Private Markets 101. Unlocked.

Public Markets: A Shrinking Opportunity Set

For decades, public markets were the primary avenue for building wealth. They're familiar, liquid, and transparent. Many advisory practices were built around guiding clients along that path. But that path is narrowing, and it's happening fast.

Back in 1996, there were more than 8,000 publicly traded companies in the U.S.. Today, that number has fallen to fewer than 4,300. By the end of 2024, just seven mega-cap tech giants known as the Magnificent 7 accounted for roughly one-third of the S&P 500's total market value.

If fewer companies are going public, where is the capital going and why? As the regulatory burdens and costs of public markets continue to rise, more capital is flowing into private markets. Those assets are projected to surpass $15 trillion by 2025 and exceed $18 trillion by 2027.

Adding private markets into your practice isn't about following the latest trend. It's about providing clients with a broader set of opportunities designed to help preserve and grow their wealth over time.

What Are Private Markets?

Private markets include investments in companies, assets, or projects that aren't traded on public exchanges.

The key asset categories include:

• Private Equity: Ownership stakes in privately held companies, often buyouts or growth investments (including venture capital)
• Private Credit: Non-public loans to companies, often providing higher yields than public debt
• Real Estate: Investments in commercial, residential, or industrial properties
• Infrastructure: Investments in essential physical assets such as energy, utilities, and transportation

Private markets respond to the same macro forces as public markets, including inflation, interest rates, and economic growth, but the way they're valued is different. In public markets, pricing is driven by daily trading. News and sentiment can push a stock away from its intrinsic value.

Private markets move on a different timeline. They're typically appraised by third-party valuation firms using standardized methods such as comparable company analysis, recent transactions, discounted cash flow models, or asset-based valuations. These valuations tend to update more slowly and are less influenced by the short-term volatility that often disrupts the public markets.

While private markets don't have the daily liquidity of their public counterparts, illiquidity can be an advantage for clients with the right risk tolerance and long-term investment horizons. In exchange for not having immediate access to their capital, clients receive a liquidity premium, which rewards them for their patience. This is one reason private markets have historically outperformed public markets over a full market cycle.

Private markets can be a compelling complement to traditional portfolios and help offset the concentration and volatility of the public markets while supporting more long-term growth strategies.

Why Advisors Are Turning to Private Markets Now

More investors want their portfolios to reflect a collection of intentional investments and not just ticker symbols. Many well-known companies have historically been out of reach. Nearly 87% of U.S. companies with revenues over $100 million remain privately held.

This shift is happening as wealth moves into the hands of a new generation of tech-savvy investors who are skeptical of traditional investment strategies.

Advisors who understand this questioning mindset and answer it with diversified, forward-thinking wealth solutions will be better positioned to attract and retain these investors.

A New Access Point: Interval Funds

For a long time, private market strategies were reserved for institutions and multi-family offices, but that is starting to change. Innovative fund structures like interval funds are expanding access and allowing more investors to participate. Advisors can now help clients unlock the same types of opportunities that were once limited to endowments, pensions, and family offices.

Because of their lower minimum investment requirements and semi-liquid structure, interval funds provide a more accessible way to enter private markets. But access is only part of the equation. Getting the right level of exposure is crucial. Our research suggests that an allocation of approximately 15% in private markets can provide meaningful diversification and return potential while keeping illiquidity at a manageable level.

Most of this allocation is concentrated in private credit because it currently provides the highest expected risk-adjusted return profile among the major private market asset classes. Traditional asset allocation models tend to measure risk through the lens of volatility, but in private markets, it's just as important to consider liquidity. Advisors should weigh both when thinking about how to introduce private markets into a client's portfolio construction.

Expanding Possibilities: Unlocking Value with Private Markets

Private markets give advisors a strategic opportunity to change the conversation. Instead of focusing on short-term benchmarks and headlines, the focus shifts to long-term outcomes, diversification, and real opportunity. When you meet clients where they are and invest in what matters to them, you help build portfolios that are not only more intentional but aligned with their priorities and long-term goals.

By guiding clients thoughtfully through both the risks and benefits of private markets, advisors can lead with confidence and build stronger, more meaningful relationships that stand the test of time and the markets.

FAQs

Private markets present both challenges and opportunities for advisors. These FAQs provide insights to help you better serve your clients and explore new ways to grow and protect wealth.

1. Which clients might be well positioned to explore private market investments?

• Clients who can tolerate higher liquidity risk in exchange for potentially lower volatility and higher returns
• Clients seeking access to unique growth opportunities not available in public markets
• High-net-worth clients with sufficient capital to meet minimum investment thresholds
• Clients with longer investment horizons
• Clients looking to diversify beyond traditional stocks and bonds

2. What are the potential benefits for clients who invest in private markets?

• Reduced exposure to public market volatility and daily trading
• Historically delivers higher long-term returns than public markets
• Access to unique opportunities in innovative sectors and growth companies unavailable in public markets
• Expanded investment opportunities as public markets shrink and traditional 60/40 portfolios evolve
• Opens the door to rapidly growing assets that were once reserved for institutional investors

3. What are the key risks clients should consider when investing in private markets?

• Limited liquidity, capital may be committed for extended periods of time
• Less transparency compared to public markets
• Use less frequent, estimate-based valuations that can make tracking performance more difficult
• Carries a risk of loss or underperformance, particularly with early-stage companies

4. How can providing access to private markets help distinguish an advisor's practice from the competition?

• Positions advisors as forward-thinking leaders who guide clients through liquidity needs, return goals, legacy plans, and risk tolerance, building deeper relationships
• Differentiates advisors' practices by providing clients with access to exclusive private market opportunities once reserved for institutions and family offices
• Provides broader diversification through private markets that may reduce portfolio volatility, improve risk-adjusted outcomes, and provide exposure to early-stage value creation
• Helps attract and retain high-net-worth clients with tailored, sophisticated wealth strategies and unique investment options

5. How can AssetMark work with advisors to provide private market opportunities to clients?

• Provides access to highly vetted turnkey portfolios with embedded asset allocation
• Conducts comprehensive due diligence
• Delivers tailored portfolio construction guidance integrating private assets with more traditional public assets in client portfolios
• Supplies educational programs and professional insights to enhance advisor knowledge and client communication
• Facilitates operational support and reporting tools for streamlined administration
• Helps manage liquidity redemption windows

Sources:

BofA Private Bank Study of Wealthy Americans Finds Generational Shifts - Bank of America

Why Private Markets Are a Diversification Superpower - Kiplinger

Important Information

This report is for informational purposes only, it is not an offer, solicitation, or recommendation to buy or sell any particular investment or investment strategy, and should not be considered investment, legal or tax advice. Investors seeking personalized guidance or more information should contact their financial advisor.

Investing in private assets, which are accessed through private markets, involves significant risks, including the risk of complete loss. Past performance does not guarantee future results. There is no assurance that private asset investments will achieve their stated investment objectives.

Private asset investments are often illiquid, meaning an investor's ability to sell may be limited for extended periods of time. Investors with a future need for liquidity, i.e., access to cash, should carefully consider if private asset investments are appropriate for their particular financial situation. An investor's ability to make asset allocation changes to portfolios, and to implement tax management strategies may also be limited.

Investing in private markets is intended for experienced and knowledgeable investors who are able to bear the risks of the investments. Financial advisors should conduct a due diligence review of private asset investments to determine if they are appropriate for their client's financial circumstances, including goals, risk tolerance, and overall portfolio objectives.

AssetMark, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission.

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8349927.1 | 09/2025 | EXP 09/30/2027

For financial advisor use only.