Mid-sized RIAs are now buying alternatives, iCapital's Gallagher says

The alternatives conversation has moved from whether to how, and the firms asking are mid-sized RIAs. Gary Gallagher, who became president of iCapital's alternatives platform in January, told Financial Advisor Magazine that RIAs with $400 million to $1 billion in assets are now buyers. 'It's no longer a question of if, it's when and how,' he said.

iCapital's survey backs that up. Eighty-nine percent of advisors plan to maintain or raise their alternatives allocations. Eighty-four percent say client interest has climbed or held steady. Confidence in the economy has slipped. The survey's confidence measure now reads 61%. It was 74% in the prior reading. The turn toward private markets looks durable, not cyclical. The equity bull market is 15 years old, and diversification is doing the job that performance used to do.

Gallagher's read on the buyer base carries weight because he has watched the RIA market from the platforms that serve it. He spent decades at Fidelity, including a stretch as head of strategic business development and president of Fidelity Institutional Wealth Advisor. He then spent four years at LPL Financial helping build its RIA platform. Now he sits in the middle of the plumbing that connects RIAs to private funds.

The questions advisors ask show how far they have moved. Fifty-nine percent say assessing liquidity and risk exposures across asset classes is difficult. Fifty-three percent flag compliance and regulatory concerns. Forty-nine percent are unsure how alternatives fit into portfolio construction. These are implementation problems, not conviction problems. 'The questions are turning to adoption, implementation and scale,' Gallagher said.

Interest is also concentrating. The share of advisors interested in venture capital now stands at 37%. A year earlier it was 26%. Gallagher ties the move to private companies heading toward public markets: OpenAI and Anthropic are expected to list this year or next, and the SpaceX IPO produced a fresh group of prospective multi-millionaire clients. For RIAs, that is a supply story: a new generation of liquid wealth is looking for a manager, and the firms that already hold private-market relationships are positioned to receive it.