The institutionalization of private wealth — practical considerations for co-investments 

Wealth management is a highly competitive area of the investment universe because those relationships forged by past generations do not always hold. According to a recent survey, among those that expect to receive an inheritance, only 27% say they would maintain an existing relationship with the managing advisor, dropping to 20% when considering those who have already received one.²

Wealth managers are contending with the same dual realities as other investors: a more uncertain macroeconomic environment characterized by geopolitical conflict, regulatory change and global fragmentation, and greater portfolio complexity with the proliferation of funds, strategies and asset managers available to them. The former calls for more consistent, repeatable and controlled processes to protect their clients, and the latter for the ability to successfully expand the opportunity set to potentially improve client outcomes — especially as demand for private markets and other alternative asset classes intensifies. 

The “institutionalization of private wealth” is an apt way to describe the response from the industry, describing how wealth managers and other financial intermediaries are increasingly running their investment platforms more like institutional allocators. They are building centralized CIO functions and investment committees, adopting more rigorous governance and due diligence, standardizing manager selection and monitoring, and investing in data, reporting and the infrastructure needed to scale private markets.

One of the more innovative ways wealth managers are exploring to provide more efficient access to private markets for their clients is via co-investments. A co-investment is a direct investment made alongside a PE or venture capital (VC) fund, usually by the fund’s LPs or other institutional investors. Instead of only gaining exposure through the fund itself, co-investors put additional capital directly into a specific company or deal that the fund is leading.

Over the past few years, co-investments have evolved into a standard GP offering, increasingly used to help close deals, reinforce LP relationships and extend capital — particularly amid a slower fundraising environment. At the same time, weaker exit markets have arguably driven more mid-life and follow-on co-investments, as GPs seek capital to support existing holdings. With less leverage available, that need is increasingly being met by additional equity investors. In turn, GPs are placing greater emphasis on disciplined underwriting and value creation — dynamics that can benefit co-investors.

Co-investments are primarily utilized by wealth managers as a tool to potentially improve portfolio efficiency. Co-investments may provide lower fee drag, in some cases being offered at no fee and no carry with the GP, while faster capital deployment may help mitigate J-curve effects, both of which have the potential to improve or reduce IRR. When accessed through a co-investment fund, this may allow wealth managers access to established sponsors and transactions in a single line item, potentially offering greater visibility into underlying holdings, and they are also a way to achieve higher concentration into conviction themes, asset classes, sectors — or even specific companies.

Historically, co-investments have served as a satellite to private equity commitments because only the largest LPs were offered an opportunity to participate in co-investment deals from the GP. But as that barrier to entry has been lifted, we expect them to become far more integral to the overall portfolio.

Product design is key strategic decision that shapes investor outcomes, liquidity behaviour, operational resilience, and ultimately trust with clients.

For many client bases, options range from single-asset SPVs and multi-asset sleeves to commingled co-investment vehicles and evergreen formats. Each comes with trade-offs. Single-asset or drawdown structures may offer clarity and alignment but little to no liquidity outside the secondary market, often limited to approved buyers. Commingled vehicles can potentially improve diversification, and operational efficiency yet may dilute exposure and reduce transparency. Evergreen formats promise greater flexibility, but that promise is often overstated or misunderstood.

Evergreen structures themselves are not monolithic. Interval funds may provide scheduled liquidity governed by prospectus-defined minimums, but sustained redemption pressure can force asset sales at inopportune times. Tender funds place liquidity at board discretion, allowing managers to gate to protect remaining investors. Institutional evergreens, governed tightly by fund documentation, require careful calibration between asset duration and redemption terms. Just because an asset can sit in an evergreen vehicle doesn’t mean it should.

Any liquidity promise — explicit or implicit — must be supported operationally, especially in stressed markets. That requires institutional-grade reporting standards: look-through exposure, fee transparency, performance attribution, and risk metrics. But delivering this consistently across multiple SPVs, managers, and strategies places real demands on data architecture and technology.

Wealth managers must also decide what to build internally versus what to buy or outsource. Investment committees, fiduciary oversight, and final decision-making typically remain in-house. Other functions — administration, operational due diligence, reporting infrastructure, or sourcing support – can often be delegated. Many sophisticated organizations tend to adopt hybrid models, and while there is no single optimal mix, clarity on roles and accountability is essential.

Strong product design and operations only succeed if they translate into a coherent client experience. For wealth managers and advisors, consistency matters as much as content. Clients need clear, repeatable narratives across deals: why this opportunity, why now, what could go wrong, and how it will be monitored.

We believe suitability is equally critical, particularly for co-investments. A robust framework should assess investor knowledge and experience, concentration risk, time horizon, and liquidity tolerance. These assessments cannot be informal or episodic. They require dedicated teams, documented processes, and governance structures that sit alongside trusted partners, general partners, and consultants who support sourcing and diligence. Without this, even well-structured opportunities can fail at the point of distribution.

As competition increases and private market access proliferates through multiple wrappers — including co-investments — the traditional illiquidity premium and alpha opportunity may compress. In that environment, differentiation shifts away from access alone and toward execution: structure aligned to purpose, realistic liquidity design, institutional reporting, and a client experience that sets expectations clearly and revisits them consistently.

_{¹Cerulli Associates, ‘U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2024’, December 2024.}

_{²Cerulli Edge, ‘U.S. Retail Investor Edition, September 2025}