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Throughout his life, Jack Bogle was a staunch advocate for the fiduciary standard, arguing that all advisors — not just retirement advisors — should be required to act in their clients’ best interests.
While the industry has yet to adopt a universal fiduciary standard, many advisors have embraced the spirit of that philosophy by building businesses designed around advisor-client alignment. For many RIAs, that alignment shapes everything from portfolio construction to the partners they choose to support their practice.
Advisors Prioritize Alignment. Do Alternative Providers Follow Suit?
Independence is at the heart of the growing popularity of the RIA model. According to a 2024 Betterment Advisor Solutions Survey, 30% of respondents cited low-touch client service in a captive model as their primary reason for independence. But even as advisors prioritize the independent model as the best way to serve their clients’ best interests, they could unknowingly be working with partners who are themselves conflicted.
Though advisors may not realize it, many alternative investment platforms are funded by large asset managers. When advisors compare plans, they may not fully understand the larger dynamics. Are these funds deficient in some way? Not necessarily, but they often come with higher fees that can eat into investor returns.
Conflicts Create Misalignment
Most advisors and their clients may not know about the potential conflicts of interest between alternative providers and asset managers. They don’t know that Gigantic Fund Manager A has potentially invested in their provider’s platform.
Advisors have varying degrees of knowledge in private market assets. A recent survey from Morningstar found that U.S. advisors and investors largely recognize the value in alternatives, but, despite their value proposition, 28% of respondents do not allocate to alternatives. They cite complexity as their primary deterrent, as well as the need for increased expertise, technology, and operations.
When relying on an alternative provider to help identify investments, it’s critical to understand the full scope of their incentives and relationships. Key questions to consider include: Can I fully trust their recommendations if fund managers are directly invested in the platform? And, how confident can I be that my interests are truly aligned with yours and your clients?
Is Your Provider Making It Difficult to Diversify?
Beyond conflicts of interest, advisors building custom-fund structures should expect true open architecture that creates better operational efficiency. Yet, many alternative providers fall short of this standard. While positioning themselves as fiduciaries, it raises an important question: Is it truly in the advisor’s (or, ultimately, the client’s) best interest to be constrained within a single, captive solution set? It may be simpler, but simplicity without flexibility is not necessarily better.
Advisors newer to alternatives may assume scale is synonymous with quality. Like traditional equities, smaller funds offer the potential for growth-driven value creation. However, advisors can easily overlook niche and emerging strategies within large platforms dominated by a sea of big managers. It’s far better for advisors to prioritize partners who can provide focused attention, strategic alignment, and a deliberate distribution framework. This way, their story and access are not diluted within the marketplace.
The universe of alternative investments is only growing. As advisors increasingly look for opportunities to diversify their client portfolios, they are eager to allocate across private equity, private credit, venture capital, hedge funds, and real estate. But independent advisors who have purposefully built their businesses on doing what is best for their clients deserve to have partners who are doing the same.
As an industry, we have yet to satisfy Jack Bogle’s lifelong quest to have a single unified standard for financial advisors. That is a worthy mission, and so is making sure that platform providers adhere to a fiduciary standard that puts clients above all else.
Brendan Lake is founder and CEO of PPB Capital Partners, a full-service alternative investment provider that helps wealth advisors harness strategic opportunities in private markets.
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