Morningstar’s CEO Kunal Kapoor has come a long way since he started at the company as a data analyst in 1997, when he compiled data on mutual funds — sometimes with the help of a fax machine.

Today, the Chicago-based firm has become one of the premier data providers on the planet and even offers indexed products, technology and robo-advice for retirement savers. “My job was basically entering data,” he said. “Believe it or not, at that time, it was like extracting gold.” The problem was a lack of transparency around mutual funds, where even compiling information from public documents, like yields and total net assets from fund companies, was a challenge. “Today, we sort of take it for granted, which is awesome.”

Over the past eight years at the helm, Kapoor has helped the company expand its workforce to over 10,000 employees and boost its stock price more than threefold. Next up is tackling the private marketplace and creating a “common language” for advisors and investors to research both public and private investments using the same yardstick. “The private equity and private credit industry is not ready for that level of transparency, even as they have an interest in reaching investors” he said. “Ultimately, they are going to come around to the view that they have to make it simpler.”

Kapoor chatted with Advisor Upside during Morningstar’s Investment Conference held annually in Chicago.

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What’s the plan? Well, nobody seems to know.

With a massive wave of retirements hitting the wealth management industry over the next decade, succession planning might seem like a top priority. However, just 6% of advisors nearing the end of their full-time careers have a fully documented succession plan, according to a report from Kestra Financial and Bluespring Wealth Partners. If they don’t figure out their strategies soon, potential successors could be walking out the door while clients scramble to find new help.

“Succession planning is about choosing someone who will not only guide the firm into the future but also uphold the same high standard of care clients have come to rely on,” said Pradeep Jayaraman, president of Bluespring Wealth Partners. It’s critical for protecting clients, creating better career paths, retaining talent, and increasing enterprise value, he said.

Put the ‘Pal’ in ‘Principal’

It’s not that principal advisors aren’t trying to craft succession plans. Many, however, are hitting road blocks and finding that their visions for their businesses may be misaligned with those of potential successors. While owners feel confident that they’re ready to walk away from their firms, the next generation of advisors often feel stuck, undervalued and not sure if they’ll even stick around, the report found:

• More than three-quarters of principal advisors have not mapped a timeline for transitioning client relationships, and just around 60% haven’t given any company equity to their successors.
• Meanwhile, next-gen advisors are frustrated, with roughly half saying they don’t have a good sense of when their principals will retire, and one in three are willing to consider leaving in the absence of a clear succession timeline.

Principal advisors should be transparent with successors and provide training on how to run an entire firm, not just typical advisor duties like financial planning and investment management, Jayaraman told Advisor Upside. “Delaying these efforts risks talent and client loss, and erodes firm value,” he said.

Play by the Rules. Advisors can close up shop whenever they want, but leaving clients in the lurch without instructions for transitioning assets or choosing a new advisor would go against the golden rule of acting in their best interests. Abandoning clients and contractual commitments might result in regulatory, legal, and reputational issues, said Greg Cornick, president of Advice & Wealth Management at Osaic. “Having a formal succession plan is just plain smart and a professional responsibility of any advisor,” he told Advisor Upside.

Time for a family (office) meeting.

Amid global economic uncertainty and rising geopolitical tension, family offices are becoming more selective with their allocations, according to a new report from BlackRock. Additionally, private equity is heading to the backseat, while private credit and infrastructure are now riding shotgun. Though they tend to invest aggressively, family offices seem to be following the lead of typical wealth management firms, adding a little security to their strategies.

“Family offices are more focused on risk management, but it doesn’t mean they’re risk-off,” said Lili Forouraghi, head of Family Office, Healthcare, Endowment and Foundations for BlackRock. “They’re looking at portfolio construction and building more resilience.”

I (Kind of) Believe in America

Family offices’ main concerns right now are potential changes in tax policy, supply chain disruptions and accompanying inflation, and whether the Federal Reserve will cut interest rates, all of which have fueled the two most important trends in finance today — volatility and uncertainty — Forouraghi told Advisor Upside.

“If we had done this survey more than a year ago, you would’ve seen very large allocations to the US, but now we’re seeing diversification into Europe and other regions,” she said.

Private Credit Reporting for Duty. Private equity still remains a core allocation for family offices, but sentiment is becoming mixed, the report found:

• At some offices, PE makes up more than 50% of assets under management, and roughly a third of offices are bullish on the sector as they look toward 2026.
• Many offices, however, said PE comes with middling valuations, a lack of transparency and delays in returning capital. Nearly 75% of family offices said private market fees are too high.
• Roughly a third of family offices plan to increase their allocations to private credit and infrastructure like AI data centers in 2025-2026.

The shift away from private equity probably stems from a lack of dealmaking and initial public offerings in the space, which are the main ways PE investors realize gains, said Jason Kephart, a senior principal on Morningstar’s multi-asset strategy ratings team.

“Those types of activities have really slowed down since 2022,” he told Advisor Upside. “People are starting to get frustrated, and shift their eyes toward private credit, where you get monthly cash flows.”