Private equity has long been an exclusive club, roped off for pension plans, endowment funds, and other institutional giants. Traditionally, its high minimums, limited liquidity, and long holding periods made it ill-suited for most retail investors. These barriers to entry have steadily eroded in recent years, and private markets are now more accessible than ever. This article explores the regulatory shifts, financial innovations, and evolving market dynamics driving this transformation—along with key considerations for investors evaluating private investments within their own portfolios.

The Role of Regulation in Private Equity

The expansion of access to private equity was made possible by changes to the regulatory framework, designed to encourage broader participation and reflect the evolving landscape of modern capital markets. The U.S. Securities and Exchange Commission (SEC) sets the rules determining who is eligible to invest in private offerings. In recent years, these rules have been meaningfully relaxed, making it easier for a wider range of investors to participate. As a result, private equity opportunities are no longer limited to large institutions or individuals with exceptionally high income or net worth.

Fintech and Fund Innovation

As regulations shifted, technology companies were quick to capitalize—building platforms that reimagined how private equity is packaged, delivered, and managed for a broader range of investors. One key development is the rise of interval funds. Unlike traditional private equity funds, which often require investors to commit their money for seven to ten years, interval funds allow investors to withdraw a portion of their investment at set times, usually every quarter. For retirement-focused investors, liquidity is crucial, and this structure offers a more practical entry point into private markets. As a result, interval funds are increasingly being considered as part of a diversified long-term strategy—and the inflows reflect that. Assets under management (AUM) in interval funds have grown nearly 40% over the past decade and tripled in the past six years.

Another approach that has gained traction is the use of feeder funds. These funds allow multiple individuals to pool their investment dollars into a single vehicle, which then invests directly in an institutional private equity fund. This structure significantly lowers the minimum investment required per participant, making private equity more accessible to individuals who might not otherwise meet the high entry thresholds. At the same time, feeder funds broaden the capital base for fund managers—a valuable advantage in securing consistent financing to support the growth of portfolio companies, particularly in periods when institutional capital is less readily available.

A Shift in Market Dynamics

While regulation and innovation have paved the way, broader shifts in the capital markets have driven investor interest toward private equity. Over the past 20 years, the number of publicly traded companies in the U.S. has declined significantly, with more firms choosing to stay private longer—or never go public at all. This trend was fueled by an abundance of private capital, the high costs and scrutiny associated with public markets, and the growing number of flexible financing options for private companies. As the number of public companies declines, retail investors are increasingly closed off from large segments of the economy that are growing and innovating outside the public markets. This makes private investments an increasingly important consideration for those seeking broad diversification and exposure to the full spectrum of economic growth.

Investor Considerations

While the expansion of private equity access is generally a positive development, it is not suitable for everyone. Despite recent innovations, these investments remain relatively illiquid, carry higher fees, and often involve more risk than public market alternatives. As with any investment, individuals should proceed with caution and conduct thorough due diligence on the fund’s strategy, structure, and management team before committing capital. Thoughtful implementation is critical, and private investments should always align with your broader financial goals, time horizon, and risk tolerance.

Informed Advice for a Changing Investment Landscape

At Pathfinder Wealth Consulting, our team of CFP® professionals understands both the opportunities and the nuances of this evolving space. Since 2005, we’ve helped clients navigate public and private markets with clarity and purpose. If you’re interested in exploring whether private equity may be a fit for your long-term goals, we encourage you to contact us to discuss how it could align with your broader financial plan.

 

This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product.

Advisory services offered through Commonwealth Financial Network®, a Registered Investment Advisor.