Didn’t have time to pore over the 100-plus-page prospectus for a new interval fund from Vanguard, Blackstone and Wellington over the weekend? Well, we did (we don’t get out much).

The much–anticipated fund from three of the best-known names in the asset management industry will wrap up public and private investments into a single product. The filing didn’t disclose fees, but the investment management will be headed up by Wellington, and follows similar announcements from other prominent players, like State Street, Apollo, KKR and Capital Group. It’s a way for retail investors to get their hands on private placements that were previously only available to institutional-grade investors.

“Managers are looking for new areas to grow,” said Jeff DeMaso, editor of the newsletter the Independent Vanguard Advisor. “They’re looking around and asking: Where else can we go?”

The Intervals Are Aligning

The WVB All Markets Fund is an interval fund, which is a closed-end fund that offers limited liquidity and allows investors to redeem shares during specified time frames. In this case, investors will be able to make withdrawals on a quarterly basis, which better aligns with traditional private investment timelines than other indexed products. A mutual fund would raise “red flags all over the place,” DeMaso said, adding that mutual funds can be bought and sold almost at will. “That’s a recipe for disaster.” The interval funds also act like a mutual fund or an ETF by sitting right inside clients’ brokerage accounts and the redemption windows are very simple to navigate, he added.

“Exposure to private assets can broaden diversification and has the potential to offer superior risk-adjusted return over the long term,” said a Vanguard spokesperson. According to the filing:

• The fund will allocate as much as 60% into public equities, up to 30% in fixed income, and a limit of 40% in private markets.
• Investors can redeem anywhere from 5% to 25% of their funds in any given quarter.

During normal circumstances, investors wouldn’t have a problem cashing out their investments, but under stressful market conditions, investors may want to pull out of the funds at the same time.“There’s a world where it takes you several quarters, and in the worst-case scenario, several years, to get your money back,” DeMaso said.

Back in Black. The new fund may not be for everyone. Financial advisors have voiced concern that managers’ interests might not be aligned with their own and that private investments generally chase bigger returns by taking on additional risk and charging higher fees. “Does the average saver or investor need private assets? I would argue no,” DeMaso said, adding he’s still waiting to see the final fees of the product. However, it is a “measured way” for the partnership to take its first step. “It makes me believe there’s probably more to come,” he said.

At this rate, don’t be surprised if toddlers start opening up retirement accounts.

The average wealth management client is in their 60s either approaching retirement or already in it, but a shift is underway as younger Americans have begun working with advisors. Some 28% of Gen Zers and 26% of millennials say they have gotten professional help from a financial advisor for the first time within the last year, according to a Northwestern Mutual report. Younger clients may not have the assets that older clients have, but when advisors start working with investors early, it can build strong relationships that last potentially decades.

“Millennials and Gen Z are hungry for advice,” said Gregory Furer, CEO of Beratung Advisors. “They’ve been inundated with information their entire lives and are now seeking wisdom over noise.”

The Young Bucks

Advisors typically take on older clients because they have high AUMs and wealth managers largely work on fee models based on assets. But today, many firms have begun working on flat-based fee models, making financial planning services more accessible to younger Americans.

Rob Stromberg, founder of Mountain River Financial, said his firm calculates its fees based on clients’ total net worth as opposed to their investable assets. “You’re starting to see firms build toward more thoughtful and fair pricing, and that also gives us the opportunity to work with a lot of people who couldn’t previously get that advice,” Stromberg told Advisor Upside.

More than half of Americans agree that it is “highly important” or “critical” to get professional financial advice between the ages of 25 and 39, per the Northwestern survey. However, even if they’re not yet working with an advisor, more than eight in 10 millennials and Gen Zers are thinking about their financial health and what areas need improvement as they approach important life milestones:

• Younger Americans are most concerned with being able to afford a house with 46% of Gen Zers and 31% of millennials saying it is their top priority.
• After that, the next major concerns are having children, paying for college, and making large purchases like a boat or vacation home.

“Our youngest client is 22,” said Nathan Sebesta, owner of Access Wealth Strategies, adding that about 20% of his firm’s client base is under 40. “Historically, the industry overlooked younger investors, but that’s changing as advisors recognize long-term relationships often begin early. It’s a welcome and necessary evolution.”

People have big feelings about retirement.

Whether they fear losing a sense of purpose or worry about outliving their assets, those feelings can hold them back more than money, according to a recent report from the Financial Planning Association, which recommends planners help guide people. Currently, financial advisors overwhelmingly said clients are better prepared for retirement financially than they are emotionally. Some 50% of advisors said their typical client is “very prepared” monetarily, while just over 10% said the same about emotional readiness. About 60% said the average client is “somewhat prepared” financially, compared with about 46% emotionally.

Responses from 167 financial planners last year show the profession might improve by counseling people on retirement, FPA president Paul Brahim said in an announcement. “As more Americans near retirement, it’s imperative that financial planners do more than just manage money,” he said. “They also need to help clients deal with the emotional aspect of this new life phase.”

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