If private investments make up 10 to 15% of your portfolio and you are paying a 1% fee on the whole thing to get them, you may effectively be paying something closer to 10% a year for access to that slice. That is the number I kept coming back to when I read this listener’s question.
He has worked with his wealth advisor for six years, mostly for access to private equity funds and private credit he did not think he could get on his own. But every time he tries to have a broader planning conversation, he gets thin answers and a quick pivot back to portfolio recommendations. He is paying close to 1% for what feels like a fund-picking relationship, and he wants to know whether to push his advisor or accept that the setup is not built for what he needs.
Question the “Nowhere Else” Premise
The first thing I would challenge is the justification itself: I stay because I cannot get these investments anywhere else. Who told you that? If the answer is the advisor, it is worth checking independently. Talk to other advisors. Call a few of the funds directly. See whether the claim holds up.
In my experience, once you let people know you are looking for alternative investments, options come out of the woodwork. Private equity and private credit are also very broad labels. Very few people I talk to have a specific fund in mind that they have researched and want to get into. More often, the fund they name is simply the one their advisor has access to.
Where Else the Deals Live
There are more paths into private deals than most people realize. Most major cities have active investing clubs with a steady flow of opportunities, and that is true in Denver, Miami, New York, Austin, Los Angeles, and San Francisco. There are also national groups, like Long Angle and MeetPerry, that pool members together and negotiate access to deals as a group.
None of that means your current advisor’s lineup is bad. It just means availability alone should not be the reason you stay in a relationship that is not meeting your other needs.
Do You Need Alts at All?
I often see the alts pitch start around the $5 to $10 million mark, framed as “you need to start investing like someone with $10 million.” I do not know what that means. The way you invest at $10 million, $50 million, or $100 million should all start in the same place: what is this portfolio supposed to do? Maybe the goal is cash flow. Maybe it is asset protection. Maybe it is taking on more risk.
Wealth and alternative investments are correlated, but alts are not a requirement that switches on at a certain balance. So before debating fees, ask whether the private allocation is doing a real job in your plan or just checking a box. Then weigh whatever benefit it provides against the fee you are paying on the entire portfolio to hold it.
You can also test how the relationship is priced. Ask whether the advisor would manage only the alternatives sleeve. If the answer is that you would not get the same caliber of deals, ask whether access scales with assets. It usually does. Clients with hundreds of millions tend to get better allocations, better fee breakpoints, and a shorter wait. Knowing where you sit on that curve tells you what the 1% is really buying.
Separating the Planner From the Portfolio Manager
Suppose you do all of this homework and conclude that this advisor really is your only path to the investments you want, and you like how they manage them. Then you have a different problem to solve: the planning is still missing.
Advising and investment management are two distinct jobs that often get bundled. At 1%, I would expect them to be bundled. At that price I would expect them to manage the money, plan around it, and buy you dinner too, probably with dessert. So have the direct conversation. Tell them you need real planning on taxes and long-term legacy strategy, and that if they will not provide it, you will bring in someone who will. If they are not interested in planning, they will probably be fine with that arrangement.
Decide What the Relationship Is For
If juggling two firms does not appeal to you, there is a third structure. Keep the current advisor for the private investments only, manage the liquid accounts yourself, and hire a planner to set the strategy and tell you which buttons to push. None of these paths is necessarily wrong. What matters is that the arrangement matches what you actually want from it.
So take a step back and name what you are trying to get out of the relationship. Then look honestly at whether that is what you are being offered today. If it is not, there are plenty of ways to get there, and we, as your advisors, should be able to show you what the fee is buying in plain numbers.
This post is adapted from a recent episode of the Scholar Wealth Podcast. For more perspective on what a 1% advisory fee should include, watch the full podcast episode here.