Capital Decanted: S2E4 – “Decanter’s (Half) Dozen: Private Capital for Wealth Clients”

Release Date: September 23, 2025
Hosts: John Bowman and Aaron Filbeck
Guests: Doug Krupa (KKR) & Shane Clifford (Carlyle Group)

Overview of Main Theme

This Capital Decanted episode is a definitive masterclass on how large private capital firms are building wealth management solutions for distributing private capital offerings (alternatives) to wealth and retail clients. Moving beyond surface-level commentary, the hosts and guests explore the evolution, urgency, and strategic complexity of bringing private markets (traditionally the realm of institutions) to individual investors. The conversation is rooted in real-world market forces, the "why" from previous episodes, and especially the "how": the practical, operational, and organizational roadmaps for success and pitfalls to avoid in this seismic industry shift.

Key Discussion Points & Insights

1. Why Private Capital in Wealth/Retail Is the Holy Grail

• Industry context: Traditional asset management faces fee compression, declining profitability, and needs new growth engines.
• Private markets and wealth clients are the clear answer:
  • John Bowman [12:16]: “The intersection of alternatives and wealth is viewed as the holy grail. The market has unequivocally spoken on the enterprise values… those sipping from this grail and those left behind.”
  • Stat that shocks: Blackstone (with 1/11th AUM of BlackRock) has a 35% higher market cap, driven by the business mix’s perceived future value.

2. Sizing the Market Opportunity

• Huge reallocation potential:
  • Current alternatives AUM: ~$25 trillion, with retail accounting for ~16% (~$4T).
  • Bain forecasts alts AUM to be $60T (~22% retail, or $13.2T) by 2032—a $9T influx.
  • Aaron Filbeck [19:04]: “A $9 trillion tsunami level movement… numbers are just staggering.”
  • Allocation increases, especially for high/very high net worth, drive further upside.

3. Recent (and Accelerating) History

• Origins: Episodic, accidental, and focused on the ultra-rich, via feeder funds and private banks after the GFC.
• Evolution:
  • Only in the last 5-10 years have firms built standalone, strategic wealth solutions businesses, moving from institutional focus to intentional wealth-client centricity.
  • Chronology:
    • Blackstone: Pioneer; PWS structured in earnest ~2014–15 (Joan Solitar), B-REIT (2017), now $250B+ in wealth AUM.
    • KKR: Doug Krupa (ex-Blackstone deputy) recruited in 2019 to catalyze true wealth strategy.
    • Apollo: Stephanie Drescher drives concerted multi-region wealth expansion.
    • Carlyle: Major 2023 shift under CEO Harvey Schwartz, hiring Shane Clifford to knit regions and business lines into a real, global effort.
    • Ares: Acquired retail-rich Black Creek Group; importance of scale and platform-centricity.
  • Supporting ecosystem: Distribution/tech platforms (iCapital, Case) help democratize access.

4. The Practical Roadmap: Phases, Models, & Priorities

• Three models of going to market:

  1. Extenders: Single-asset shops stretching into wealth (e.g., Starwood, Cliffwater).
  2. Buyers: Traditional asset managers acquire alts capability (e.g., BlackRock, Franklin).
  3. Builders: GP-led model (focus); create wealth org from institutional roots (e.g., KKR, Carlyle, Apollo).

• Crucial Elements to Build:

  • Product: Right asset class & vehicle (tender fund, interval fund, REIT, etc.).
  • Sales: Completely different from institutions; heavy on advisor/intermediary education, content, patience.
  • Back Office: Legal, ops, client service—often underestimated.
  • Culture: Must have C-suite buy-in, patience, and bridge institutional and retail mindsets.

• Stages of Maturity:

  1. Bootstrapping: Single product, single salesperson, proof of concept—often with existing resources.
  2. Scaling: Formal investment, hiring, multi-product platform, expansion by wealth channel (wirehouses → RIAs → IBDs).
  3. Persistence: Dedicated org structure, robust back office, true distribution & marketing machine.
  • Aaron Filbeck [53:24]: “These are typically new hires… it’s really hard to transition institutional salespeople… huge absorption of cultural onboarding is way harder than designing product or hiring people.”

Guest Executive Masterclass: Doug Krupa & Shane Clifford

1. Why & When Did Their Firms Commit to Wealth?

• Carlyle (Shane) [62:45]: Early episodic engagement; transformation began when CEO (Harvey Schwartz) prioritized wealth as a core strategic pillar, committing resources and pushing beyond episodic drawdowns.
• KKR (Doug) [63:59]: Firm recognized that the end investor, even in DB plans, is an individual, and with DBs diminishing, direct access for individuals via advisors became crucial. Strategic investment followed (100+ staff, >$2B balance sheet capital).

2. Lessons Learned from Blackstone/Franklin and the Importance of Education

• Doug [66:17]:

  • True pioneering story at Blackstone: "No one really knew how much broken glass it would take…"
  • "The firm really believed in the wealth mission... they've since evolved... but there wasn't an interest... beyond yielding products… everyone thinks of KKR as private equity, but my mandate was to get access to the ‘crown jewel’: PE, infra…"
  • Education is non-negotiable: “Advisors only allocate to what they’re comfortable allocating to and can easily explain to their clients.”

• Shane [71:10]:

  • Different worldview, coming from a traditional manager: “Get out and actually hear from clients… the US is more advanced, but everyone’s on a journey.”
  • Product design must start with client conversations, not the ‘ivory tower’: “I've had brilliant PMs pitch ideas—no actual demand.”

3. Talent, Culture, and Internal Buy-In

• Doug [76:07]:

  • Building the team is hard work: “We really worked on educating the organization… built a team with a mix of relationship people and technicals… intentionally mixed traditional public markets backgrounds with alts.”
  • Covid adapted hiring: “We did that. In some cases, I actually met people under heat lamps in Feb/Mar 2020… relationships are probably even more important than educating on business.”

• Shane [78:54]:

  • You can't just hire from private markets—traditional asset manager backgrounds are vital: “The pool of talent is not big enough… certain nuances to the wealth business a private markets firm just doesn’t understand… share classes, for example.”

4. Product & Channel Blueprint

• Doug [86:07]:

  • Wrapper/vehicle agnosticism in practice: “All part of stakeholder conversations… first-mover advantage for PE and infra… did easier structures first, built to 40 Act funds and then more complex accredited-only PE vehicles.”
  • Global local structures—adapting to market needs.
  • Succession of launches and learning: “Sequenced differently than I envisioned… but all are great solutions that create great outcomes…”
  • [92:23]: Mad scientist to architect: “During development you’re the mad scientist, but when you’re done, you’re the architect.”

• Shane [90:20]:

  • Compliment, don’t compete: “A lot of ‘me too’ products… at a certain point it’s hard to tell them apart. Be smart, complement, and invest in education.”

5. Internal Advocacy & Patience

• Shane [93:05]:

  • Strategic buy-in must be real: “If your CEO just throws it on a PowerPoint and disappears… you’ll fail.”
  • "You need tactical wins along the way… to be more than a mad scientist, to become the architect."
  • Culture matters: “We are dysfunctional families… but you have to get your C-suite on the road talking to advisors and clients—it can’t just be a box tick.”

• Doug [97:29]:

  • Multi-generational and compounding: “Biggest regret in this business? Giving the money back every 10 years… Now we can build generational wealth, compounding over 20+ years. That got everybody energized here.”

• Shane [97:29]:

  • Brand responsibility: “These brands (KKR, Carlyle) resonate, but with that comes a responsibility… I would give up a piece of business rather than do anything that could harm the brand.”

Notable Quotes & Memorable Moments

“The market has unequivocally spoken… the enterprise values of those sipping from this grail and those left behind.”
– John Bowman [12:16]

“A $9 trillion tsunami level movement... The numbers are just staggering.”
– Aaron Filbeck [19:04]

“When we all got to Blackstone, yes, they wanted to do this, but no one really knew how much broken glass it would take.”
– Doug Krupa [66:17]

“If your CEO just throws it on a PowerPoint… and disappears for the rest of the year... you'll fail.”
– Shane Clifford [93:05]

“During development, you’re the mad scientist. But when you’re done, you’re the architect.”
– Doug Krupa [92:23]

“Keep it simple, stupid... bite off something you can actually chew.”
– Shane Clifford [100:57]

Timestamps for Key Segments

• Market Opportunity & Urgency
  • 14:41–26:14: Market sizing, AUM, allocation models
• Industry Timeline/History
  • 26:14–36:57: How the landscape evolved, key firm stories
• Building the Business: Models & Stages
  • 36:57–53:24: Practical framework, priorities, founder-led insights
• Halftime Wisdom (Franklin Templeton)
  • 55:30–61:14: Education, common roadblocks, current client excitement
• Main Guest Segment: Blueprint in Action
  • 61:14–98:28: Krupa & Clifford on "how," pitfalls, talent, product, culture, brand, & leadership
• Advice and Lessons Learned
  • 99:17–102:53: Tips for those building from scratch; focus and differentiation

Additional Takeaways / Closing Reflections

• Patience + Focus: Rome wasn’t built in a day; start with practical, channel- and product-appropriate wins.
• Differentiation is key: Don’t just be the 17th flavor in an asset class—bring your core expertise to fill a specific market gap.
• Education & Culture: Investment in advisor/client education hasn’t kept pace with product proliferation, but it’s the true engine of sustainable adoption.
• C-suite Credibility: Success in this new business line demands visible, sustained leadership buy-in.
• Empathy & Adaptation: Meet partners (advisors and clients) at their level—the wealth space isn’t a monolith, nor is institutional always “smarter.”

For Listeners Short on Time

• Listen: 61:14–99:17 for the live, hands-on masterclass from Krupa and Clifford.
• Read: The section above, “Building the Business,” for the how-to blueprint.
• Remember: This is a massive, still-unfolding change in finance. The podcast offers a living roadmap—and a call for prudence, patience, and purpose in allocating to alternatives for wealth clients.

In summary:
This episode is a rich, practical guide for firm leaders, asset managers, investment professionals, and curious thinkers eager for a real-world blueprint in launching and scaling private capital offerings for wealth clients—delivered candidly by the people writing the industry’s playbook.