Psh, get real. Literally.

With markets still rebounding from the Trump administration’s tariffs, clients are hungry for diversification, and real assets are gaining traction. In a new report, Bank of America points to real estate, farmland, timber, and energy as increasingly valuable components of high-net-worth portfolios. With inflation stubbornly high and interest rates stuck since December, these tangible investments are appealing for their low correlation to traditional stocks and bonds.

“If you look at timber, for example, the reality is trees grow regardless of who’s in DC,” said Ken Shepard, head of Specialty Asset Management at BofA.

Reality Bites

While the equity markets are inching their way back to February highs, commercial real estate is still on shaky ground as tenant demand slumps and vacancies increase. Owning more property can be alluring to investors, but most people are “a little crazy” to get into active real estate, said Charles Sachs, CIO at Imperio Wealth Advisors. “Unless you have scale in that business, it’s very difficult to do,” he told Advisor Upside. “Why not just use a real estate fund that gives you your dividend and some tax benefits?”

Still, BofA sees signs of life in apartments, helped by low unemployment, reduced supply, and high homeownership costs. “If you buy an apartment building today, you’re likely buying it for 30% less than a couple of years ago,” Shepard told Advisor Upside.

Keeping It Real. BofA also sees plenty of room for resilience and growth in other real assets in the future:

• The rising demand for wood products and expanded sawmill capacity highlight timberland’s stability and long-term growth prospects.
• Beyond growing traditional fruits and vegetables, farmland can offer alternative revenue streams like harvesting plant-based proteins and biofuels. The properties can potentially generate additional revenue through renewable energy projects, such as solar and wind farms
• The energy needs for artificial intelligence alone point to strength in the sector.

“Stocks and bonds will always play the most significant role in a portfolio, but we’re seeing clients being open-minded and wanting to think creatively about where they’re deploying their investments,” Shepard said, adding that real assets currently make up about 20% of total balances for the clients his team works with.

Public or private? Goldman Sachs just couldn’t decide.

The storied Wall Street bank is following in the footsteps of other prominent asset managers by launching new model portfolios that package private investments alongside traditional mutual funds, ETFs, and equity SMAs, according to a statement. Through a partnership with GeoWealth and the alts platform iCapital, the models can be custom-designed by the advisory firms themselves, allowing CIOs to adjust their investments to suit their advisors and end clients.

The new products are addressing demands from clients looking to tap into a private investment marketplace that’s traditionally been the playground of the world’s wealthiest investors. “The recent surge in public-private investment platforms isn’t just industry hype,” said Will Trout, Datos Insights’ director of securities and investments.

Shiny and New

Goldman isn’t the first major financial institution (or likely the last) to launch public-private investments. In recent months, BlackRock, Blackstone, State Street, and Vanguard have announced similar offerings that come with more complex fund structures and fees, but offer the promise of higher returns. “Obviously an important aspect of this offering is customization, but more generally, I see this initiative as part of a broader industry trend toward integrated public-private portfolios,” Trout said.

While the strategies open up new doors to advisors, it’s not all hunky-dory and there are significant hurdles to overcome. Firstly, some advisors wonder about the risk tolerances of their clients and whether the products are in their best interest. They also must navigate higher fees, and overcome operational complexities. “Private investments aren’t suitable for every client, inherently limiting their addressable market,” Trout said, noting a handful of other issues:

• Liquidity. Private investments typically involve longer lockup periods, meaning the products are better suited for clients with longer time horizons.
• Goals. The allocations should be tied to specific client goals, like retirement funding or legacy planning, not chosen just because they’re new and shiny.
• Education Gap. Advisors should get up to speed on the products before recommending them.

“What advisors are really asking for is help integrating private assets efficiently into public portfolios,” said Greg Weiss, head of Goldmans’ wealth customized solutions, adding that private equity has outperformed public markets by 3.2% over the past 15 years.

Back to Black. Through a partnership with the massive turnkey asset management platform Envestnet, BlackRock launched similar models last month that use public-markets ETFs, SMAs and mutual funds, and will offer private markets and other alternative exposures in the near future. “For forward-thinking RIAs, these platforms represent both a value proposition enhancement and business growth opportunity by providing sophisticated options that might otherwise drive clients to larger firms,” Trout said.

Fraud protection company Carefull has a new deal with Integrated Partners to provide its AI-powered account-monitoring service to more than 200 financial advisors.

That’s a benefit for advisors working with older clients who increasingly are targeted in scams that involve assets outside of the advisory relationship. “We kept hearing from our advisors about these really sad stories of their clients being taken advantage of financially,” said Andree Mohr, president of Integrated Partners. “A lot of it is not coming from accounts that advisors manage … These are things we couldn’t see or control, so it was tough for us to protect people.”

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