‘Major shift’ in private markets as wealth clients increase allocation

Wealth managers are executing a material structural shift in portfolio construction, moving away from the traditional 60/40 equity-bond framework toward a 50/30/20 model that allocates an additional 20% of client assets to private markets. This reallocation reflects growing recognition that private markets have historically outperformed public counterparts and represent sustained investment opportunity, particularly as companies remain private longer and access to IPO funding narrows. According to research from the Thinking Ahead Institute's Global Wealth Study 2025—based on insights from 250 wealth management professionals across 151 firms in 27 countries managing $15.1 trillion in assets—nearly 60% of financial professionals plan to allocate 10% or more to private market investments in 2025.

However, this structural appetite for private market exposure is being tempered by persistent institutional headwinds. High fees emerged as the leading barrier to increased private market allocation in North America and Europe, while limited liquidity ranked as the primary constraint in the UK market. Lack of transparency constituted the third major concern cited by wealth firms evaluating private market allocations. These concerns have proven resistant to recent regulatory and product innovation, including the introduction of European Long Term Investment Funds (ELTIFs), US Interval Funds, and UK Long Term Asset Funds (LTAFs), designed specifically to address wealth management client needs. The Global Wealth Study finds that despite these new structures, wealth firms do not anticipate significant changes in overall client portfolio allocation across all four major regions over the next 2-3 years.

In response to the complexity of private market investing, wealth managers are increasingly outsourcing allocation decisions to external specialists rather than managing private market exposure in-house. This outsourcing trend reflects both the technical expertise required and the fiduciary discipline of delegating complex investment decisions to specialized practitioners. The research also identifies a significant demographic transition underway: a generational wealth transfer is expected to move trillions of dollars from Baby Boomers to Gen X, Millennials, and women, fundamentally reshaping the client base and preferences within global wealth management. This demographic shift, combined with the structural reallocation toward private markets, suggests the industry is in transition—though the pace of adoption remains constrained by the cost, liquidity, and transparency barriers that continue to limit broader penetration of private market allocations among wealth management clients.