The Private Market Pivot: Generational Shifts and the Future of Alternative Investments
Opening the Door to Alternatives
The landscape of individual investing is undergoing a profound transformation, moving away from a reliance solely on public markets and towards a more diversified approach that embraces private equity, credit, and real assets. This shift is the focal point of the report Opening the Door to Alternatives (October 2025), which aggregates insights from a survey of 1,000 high-net-worth (HNW) and ultra-high-net-worth (UHNW) investors in the United States.
The report posits a clear thesis: while wealthy individuals are increasingly adopting alternative investments (often referred to as “alts”) as their net worth grows, there remains a significant “perception gap” regarding risk and accessibility. The data reveals that the adoption of alternatives hits an inflection point at $5 million in investable assets and becomes mainstream for those with over $10 million. However, the report highlights that this is not merely a story of wealth accumulation; it is a story of generational divergence. As the investment landscape shifts, marked by companies staying private for longer and public markets shrinking, individual investors are being driven by different motivations depending on their age and life stage.
The following analysis explores the distinct investment appetites of Millennials versus older generations, the trajectory of the private markets, and how new solutions are bridging the gap between perceived risk and strategic necessity.
The Investment Appetite of the “New Alts Generation”: Millennials
The report identifies Millennials (aged 29 - 44) as the “New Alts Generation,” placing them at the forefront of a significant shift in investment behaviour. Unlike their predecessors, this cohort is not merely dipping a toe into private markets; they are integrating them as a core component of their financial architecture.
Allocation and Familiarity
The statistical divergence between Millennials and older cohorts is striking. The report estimates that alternative investments make up approximately 20% of Millennials’ assets. This is significantly higher than the allocations found in Generation X (approx. 11%) and Baby Boomers (approx. 6%). Furthermore, Millennials display a high degree of confidence in this asset class, with nearly all surveyed Millennials claiming familiarity with alternatives.
Motivation: Innovation over Preservation
What drives this appetite? The report suggests that Millennials are motivated primarily by “access to innovation and unique opportunities.” They are almost twice as likely as Boomers to cite access to unique opportunities as a rationale for using alternatives. This generation views private equity and venture capital not just as financial instruments, but as gateways to high-growth sectors such as breakthroughs in healthcare and technology, that are increasingly found outside the public stock exchange.
Risk Perception
Crucially, Millennials possess a distinct view of risk. They tend to view public equities (stocks) as riskier than older generations do. Consequently, their portfolios reflect a lower reliance on public stocks (27% of assets) compared to the cross-generational average of 43%. While they are disciplined savers, saving 21% of their income on average, they are willing to deploy that capital into illiquid private markets to capture the “alpha” or excess returns associated with early-stage growth companies.
The Investment Appetite of Older Groups: Gen X and Boomers
In contrast to the aggressive adoption seen in Millennials, older groups, specifically Generation X (aged 45–60), Baby Boomers (61–79), and the Silent Generation (80+), exhibit a more conservative, traditionalist approach to portfolio construction.
Allocation and Reliance on Traditional Assets
For these investors, public equities and fixed income remain the bedrock of wealth. Boomers hold only about 6% of their assets in alternatives, while Gen X holds roughly 11%. Their portfolios are heavily weighted towards public stocks, which they view as less risky than Millennials do.
Motivation: Stability and Diversification
The primary drivers for older investors are wealth preservation, lifestyle maintenance, and retirement planning. When they do engage with alternative investments, their motivation is pragmatic rather than aspirational. Approximately 48% of Gen X and 53% of Baby Boomers cite “diversification” as a primary reason for investing in alternatives. This aligns with their broader financial goals: they are looking to smooth out volatility and protect the nest egg they have built, rather than aggressively chasing the high-growth potential of a pre-IPO unicorn.
The Role of Cash
A significant characteristic of these wealth tiers is the preference for liquidity. Wealthy individuals across the board hold roughly one-fifth of their net worth in cash. For older groups, this liquidity is essential for covering major annual expenses such as home costs and taxes, as well as providing the flexibility to maintain their lifestyle. This preference for liquid assets acts as a natural brake on the adoption of illiquid private market strategies, which require capital to be locked up for extended periods.
Information Sources
There is also a divergence in how these groups gather intelligence. While Millennials are more likely to cite social media as an information source, Boomers rely heavily on traditional financial media outlets. This impacts their exposure to new asset classes; if traditional media and advisors are not actively discussing the nuances of private credit or infrastructure, older investors are less likely to encounter them.
What the Future Looks Like
The report paints a picture of a financial future where private markets move from the periphery to the centre of individual portfolio construction.
The Shift from Public to Private
A structural change in the economy is driving the necessity of alternatives. The universe of U.S. public companies has declined by 43% since 1996. Conversely, the number of companies backed by private equity in the U.S. has increased five-fold since 2000. Today, fewer than 15% of companies with revenues over $100 million are public.
The implication is stark: investors who limit themselves to the public stock market are effectively shrinking their investable universe and missing out on the vast majority of growth-stage companies. As noted in the report, companies are choosing to stay private longer to maintain control, flexibility, and avoid regulatory burdens. Consequently, the value creation that used to happen in the public markets (post-IPO) is now captured by private investors before the company ever rings the opening bell.
Growth of Assets Under Management (AUM)
The financial industry is preparing for this migration. Assets under management in alternatives among individual investors have risen to approximately $4 trillion over the past decade. The report projects this could triple to $12 trillion in the next decade. This “rapid expansion” signals that private markets, once the exclusive domain of institutional giants, are becoming increasingly accessible and essential for individuals.
The “Democratisation” of Access
The future will likely see a blurring of the lines between institutional and individual access. The report highlights that “private markets are increasingly becoming a focal point for exciting opportunities.” As the supply of public equity shrinks, the demand for private equity, private credit, and real assets will force the industry to create infrastructure that accommodates individual investors at scale.
How to Reduce the Perception Gap
Despite the clear economic case for alternatives, a significant barrier remains: the “perception gap.”
Risk vs. Reality
The survey reveals that 56% of individual investors label alternatives as “high risk,” a classification second only to cryptocurrency. However, the report argues that this perception is often a function of unfamiliarity rather than reality. Interestingly, the perception of risk drops dramatically among those who actually use the products. Only 39% of current alternative users rate them as high risk, compared to 73% of non-users. This suggests that the fear of the unknown is a primary obstacle.
The Advisor’s Dilemma
A critical failure point identified in the report is the lack of communication between financial advisors and their clients regarding these assets. Although 80% of surveyed investors use an advisor, only 41% of advised clients report having conversations about private markets. By comparison, ETFs and tax strategies are discussed far more frequently.
To close this gap, the industry must prioritise education. The report states there is a “clear need for increased education on alternatives as an asset class more broadly.” Advisors need to be equipped to explain not just the potential returns, but the mechanics of the asset class—liquidity constraints, fee structures, and the “j-curve” of returns.
Brand Trust and Familiarity
Trust is another lever for reducing the perception gap. The survey indicates that 86% of investors agree (39% strongly, 47% somewhat) that they would be more comfortable working with a familiar financial institution when navigating alternatives. Leveraging established brands to introduce these complex products can help mitigate the anxiety associated with “high risk” labels.
The New Future Solution
Companies that operate at the intersection of technology, education, and asset management are part of the “new future solution” alluded to in the report. These include fintech platforms, wealth-tech providers, and asset managers.These entities are taking tangible steps to close the perception gap and operationalise the shift to private markets.
- Democratising Structure: Evergreen and Open-End Funds:
One of the most significant barriers to entry for individuals has been the rigid structure of traditional private equity: high minimums (often millions of dollars), capital calls, and lock-up periods of 10 years or more. The report notes that the market is “rapidly changing,” with new solutions addressing these barriers. Companies like Raveum are contributing to the democratisation of U.S. real estate. Others are introducing “open-end and evergreen funds.” These new structures offer: - Lower minimums
- Liquidity through periodic windows
- Immediate exposure without extended capital call schedules
- Bridging the Education Gap
Future-focused companies are treating education as a core product offering. The report highlights initiatives like Goldman Sachs Investment University (GSIU) as a model. Companies “like Raveum” function as knowledge hubs, providing “objective education and practical insights,” on their resource hub, enabling advisors to engage meaningfully with clients. Education and information are the primary tools required to close the "perception gap" that currently prevents mainstream investors from accessing private markets.
- Access to Growth and “Unique Opportunities”
New platforms are curating access to growth equity and venture capital opportunities previously reserved for institutional investors. By aggregating demand, these platforms allow individuals to participate in “breakthroughs in healthcare and technology” that define modern private markets.
- Transparency and Operational Simplicity
Simplifying subscription, reporting, and tax documentation processes is critical to mainstream adoption. By reducing administrative friction, these platforms make private market allocations more feasible within traditional advisory practices.
Conclusion
The Opening the Door to Alternatives report describes a wealth management industry in transition. As wealth transfers to a Millennial generation that favours innovation and growth over traditional diversification, the demand for private market access will only accelerate. However, fulfilling this demand requires overcoming a deep-seated perception gap regarding risk. The solution lies in a combination of education, trusted advice, and structural innovation, creating a future where the “alternative” becomes a standard component of a well-rounded global portfolio.
Frequently Asked Questions
Q1. Are alternative investments inherently riskier than public equities?
Alternative investments are often perceived as riskier because they are less familiar and less liquid than public equities. However, risk depends on structure, asset quality, time horizon, and portfolio context. The report indicates that investors with direct experience in alternatives tend to rate them as less risky than those without exposure, suggesting that perception is strongly influenced by familiarity rather than outcomes alone.
Q2. Why are private markets becoming more important for individual investors now?
Private markets have grown as companies increasingly choose to stay private for longer periods. As a result, a significant portion of value creation now occurs before a company reaches public markets. Investors who limit themselves to public equities may therefore be excluding a large segment of the modern growth economy from their portfolios.
Q3. Who should consider allocating to alternative investments and who should not?
Alternative investments may be suitable for investors with longer time horizons, sufficient liquidity elsewhere in their portfolio, and an understanding of illiquidity and structural complexity. They may be less appropriate for individuals who require short-term access to capital or who are uncomfortable with limited transparency relative to public markets.
Q4. How does illiquidity affect long-term portfolio construction?
Illiquidity can act as both a constraint and a feature. While it limits short-term access to capital, it may also reduce behavioural risk by discouraging reactive decision-making. Over
longer time horizons, illiquid assets can complement liquid holdings by providing differentiated return drivers and smoothing overall portfolio volatility.
References
Opening the Door to Alternatives. (2025). Survey report of high-net-worth and ultra-high-net-worth investors in the United States. October 2025.
Raveum. (2025). Platform research, market analysis, and educational content on U.S. private real estate. https://www.raveum.com