Why Many Fund Managers Are Bypassing Advisors
ETFs are more easily accepted than private funds or private real estate, largely due to ETF’s transparency, liquidity, accessibility, and the breadth of available information—while still acknowledging where private investments may offer advantages.
First, liquidity is a defining benefit. ETFs trade on public exchanges like the NASDAQ and the New York Stock Exchange, allowing investors to buy or sell shares throughout the trading day. There are no lock-ups, capital calls or redemption restrictions—features that often complicate private investments. This immediacy reduces perceived risk and lowers the barrier to entry, as investors know they can exit a position quickly if desired.
Second, pricing is transparent and continuously validated by the market. ETF prices update in real time, reflecting supply, demand, and the value of the underlying holdings. While private funds rely on periodic valuations—often quarterly and subject to manager discretion—ETFs provide a constantly refreshed view of value. This dynamic pricing builds confidence, as investors are not relying on delayed or infrequent NAV estimates.
Accessibility further simplifies the equation. ETFs can be purchased seamlessly through mainstream brokerage platforms such as Fidelity Investments or Charles Schwab. There is no need for subscription agreements, accreditation verification, or complex onboarding processes. Investors can move from interest to execution in minutes.
In addition, ETFs benefit from a deep ecosystem of research and analysis. Investors and advisors can access independent coverage, performance data, and real-time analytics across numerous platforms. This creates a perception—often justified—of greater transparency and comparability. By contrast, private investments typically rely more heavily on sponsor-provided materials, which can limit independent validation.
For financial advisors, ETFs integrate directly into portfolio management systems, making them easy to evaluate, allocate, and rebalance. They sit alongside other public securities, enabling quick comparisons and efficient decision-making without operational friction.
Another important dynamic is the industry’s evolution. Many wealth management firms have taken their internal investment processes—once reserved for proprietary client portfolios—and turned them into scalable, saleable products, in some cases packaging them as ETFs. This mirrors a broader trend seen in the family office space, where multi-family offices increasingly productize their strategies and offer them externally to single-family offices. It raises a natural question: will more of these institutional-quality processes ultimately be translated into retail-friendly vehicles like ETFs? The trajectory suggests that continued productization and democratization of investment strategies is likely.
Private funds may offer advantages in certain contexts. They can, in some cases, provide higher income potential and access to differentiated sources of return, including niche or less efficient markets. Additionally, some asset classes—particularly certain forms of private real estate, infrastructure, or specialized credit—do not always package well into an ETF structure. Private vehicles can also offer diversification benefits that are less correlated to public markets.
Ultimately, while private investments have a role in a well-constructed portfolio, ETFs align more closely with how modern investors and advisors prefer to operate: liquid, transparent, accessible, and information-rich. These attributes make them not only easier to understand—but significantly easier to bring to the market.
My firm evaluates and markets both private investments (at scale) and ETFs to institutions, advisors, and direct to retail investors.
Having a precision target audience is the key to success. Institutional data is available from several databases, as are advisors. E5A has perhaps the most complete set of data on the individuals holding approximately 70% of the wealth in America. The 18 datasets focus on the top 0.5% to the top 8% of wealth holders, by profession, education and other attributes. The data has been proven in private market capital and AUM campaigns. This results in another precision channel for issuer consideration.
Each product has different characteristics. Each issuer needs to decide on its distribution strategy. As advisors shrink in number and have become more dependent on model portfolios, the case for going direct to retail has grown. With the technology to onboard investors at scale for 506c and Regulation A raises, large amounts of capital and AUM are being raised directly from retail.