After several years of hype and experimentation surrounding the “democratization” of private markets, the tenor of the industry conversation has shifted, with asset managers and wealth firms emphasizing the need to address operational, educational and liquidity challenges.
That was the thrust of a series of sessions held during the RIA Edge Private Markets event, taking place alongside RIA Edge Austin this week.
On the equity side, companies staying private longer have changed the math on IPOs and driven investor interest in gaining access to pre-IPO firms to participate in unlisted firms’ growth. Meanwhile, the spike in redemptions that affected some evergreen private credit vehicles also weighed on flows, although it hasn’t entirely dimmed interest in the asset class. And despite hefty investment in private-market tech, operational challenges remain.
Gaining Access to Growth
The mega-IPO of SpaceX earlier this year and Anthropic’s pending listing have illustrated how the equity landscape has shifted. In the past, IPOs occurred earlier in a company’s life cycle, meaning early public investors participated in the company’s growth.
Now, however, with companies staying public longer, there’s trepidation about serving as the exit capital or “dumb money” for growth investors, and more investors are looking to participate pre-IPO.
“If you look at the IPOs of tech companies from the last few years, IPO investors did not do well,” said Christian Munafo, head of private growth strategies at VanEck. “Value has been harvested outside of listed markets. By the time firms go public, they need time to grow into those market valuations.”
Moreover, many companies now never IPO at all, meaning investors’ only option is trying to gain access to venture capital or growth equity opportunities. That’s because private companies have more than one liquidity path, including continuation vehicles or M&A. Several panelists pointed out that 80% of private firms never go public, while 87% of firms with $100 million in revenue are private. In addition, tech giants like Alphabet and Meta often buy private companies developing disruptive technologies before those firms ever go public.
Therefore, providing access to private equity is important for offering clients avenues to participate in the whole market, not just the public side.
However, it’s also crucial to do due diligence on all the entities hyping access to pre-IPO firms. Several cited special purpose vehicles that bypass broker/dealer registration and claimed to hold stakes in firms like SpaceX.
In addition, secondaries have become a core portfolio-construction tool, enabling active management and providing a “quasi-public” liquidity profile for late-stage positions.
“Advisors can use secondaries to more actively manage client portfolios to generate the highest possible returns,” said Tracy Gallagher, head of investment strategy with Allocate. With secondaries-focused funds, investors get not just single positions. “GPs and fund managers can be adept.”
Mitchell Stein, founder and principal of ARENA Private Wealth, a $1 billion RIA, has taken a novel approach to increasing private market allocations, deploying $300 million directly into private company capital tables over the past year through leading two Series B rounds and joining the boards of private firms. Stein cited benefits to the approach of lower costs by eliminating fees of going through a fund-of-funds, offering greater transparency into the investments and greater pre- and post-trade control.
“We asked ourselves how we could innovate and differentiate ourselves,” Stein said. “We’ve seen this democratization bridging the gap, but asked how do we close it? To us, it came down to active participation. We wanted to create the dish, not just order off the menu.”
Privates in Retirement Plans
While adoption remains low to date, the 401(k) segment is looking to implement advisor-managed accounts using CITs. Panelists estimated current private allocations in defined contribution plans at around $100 billion (out of roughly $15 trillion in assets). They also projected a 5% to 10% shift toward private allocations over the next five to 10 years, potentially pushing that figure to $600 billion by 2030.
“All of those forces are coming together, which is now opening the door to implement private markets in 401(k)s and address constraints that have come before,” said Michael Esselman, CIO at One Digital.
However, they predicted that only a subset of managers would offer funds featuring private assets. For example, private-equity-backed companies that are more familiar with private markets may be more likely to look to offer private markets in their retirement plans.
They also pointed to several announced partnerships by asset managers to develop products for the retirement space, many of which have not launched funds yet.
“There’s not a lot of choice or variety (yet),” said Sean Murray, head of retirement with Cliffwater. “But these partnerships are out there, and there will be more off-the-shelf target date funds with privates. … In addition, there will be advisor account solutions where you can build customized model portfolios.”
Private Credit Weathers the Storm
While the wealth channel has dialed back some of its exposure to private credit, flows have not stopped entirely.
Tim Donaldson, managing director, platform solutions, at CAIS, said private credit dropped from representing 40% of CAIS platform volume in 2024 to 33% in 2025 and just 15% this year. Donaldson noted, however, that some of that shift may be due to firms that made their initial private-market allocations to private credit now broadening into other asset classes, such as infrastructure, late-stage venture and growth equity.
“Private credit remains a core component of diversified private markets portfolios,” Donaldson said. He added that of 102 custom model portfolios built by RIAs hosted on CAIS, 77% include private credit.
Panelists described the market as going through a “healthy reset.” The shift in the interest rate environment, for example, means conditions have shifted from borrower-friendly to lender-friendly in the middle/lower-middle-market direct lending category. That has created attractive entry conditions for managers with proven fundraising capabilities.
Firms are more thoughtful about homing in on the proper role of private credit in client portfolios. They are also exploring the full set of opportunities. While many initial private credit allocations have focused on direct lending, demand has broadened into real asset lending, royalties, legal finance and other areas.
“In terms of private credit, we’re telling them this is an appropriate asset allocation class,” said Bob Hostetter, chief investment officer at VestGen Wealth Partners. “However, we are not going to introduce non-daily liquid investments for clients that are under an accredited status. Accredited is where we would prefer to start with privates. When appropriate, we also like allocating in the qualified space. We have a lot of clients who are former high earners. As folks get later in life, private credit becomes a good source of income.”