Financial advisors are finding opportunities in private equity

Financial advisors are exploring the private equity world like never before, as alternative assets have evolved into an accepted part of a client’s asset allocation.

And to meet the added demand from wealth managers and their retail clients, private equity firms are busy adopting new fund structures that address historical barriers to entry related to liquidity, fees, and tax efficiency.

Private equity funds are now increasingly being offered to wealth managers through perpetual or “evergreen” vehicles that allow monthly purchases and quarterly redemptions, often with lower investment minimums. These are features that appeal to high-net-worth individuals that have typically been wary of the liquidity constraints in alternatives that were less of an investing impediment to longer-term holders like institutions and endowments.

Christian Salomone, chief investment officer at Ballast Rock Private Wealth, said fee models are also evolving, with growing transparency around both management fees and performance-based incentives, including claw-back provisions that better align general partner and investor interests.

Fee models evolving

“On the tax front, these newer vehicles are often more retail-friendly: many issue Form 1099s instead of K-1s, simplifying reporting and easing the April 15th filing process. Most are also structured as pass-through entities, avoiding double taxation and allowing for deferral of gains, which are typically taxed at favorable long-term capital gains rates,” Salomone said.

Salomone added that regulatory shifts and fintech innovation have further expanded access by digitizing subscription documents and enabling custody at major platforms where valuations are calculated monthly, or even daily, such as mutual funds.

“Collectively, these developments represent a strategic push by private equity firms to tap into the vast pool of retail capital and reshape an asset class long dominated by institutions into a more accessible building block of modern portfolios,” Salomone said. 

Elsewhere, Blair Cohen, managing partner at GoalVest Venture Capital, agrees that private equity is maturing as an asset class and the PE industry is increasingly looking to broaden its investor base beyond institutions to include high-net-worth individuals. To do that, he said firms are realizing they need to evolve beyond the traditional 10-year drawdown fund structure. One major shift has been the incorporation of secondaries and the rise of evergreen and interval funds, which offer quarterly liquidity instead of locking up capital for a decade.

“That shift has been timely as investors across the board have become more sensitive to liquidity in recent years, and the traditional illiquidity premium is no longer enough to justify the lockup for many LPs. These new fund structures are also starting to come with more flexible and, in some cases, reduced fee models, which further aligns them with investor expectations around transparency and access,” Cohen said.

Jason Howell, president and family wealth advisor at The Jason Howell Company, meanwhile, feels the biggest evolution is access.

“With the rise of alternative funds like interval funds and evergreen funds, investors can be invited to invest with fewer qualifications and lower investment minimums. And the SEC's accredited investor rules may get looser still if, as expected, an imminent executive order from the President of the United States allows 401(k)s to include private equity as an investment option,” Howell said.

Private equity, promising opportunities

As for where the best PE prospects can be found in the current market, GoalVest’s Cohen is focusing heavily on the venture growth space. In his opinion, it’s a relatively new asset class that’s taken off in the last decade, especially post-COVID with the boom in secondaries.

“Decades ago, many of these companies would’ve already exited via IPO or M&A. Now, with ample private capital, they’re staying private for 10 to 20 years, sometimes longer. These companies are often growing revenue at 50% to 100% annually - much faster than their public peers - and are operating in high-growth sectors like AI. For investors with access, it’s an incredible opportunity to back category leaders before they hit the public markets,” Cohen said, adding that GoalVest has already built several funds to invest in this space and expects to double down on this strategy.

Howell sees opportunities in the sports arena now that all four of the major sports leagues - baseball, soccer, basketball and football - allow for private equity investment at some level. Something that was not always the case.

“You see it in the recent sale of the Baltimore Orioles, Los Angeles Lakers, Buffalo Bills and Miami Dolphins. Expect to see more!” Howell said. 

Finally, Ballast Rock’s Salomone continues to see compelling opportunities in secondaries, which remain buoyed by strong institutional demand for liquidity due to the limited availability of traditional exit routes like IPOs. In his opinion, this demand is also causing a rapid expansion beyond private equity into adjacent asset classes such as private credit, venture capital, and infrastructure. 

Simultaneously, he sees the emergence of AI and the digital transformation as long-term growth engines for investors both in public and private markets.

“This evolution is not only fueling demand for technology-related investments but also driving significant infrastructure needs from hyperscale data centers and digital communication networks to energy generation and grid modernization. As these shifts unfold, we expect capital to flow toward platforms and assets positioned to enable and support this transformation,” Salomone said.