Private Markets Transform Wealth Management

In Brief:

Bloomberg's Katie Greifeld interviewed Raj Dhanda (Global Head of Wealth Management at Ares Management) and Meena Flynn (Co-Head of Global Private Wealth Management at Goldman Sachs) about evolving wealth management strategies at Bloomberg Invest, focusing on how they're balancing public and private market allocations for high-net-worth clients. The executives emphasized that private investments help clients avoid emotional decision-making during market volatility by eliminating daily mark-to-market pressures.

Big Picture Drivers:

• Democratization: Private markets are increasingly accessible to broader investor segments, no longer limited to only the ultra-wealthy

• Convergence: The line between public and private markets is blurring with new investment vehicles like private credit ETFs

• Concentration: Public markets have become highly concentrated in a handful of mega-cap stocks, driving demand for diversification through private investments

• Evolution: The investable universe has shifted dramatically, with declining public companies and sixfold growth in private equity-backed companies

Key Topics Covered:

• Portfolio Construction: How Goldman allocates roughly 40% to public equities, 25% to alternatives, and the remainder to fixed income for moderate-risk ultra-high-net-worth clients

• Market Volatility: Recent market turbulence has reinforced the value of illiquid investments that don't mark-to-market daily, helping investors avoid emotional selling

• Innovation: Emerging investment categories like sports team ownership represent new private market opportunities

• Wealth Transfer: Demographic shifts showing women taking greater control of family wealth management decisions

Key Insights:

• Liquidity Trade-off: Private investments help investors stay invested by removing the emotional component of daily market volatility

• Deployment Strategy: Optimal approach involves building private market exposure over 5-6 years across market cycles until distributions create self-funding portfolios

• Women Investors: Female clients typically begin with financial planning goals before investment selection, are highly focused on education, and are risk-aware rather than risk-averse

• Generational Shift: Younger investors show greater interest in pre-IPO opportunities than traditional public market investments

By The Numbers:

• Client Definition: Goldman defines ultra-high-net-worth as $25+ million in investable assets

• Market Size: The addressable wealth management market grew from $80 trillion to nearly $100 trillion last year

• Advisor Ratio: Ares works with 1,000 advisors serving 17,000 families, averaging 17 client families per advisor

Memorable Quotes:

• "We don't think of it as alternatives anymore. We think that term is a bit backwards. We think the public markets is a great alternative." - Raj Dhanda

• "I think there's a misnomer out there that women are more risk averse than men. We don't find that... they're risk aware." - Meena Flynn

The Wrap: 

As wealth management evolves, private markets have moved from alternative status to core portfolio components. With public markets becoming more concentrated and volatile, high-net-worth investors are increasingly allocating to private assets for diversification, smoother returns, and access to a growing universe of private companies that skip public markets entirely.