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Alison Nest thinks most of Morgan Stanley's clients could benefit from having as much as a quarter of their portfolios in private equity, private credit and similar investments.
Now one of her main goals as managing director and the head of alternative investments at the Wall Street giant's wealth management unit is to help investors find ways to move beyond standard stocks and bonds when appropriate. Nest noted that Morgan Stanley's global investment committee recommends that alts like private equity, credit and real estate make up anywhere from 15% to 25% of portfolios.
"And today at Morgan Stanley, it's much below that mark," she said. "So we think that there's a really rich opportunity here to increase our client penetration levels and to really grow that business because we certainly view it as a differentiator for us."
The consulting giant McKinsey has reported that the total amount of private assets under management rose to $13.1 trillion by the end of June last year after rising by 20% a year since 2018. To be sure, private AUM is still dwarfed by the size of public markets.
But a dearth in recent years of companies selling stock for the first time through initial public offerings and similar deals means many of the newest opportunities are now coming open on the private side. Speaking in February at a Bank of America conference in Miami, Morgan Stanley Head of Wealth Management Jed Finn said the firm's alternatives unit sold more investments last year than its other wealth divisions.
Nest said she thinks firms like Morgan Stanley can be particularly useful for clients who are interested in the often strong returns promised by private investments but remain wary of their pitfalls. Skeptics of private equity and private credit point out these vehicles' often high fees and barriers to pulling money out.
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Nest said experienced advisors can play a big role in helping investors come to...