E225: Inside the $324B Playbook: How Hightower Is Reshaping Wealth Management
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this revealing conversation, Robert Picard, Head of Alternatives at Hightower Advisors, explores the seismic shifts occurring in private markets and wealth management. Picard leads investment strategies for a platform managing over $320 billion across 100+ wealth management firms, offering unique insights into how technology and AI are transforming finance. (27:50)
Key discussion points include the democratization of private markets, where minimum investments have plummeted from $25 million to $10,000, making previously exclusive opportunities accessible to high-net-worth individuals. (07:07) The conversation delves deep into portfolio allocation strategies, with Picard revealing that 91% of companies generating over $100 million in revenue remain private, representing a massive untapped opportunity for investors. (06:09)
- Core Theme: The transformation of wealth management through technology, AI disruption, and the democratization of private markets access for high-net-worth investors
Speakers
Robert Picard
Robert Picard serves as Head of Alternatives at Hightower Advisors, where he oversees private markets investment strategies for a platform managing over $320 billion in assets across 100+ wealth management firms in 34 states. With 35 years of experience in finance, Picard brings deep expertise from global equity derivatives, volatility trading, and structured products. He has a unique background including Swiss military service, which shaped his process-driven investment approach, and previously founded multiple businesses including a successful $50 million exit.
David Weisburd
David Weisburd is the host of the How I Invest podcast, known for conducting high-caliber interviews with leading investors and asset managers. He brings deep knowledge of private markets and investment strategies, regularly engaging with industry leaders to uncover actionable insights for ambitious professionals and investors seeking to master their craft in the financial services industry.
Key Takeaways
Embrace the Democratization of Private Markets
The private markets landscape has fundamentally transformed, with minimum investment thresholds dropping from $25 million to as low as $10,000. (07:07) This shift represents what Picard calls "the democratization and miniaturization of private markets." The context is crucial: 91% of companies generating over $100 million in revenue remain private, meaning public markets only represent 9% of the opportunity set. (06:09) For professionals, this means previously inaccessible alpha-generating opportunities are now within reach, fundamentally changing how portfolios should be constructed and diversified.
Implement Strategic Asset Allocation Across Private Markets
Hightower has developed a sophisticated framework categorizing private market allocations as conservative (10%), balanced (20%), or growth (30%) of total portfolio. (11:24) Within each allocation, the mix varies: conservative approaches use a 20/80 split (20% private equity/venture, 80% real estate/credit), balanced uses 50/50, and growth uses 60/40. This systematic approach has demonstrated better risk-adjusted returns compared to traditional 60/40 portfolios across 16 years of historical data. The key insight is treating private markets with the same disciplined allocation methodology as public markets, rather than ad-hoc investments.
Leverage Illiquidity as a Strategic Advantage
Picard argues that illiquidity can be a powerful feature rather than a bug, preventing investors from making emotionally-driven mistakes during market downturns. (13:54) He draws parallels to homeownership, noting that forced selling during market stress creates artificial discounts. The framework requires proper client education and understanding, but those who maintain conviction during temporary mark-to-market declines historically benefit. This applies particularly to private credit funds that experienced temporary markdowns in March 2020 but quickly rebounded for patient investors. (16:31)
Prepare for AI-Driven Industry Disruption
Picard experienced a transformational moment using Lovable AI, which created five functional websites in 20 minutes, including complex private markets research platforms. (22:14) He acknowledges that his role as a research analyst will likely be disrupted within 5-10 years as AI democratizes access to investment research and due diligence. The practical implication is that professionals must evolve their value proposition beyond information gathering toward relationship building, unique network access, and strategic thinking that AI cannot replicate. The window for adaptation is narrowing rapidly.
Build and Maintain Your Network Strategically
Drawing from 35 years of experience, Picard emphasizes that maintaining professional networks is crucial for long-term success. (50:51) At Hightower, their competitive advantage comes from leveraging relationships across 100+ wealth management firms and their clients' networks, enabling access to unique investment opportunities like co-investing alongside Peter Thiel or David Rubenstein. (35:42) The lesson extends beyond investing: whether camp friends, college connections, or professional contacts, these relationships compound over time and create opportunities that pure analytical skills cannot access.
Statistics & Facts
- 91% of companies in the United States generating more than $100 million in revenues are still private, with only 9% being public companies. (06:09) This statistic highlights the massive opportunity in private markets that most individual investors miss.
- The average university endowment has more than 50% allocated to private markets, while the average individual investor has less than 5% allocation. (04:47) This represents a significant gap in sophisticated institutional versus retail investment strategies.
- Private markets are expected to grow from the current $12-13 trillion to $30-35 trillion over the next 6-8 years, with some estimates reaching $50-80 trillion according to various fund managers. (27:17) This represents one of the largest asset class growth opportunities in financial history.
