Democratization of Private Markets: What Advisors Need to Know

Private markets have grown significantly over the past 20 years and are no longer the sole domain of institutional and ultra-wealthy investors. Expanding access, driven by innovation in product design, technology, and growing policy support, is bringing private equity and private credit closer to the mainstream. In fact, retail investors are now among the fastest-growing segments in private asset ownership, underscoring how quickly this shift is taking hold.¹

Several factors support this growth. Semi-liquid vehicles (such as evergreen and interval funds) and digital platforms are making private markets easier to access, while policymakers continue to explore ways to broaden availability, including within retirement plans, such as 401(k)s. 

As access expands, retail investors face a new set of considerations. Private markets differ meaningfully from public markets in market and economic exposure, liquidity, transparency, and return drivers. For advisors, understanding these distinctions is key to determining if and how private investments fit within client portfolios.

The rise of private markets

Following the global financial crisis, lower interest rates led many institutional investors to seek yield from private markets. And while today’s environment is marked by higher rates, allocations have continued to rise across all investor types.

Private credit and private equity are central to this expansion. In the United States, private credit grew rapidly post-2008 as banks pulled back from lending, increasing from roughly $200 billion in 2010 to over $1 trillion today.¹ Private equity has also scaled meaningfully, with U.S. assets rising from around $1 trillion in 2010 to over $3 trillion today, reflecting sustained investor demand and the maturation of the asset class.¹ For additional insight into these market dynamics, read New York Life Investment Management’s 2026 Private Markets Outlook here.

Private markets can be a powerful source of diversification

Private markets offer a distinct opportunity set for investors. They provide access to smaller, “main street” companies and earlier stages of growth that are typically not available in public markets, with the potential for differentiated returns that may be less correlated with public equities. These businesses tend to be more domestically focused and less sensitive to global shocks.

This matters more today, as public markets have become increasingly concentrated. The number of publicly listed companies has declined, while a growing share of returns is driven by a small group of mega-cap names. 

Dispersion is rising, and selectivity likely matters more

Private markets have benefited from a long period of strong liquidity and growth since the global financial crisis, which has supported returns across asset classes. But the next 15 years will likely look different than the last. Performance is becoming more uneven, with return dispersion rising across private markets. This is particularly evident in private credit, where isolated pockets of stress have drawn increased attention.

While we do not believe this stress signals a broad credit event – corporate fundamentals remain generally sound – as the economic cycle matures, outcomes are likely to vary more across investments. Going forward, returns may depend less on broad market trends and more on selecting the right managers and strategies.

Considerations for retail investors

As private markets become more accessible, the question for advisors is no longer whether their clients can invest in private assets, but how to assess their role, if any, within portfolios.

Incorporating private markets requires a deliberate approach. This challenge has become more pronounced as dispersion increases across private investments. Manager selection, underwriting discipline, and portfolio construction can play a larger role in outcomes than in public asset classes.

For advisors, this raises the bar and shifts the focus from access toward careful evaluation and implementation.

We believe the most compelling opportunities are those that enhance diversification and provide access to parts of the economy that are less represented in public markets, such as the lower middle market.² At the same time, these investments introduce trade-offs, particularly around liquidity, transparency, and complexity, which may not be appropriate for all clients.

Ultimately, any allocation should be grounded in a client’s time horizon, liquidity needs, and risk tolerance. Understanding how these investments fit within a broader portfolio can help support more informed decisions over time.