-traded REITs/BDCs and interval funds, as well as lower investment minimums to reach a broader pool of capital. Furthermore, the recent denominator effect and need for liquidity that most institutions are currently experiencing has led alternative managers to turn to the wealth channel to grow their asset base.
The largest players in this market have built robust dedicated teams over time, with Blackstone employing over 160 professionals across advisor sales and support, strategic accounts, operational support, product development, content marketing, among other functions supporting private wealth. Firms more recently launching into the intermediary channel have been successful in hiring “Heads of” that bring a strong grasp of the ecosystem and key home office relationships, while building small teams of internal support and external advisor sales professionals to support the distribution effort.
With limited supply and high demand for private wealth distribution talent with experience selling alternatives, many firms have made strategic compromises in building their teams. These types of opportunities are compelling to traditional distribution professionals who want to break into the world of alternatives, and alts firms have found capable talent to support wholesaling and strategic accounts teams from long-only firms. Additionally, alternatives product specialists and due diligence professionals from the wealth platforms have transitioned successfully into the same national accounts and distribution roles and have been able to get up the learning curve of sales and relationship management.
It is crucial that when building a dedicated team, the team leader knows the private wealth ecosystem and has strong connectivity with the home offices of wealth platforms. This could be a wealth sales leader today or a head of national accounts. The percentage of advisors today who incorporate alternatives into their portfolios is still small, so it is imperative that this leader knows who those groups are for targeted marketing.
It is hard to get the attention of the wealth platforms, in particular the nationals, if you view this as a ‘one-person fits all’ strategy. This shows a lack of commitment to the channel and the home offices will not want to invest time in the relationship. Large bank platforms look for teams of at least 3-5 dedicated private wealth professionals when forming partnerships with an alts manager, even if the product set is narrow. Home offices look to the manager to help educate their advisors on alternatives – how to represent them and best use them in a portfolio. This cannot be done effectively by one person given the breadth of coverage required across home office due diligence teams and advisors.
Demand for talent in private wealth distribution for alternatives has grown and will continue in the coming years. At Jamesbeck, we have been involved in numerous private wealth sales and national accounts role across long only and alternatives. We welcome the opportunity to be a resource and to discuss our work placing top alternative private wealth distribution talent. If you’d like to have a conversation, please feel free to reach out to us!
Melissa Norris, Founding Partner
Preston Richard, Senior Associate