It’s Complicated: Issues with Private Assets Aren’t Deterring Advisors

Wall Street is betting big on alternative investments, particularly private markets. Major asset managers have launched products to bring private investments to more clients, and Washington has pushed to make alternatives a more common feature of 401(k) plans.

However, while more advisors are offering privates, their confidence in explaining them to clients has declined, raising questions about whether the push for broader adoption is outpacing advisors’ preparedness. Just 61% of advisors said they felt somewhat or extremely comfortable explaining the private investments they offer, down from 68% in 2025, according to Morningstar research. Meanwhile, 40% said they offer private-market investments, up from 35% last year.

Choose Wisely

Access is no longer the only barrier to private markets. The bigger challenge is finding exceptional managers, said Will Sterling, CIO of TritonPoint Wealth. “You can’t democratize alpha,” he told Advisor Upside. 

Asset managers are trying to make alternative investments more attractive to advisors by simplifying them and packaging them in familiar strategies. Just last week, Morgan Stanley rolled out nine model portfolios that mostly hold public assets but also include 8% to 12% allocations to private equity, private credit, real estate and infrastructure. This month, Morningstar expects to launch its own suite of alts model portfolios, featuring strategies from Apollo, Franklin Templeton and JPMorgan.

However, returns can vary widely across managers, making selection especially critical, Sterling said. “A lot of charts used in presentation decks show the top quartile versus bottom quartile and the dispersion that exists in private markets relative to public markets,” he said. “Making sure you’re getting in at least the top 50%, if not that top quartile, is of the utmost importance.”

Advisors’ due-diligence concerns are also growing, per Morningstar: 

• Some 46% cited concerns about fees and fee transparency, up from 36% last year. 
• More than 40% flagged limited liquidity, compared with 36% in 2025. 
• Meanwhile, 35% expressed concern about a lack of transparency into underlying holdings, up from 32%.

Carve It Up. There’s no standard allocation for alternatives comparable to the traditional 60/40 portfolio of stocks and bonds. The right amount depends on the client, said Josh Glenn, founder of Focused Wealth Management, who recommends allocating between 5% and 20% of some clients’ portfolios to alts.

Glenn began exploring the investments during the pandemic and has since grown comfortable with them. “It was clear that markets were changing, and we didn’t want to miss out,” he told Advisor Upside. “In 2022, when equities and bonds were beaten up, alts were the bright spot in many client portfolios.”

Others remain skeptical, feeling that while alts can potentially benefit some clients, those instances tend to be rare. “Most investors will benefit from increased simplicity, not increased complexity in their financial plans,” said James Eppes, founder of Eppes Wealth Management.