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Blackstone Is Going After Individual Investors

April 27, 2018

The private equity firm Blackstone Group LP has been broadening its reach from institutions to individual investors, Bloomberg reports.

The company has expanded the number of employees in its private wealth unit to 100 and has been using data analysis to understand how to win more business, people familiar with the matter tell the newswire. Blackstone has also trained “thousands of financial advisors” on how to peddle its investments, the sources tell Bloomberg. The company is also meeting with advisors across the country and bringing some of them to its New York headquarters to help them sell the products, according to the news service.

To lure clients Blackstone is offering retail investors the opportunity to get into hedge funds, real estate investment trusts and other products normally available only to institutions, according to the news service. And Blackstone President Jon Gray sees its retail business as a big opportunity, he said in a conference call from last week cited by Bloomberg.

In the next five to 10 years about half of Blackstone’s assets could be from individual investors, Joan Solotar, the company’s head of the private wealth group, has said, according to the news service. In the latest quarter, retail clients were behind $3.4 billion of the money Blackstone raised, or 19% of the total, she said in a call with media last week, according to Bloomberg.

But while Blackstone is certainly the firm to pull off bringing on retail investors, according to Paul Auslander, director of financial planning at ProVise Management Group, products such as unlisted REITs offered to retail clients wouldn’t be the same quality as those offered to institutions, he says.

And many retail clients may simply be unprepared for the typically long periods investments must be held and the steep fees, Auslander tells Bloomberg.

“It’s a risk that most financial planners are loathe to take,” he tells the news service. “Between the lock up and the fee structure it’s not what clients are used to.”

By Alex Padalka
  • To read the Bloomberg article cited in this story, click here.