In this episode of The Distribution by Juniper Square, Brandon Sedloff sat down with Joan Solotar, Global Head of Blackstone’s Private Wealth Solutions and a member of its Management Committee. Solotar joined Blackstone in 2007 and is part of the leadership team that grew the firm from $88 billion to $1+ trillion in AUM. As the leader of its Private Wealth operation, her team helps advisers understand and access investment opportunities across all of Blackstone’s assets.
“We are designed to service the adviser.”
Private investments are becoming essential to well-diversified portfolios, a fact most advisers recognize but don’t always feel equipped to operationalize. "The education lift is significant,” said Solotar. “The majority of advisers across the U.S. and certainly around the world have still never allocated any of their client assets to privates."
So Solotar’s team went on a listening tour. “We asked, ‘In order to scale this, what would we need to do on our side to service you?’ That sparked the framework for this business."
But Blackstone’s team of 300 doesn’t operate as salespeople. “We don’t have anyone here paid on commission,” she noted. “It’s all about educating, communicating, and making sure we’re in front of people…advisers want to know we’re supporting them. We’re not just showing up, selling a product, and disappearing."
Blackstone’s private wealth managers will even attend client meetings with advisers to field real-world questions and familiarize advisers with how to position their private investment products. She shared an example: “Our product person attended five or six client meetings with one adviser to help him explain the role and importance of alternatives. Finally, the adviser had the confidence to talk about alternatives himself.”
“In addition to offering our drawdown funds, we have open-ended funds.”
Blackstone built their product offerings with clients in focus, opting for structures designed to maximize net client returns versus asset gathering. The firm also diversified into open-ended funds in real estate, private credit, absolute return (formerly called hedge funds), PE, and infrastructure, in addition to a suite of closed-end and drawdown funds.
“I think the path of travel is moving towards open-ended [funds] because your money is invested right away,” Solotar explained. “There are others who prefer drawdown funds to manage their own liquidity…but if you are a private equity investor looking for that high-teens return, a 10-year fund will probably double your money. But if you’re an open-ended investor and that fund achieves just 12 percent net over 10 years, you will triple your money because the money’s in the ground day one.”
“It's a big business and growing.”
A once-in-a-generation shift is happening in the private markets. This $25-trillion industry is predicted to more than double in size by 2032 to $60 trillion, with high net worth (HNW) individual investors as the primary driver of growth. “By and large, private investments have been left out of [portfolio management for individuals] because the process is clunky today,” Solotar explained. “But that’s where everything is going…and those are massive pools of assets in need of high-quality private investments. Advisory firms will want to partner with asset management companies like ours that can provide real scale across a number of asset classes to fulfill those needs.”
Solotar sees Blackstone’s already impressive scale primarily as confirmation that their ground game is solid. "We’re not focused on asset gathering,” she said. “Asset growth is really an outcome, not the input. Deliver high-quality products and treat customers well, and they’ll allocate more assets to you."