Private markets have spent the past several years solving for access by implementing lower minimums, broadening distribution, and creating more entry points for advisors and their clients. That problem is largely solved. But access to a single fund position isn’t the same as access to a diversified private markets allocation.
That's the next challenge for the industry. Building diversification fund by fund can quickly create both concentration risk for investors and operational complexity for advisors — making it difficult to bring private markets into portfolios at scale.
The Market Is Moving, Even If Firms Aren't
Investor demand for private markets continues to accelerate across wealth channels, now growing faster than institutional allocations. But at current ticket sizes, access alone isn't enough. A $2M investor putting $250K into a single fund is committing over 10% of their portfolio to just one position. That's not a diversification strategy. It's a concentration problem. Relying on a single manager or single fund for private markets exposure carries the same idiosyncratic risk as picking one stock and hoping it's the winner. Leading firms are moving from wait-and-see to active adoption, recognizing that manual, fund-by-fund implementation was never built to keep pace with this level of demand. What's emerging in response isn't a new product so much as a new structure — one built around how a portfolio is put together, not just which funds happen to be available.
From Exclusive to Accessible — And Why the Old Model Doesn't Scale
Every major asset class has made this same trip from limited access to scalable participation. Public equities made it. ETFs made it. Private markets are making it now. Advisors are under real pressure to grow their share of wallet in alternatives, but building a diversified private markets allocation fund by fund is slow, operationally heavy, and nearly impossible to repeat with any consistency across a book of clients.
A big reason is because a lot of that process still runs on paper subscription documents, email chains, and flat files passed hand to hand between counterparties — a structure detailed in Corastone's look at GP distribution operations. That structure was serviceable at low volume, but it doesn't hold up now. Every additional fund an advisor layers into a client's private markets sleeve is another subscription document, another capital call, another statement to reconcile by hand — work that's invisible to the investor but very much felt by whoever's running operations. Some in the industry have started calling this a plumbing problem more than a product problem, and that framing is closer to the truth than most product pitches admit. Demand was never really the issue. Building something that can actually carry it is.
Model Portfolios Turn Demand Into Scalable Growth
Model portfolios package multiple private funds into a single, target-allocation structure, so investors get diversified exposure through one investment instead of stitching several together themselves. Advisors are starting to treat that inclusion as table stakes: if it isn't in the model, increasingly, it isn't in the portfolio.
Once a model is built, it can rebalance on its own as markets move, netting trading activity across accounts instead of relying on someone to reconcile it manually. That's a shared source of truth replacing a patchwork of individual records. It also quietly changes the advisor's job. Instead of defending one fund's merits in isolation, the conversation moves to how an allocation behaves inside the rest of the portfolio — rebalancing, reporting, everything running through the channels a client already trusts. And because the operational lift comes down, lower minimums stop being a loss leader and start being economically viable on their own. Access, in other words, stops being the end point and starts being the entry point to something that compounds.
Franklin Templeton is already putting this model into practice, launching Private Markets Model Portfolios with Corastone that bring diversified private market exposure into a single-subscription structure designed for advisor-managed portfolios.
The Next Phase of Private Markets
Private markets are shifting from episodic, single-fund bets to portfolio components investors hold the way they hold everything else. Custom model assets have already grown roughly 40% year over year, and nearly 70% of surveyed firms say they already offer, or plan to offer, private-asset exposure within models. That's not a fringe trend anymore — it's where the flows are actually going.
Growth from here will favor firms that can deliver alternatives with the same institutional rigor as the rest of the portfolio, not just the firms that offer access to them. Model portfolios are becoming the mechanism that turns demand into adoption at scale — not an add-on to private markets, but the infrastructure that makes broader participation possible in the first place. The technology already exists. The firms adopting it now are the ones setting the pace everyone else will be measured against.
The window to move early is open now. It won't stay open for long.