Estimated read time: 3 minute 46 seconds.1985. New York City. With $400,000 of their own money, Stephen Schwarzman and Peter Peterson incorporate The Blackstone Group, setting the stage for one of the most powerful investment firms in the world.Initially created as a mergers and acquisitions advisory boutique, Blackstone quickly expanded into other areas, including private equity, real estate, and alternative asset management. Today, Blackstone manages more than $1.1 Trillion in AUM. Its secret? The wealth channel.

Peter Peterson (left), Stephen Schwarzman (right), co-founders of The Blackstone Group

Where there's a will, there's a way

Blackstone started raising capital from individual investors in 2011. While other firms prefer to "scale" by focusing on institutional capital only, Blackstone has amassed more than $240B in AUM from wealthy individuals in a little more than a decade. Some firms might say "it is too much work".

In Stephen Schwarzman's own words

"The vast majority of individual investors remain underallocated to this asset class. Through Blackstone’s Private Wealth Solutions business, we provide individuals access to the same high-quality products that institutional investors have benefitted from for decades."

The Trailblazer in the private wealth channel

From its humble beginnings as a mergers and acquisitions advisory boutique, Blackstone’s strategic foresight led them to identify and capitalize on a new frontier: the wealth channel. This forward-thinking approach has allowed them to amass over $240 billion in assets from individual investors in just over a decade—a feat few could have predicted. But what exactly is the wealth channel, and why should it matter to you?

70% of global HNWIs are located in North America and Europe and are the biggest underserved candidates for private alternative assets. 38% of HNWIs and 53% of very HNWIs want to significantly increase their allocation to private markets

Source: Bain & Company, Vessel

Why does the wealth channel matter?

As a General Partner, you’re faced with a critical decision that could define the future trajectory of your firm. You can either wait for exits to materialize—an approach that could keep your capital tied up for years, delaying your next fundraise. Or, you can proactively seek out new, less competitive sources of capital, positioning your firm ahead of the curve in an increasingly crowded market. The wealth channel offers a unique opportunity to access a vast pool of untapped capital, allowing you to diversify your investor base and accelerate your growth strategy. In an era where institutional funding is becoming more constrained, the wealth channel isn’t just an option; it’s a strategic imperative.

Source: Bain & Company, Vessel

Individual investors hold 54% of the $300 trillion in global assets under management, yet they represent just 16% of assets managed by alternative funds. This discrepancy highlights the massive, untapped opportunity that lies within the wealth channel—a frontier that firms like Blackstone began exploring over a decade ago.

“The time is now to start making choices about whether to get in the game and how to position your firm to win.” Bain & Company

Most GPs are developing a strategy to tap into the Wealth channel

There isn’t a one-size-fits-all answer. It varies based on each firm’s unique funding strategy and goals. However, with the landscape becoming more competitive, an increasing number of firms are building Private Wealth Solutions (PWS) teams.

Source: Private Equity International

But other firms made this strategic decision a long time ago and are way ahead of the curve...

Source: Public filings from Blackstone, KKR, Apollo Global Management, Eurazeo, Warburg Pincus and EQT

FOMO and Status symbol

The FOMO (Fear of Missing Out) effect among high-net-worth individuals (HNWIs) drives them to seek out private investments, fueled by social interactions where peers discuss their latest deals rather than traditional stock investments. This status-seeking behaviour is linked to a desire to be part of exclusive opportunities, such as private equity or high-profile deals like SpaceX.

“Today what’s actually happening is, at those same cocktail parties, people are not talking necessarily about stocks. They’re talking about ‘Which fund are you investing in? Which private investments are you doing? What deals are you in? Are you in the latest SpaceX round?’ ”

From Robert Picard, head of alternative investments at wealth management firm Hightower Advisors.