Lu Wang

Mon, Jun 23, 2025, 7:23 AM7 min read

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(Bloomberg) -- Wall Street has a new favorite investor. They’re young, they’re affluent and they’re skeptical that traditional markets can deliver wealth over the long haul. Shaped by financial crises and fueled by tech optimism, this well-heeled class of Millennials and Gen Z are moving their money into the buzzy world of alternative assets.

Think pre-IPO unicorns, real estate, crypto, collectibles, and more. From private banks to fintech platforms, the financial industry is rushing to keep up. Firms like Forge Global Holdings Inc. have lowered their minimum investment thresholds, pitching private-market access as aspirational — and attainable. 

At Bank of America Corp., the number of retail clients holding alternative assets has more than doubled since 2020, and the firm adds about 50 new funds to its platform each year. Nearly three-quarters of wealthy investors under 43 believe a traditional stock-bond portfolio will fail to generate above-average returns, according to BofA’s biennial study last year. About 93% plan to increase allocations to alternatives in the coming years. 

The irony for Wall Street’s old guard: many in this alt-loving crowd are turning away from the very public markets that helped build their wealth in the first place. 

“Investor preferences are changing at the same time that the markets are evolving,” said Michael Pelzar, head of investments at Bank of America Private Bank. “Those two dynamics are at play that are feeding off of each other.”

The demand is reshaping how Wall Street pitches wealth-generating products. What used to be institutional is now increasingly being redesigned for individuals, albeit the well-connected and well-funded. Blackstone Inc. and Apollo Global Management Inc. are among investment firms repackaging their once-elite strategies for the masses into ETFs and semi-liquid funds. 

The 60/40 model — allocating 60% to stocks and 40% to bonds — delivered respectable gains over much of the past decade. But its appeal has dimmed since 2022’s inflation-driven rout, as both assets began moving in lockstep, eroding the diversification benefit of the strategy. 

“Some advisors may have just used the 60/40 portfolio over time and haven’t really felt the need to offer something in the way of alternatives,” said Mark Steffen, global alternative investment strategist at Wells Fargo Investment Institute. “But I think that’s probably changing.”