How I Invest with David Weisburd – E220: Why Family Offices Quietly 5x’d Their Alt Allocations

Podcast: How I Invest with David Weisburd
Episode: E220
Date: October 1, 2025
Theme:
This episode delves into the recent, explosive rise in alternative investment allocations by family offices and RIAs (Registered Investment Advisors), centering on the primary obstacle stifling even broader adoption: operational complexity. David Weisburd and his guest (referred to as "B", founder of Unlimited AI and former family office investment executive) discuss the new wave of tools aiming to democratize private market access for individual investors, family offices, and RIAs, as well as the unique industry dynamics driving this trend.

Main Themes & Purpose

• Investigate why family offices have quintupled ("5x’d") their allocation to alternative investments (alts) in recent years, while RIAs are still lagging.
• Deep dive into the operational complexity that inhibits RIAs and individuals from further adoption of alternatives.
• Explore the rise of fintech and AI-driven solutions (especially Unlimited AI’s new platform) to address information asymmetry, workflow, and reporting difficulties.
• Discuss the future of private markets as individual investors, rather than large institutions, increasingly define the landscape.

Key Discussion Points & Insights

1. Operational Complexity as the Core Barrier

• Complexity is the Top Hindrance:
  Across every industry survey, 40–50% of RIAs cite operational complexity as the main reason for not increasing alternative allocations.

  • "Operational complexity is the number one hindrance they have to their private markets." (B, [00:14])

• Why Complexity Matters:

  • Leaving “alpha” (excess returns) on the table for clients; the gap between the Yale endowment model (40% private allocations) and average HNW investors (2–5%) is massive ([00:42]).
  • Client demand: If advisors don't provide access, clients will find it elsewhere — "They're learning about these alternatives... and they're learning that they're losing alpha in the market. They’re not going to be very happy." (A, [00:42])

• Institutional vs. Individual Investors:

  • Institutions used to have large staffs and could afford six-figure tech platforms. Today's family offices and RIAs cannot.
  • Private markets have seen double-digit growth among RIAs even in less favorable (bearish) years.

2. Anatomy of the Complexity Problem

• Four Buckets of Complexity ([07:34]):

  1. Access Complexity: Difficulty in finding, evaluating, and accessing deals due to regulatory marketing limitations and high minimums.
  2. Legal/Regulatory Complexity: Massive, impenetrable legal docs (PPMs, LPAs), lack of investor familiarity with legal nuances; "most LPs admit they don’t even read them" (B, [07:34]).
  3. Reporting Complexity: Tax reporting is delayed (K-1s arrive late), performance statements are non-standardized, and there’s little transparency on valuations.
  4. Liquidity Complexity: Uncertainty of capital calls, exit timing, and valuation on exit.

• Despite This…

  • Boom in Alternatives:
    “In the last five years, family offices by some counts have quintupled their alt allocations…It’s still seen double digit growth in allocations in the RIA space.” (B, [09:34])

3. Solutions: Technology and AI as the Great Enabler

• AI’s Role:

  • Can “level the playing field” between heavyweight GPs and smaller LPs by extracting, structuring, and analyzing vast swathes of unstructured fund data ([13:12]).
  • "It's what you do with it. You integrate that, you make it queryable, you can chat with it... and you have much more deep, much more integrated performance data." (B, [13:12])

• Due Diligence Management as the New Frontier:

  • Despite advances in access and onboarding, due diligence remains slow, fractured, and a primary obstacle ([15:01]).
  • AI can turn "scavenger hunt for documents" into a unified, queryable, and comparative process; even supporting insight into decision-making patterns (e.g., “Do I make better investments on Mondays or Thursdays?”) ([15:01]).

• The Need for Unified Platforms:

  • Advisors want an end-to-end platform, not a patchwork of disconnected portals: "You have to create the... unified platform. We want something that we can stay in one place and make a lot of decisions and really track investments throughout that life cycle." (B, [17:06])

4. Capital Flows and Psychology of Money

• Why so much capital is entering the market:

  • Investors crave lower volatility and differentiation from public markets, not just outperformance.
    "People investing their own capital care a lot more about the volatility of their money... They don’t want to watch their net worth whipsaw every day based on news they see.” (B, [18:02])

• Empirical Outperformance:

  • S&P 500 has been outperformed by private equity and venture capital by 350–400 basis points annually, compounding significantly over time ([19:24]).

• What’s Holding RIA Adoption Back?

  • Knowledge gaps, lack of tools, and a steep learning curve.
  • Education and confidence are key:
    "When they do have better tools to do it, they're going to feel a lot more confident. It's that simple." (B, [20:00])

• Advisors Being Pulled by Clients:

  • Demand is increasingly client-driven: "My clients are doing these certainly in the high net worth space and ultra high net worth space. They're asking you to report on them. They're saying, I'm doing real estate deals with my friends." (B, [21:44])

5. The Future: Standardization, Transparency, and Breaking Down Silos

• To get to the predicted $150 trillion private markets, both the GP and LP sides need to embrace transparency and standardization:
  _"We need more standardization, we need more transparency. We live in an era where the private markets still operate largely like they did 10, 20, 30 years ago. That's got to change." (B, [23:11])
• The LP side (family offices, individuals, RIAs) needs more community and advocacy, not just tools; markets remain highly fragmented by design ([24:38]).

Notable Quotes & Memorable Moments

• On Complexity as the #1 Problem:
  • "Operational complexity is the number one hindrance they have to their private markets." (B, [00:14])
• On the New Client-Driven Dynamic:
  • “What a lot of people don’t realize is people are doing alternatives… Advisors had to realize that. They're saying, my clients are doing these certainly in the high net worth space and ultra high net worth space. They're asking you to report on them.” (B, [21:44])
• On AI’s Transformative Role:
  • "There are so few industries that are more ripe for disruption than the private markets with AI... It really is going to change the way we do things." (B, [13:12])
• On the Need for Better Tech:
  • "You have to have a platform that is open such that you can report on all of that in one place. So that's one of the reasons why we think consolidated balance sheet reporting is so important at the LP level." (B, [22:28])
• Announcement of Unlimited AI’s Launch:
  • "Today Unlimited AI is live... our mission as a company is to empower limited partners in their private markets portfolios." (B, [24:52])

Timestamps for Key Segments

• [00:14] – Complexity as obstacle; survey data
• [01:19] – Why the issue matters for RIAs and their clients
• [02:18] – Guest’s background and passion for solving alts complexity
• [05:19] – Four buckets of complexity in private markets
• [09:34] – Rapid growth in alts despite complexity
• [13:12] – How AI solves information asymmetry in private markets
• [15:01] – Due diligence management and new AI-driven workflows
• [18:02] – Psychology of money, volatility concerns, and why capital is flowing to alts
• [19:24] – Empirical outperformance: Private equity vs. S&P 500
• [21:44] – Advisors being pulled by client demand
• [23:11] – Industry future: standardization and transparency
• [24:52] – Launch announcement for Unlimited AI platform

Conclusion

The episode paints a vivid, data-supported picture of the alternative investments boom among family offices and the reasons why RIAs are still catching up. Core barriers like operational complexity, reporting headaches, and due diligence delays are increasingly solvable through new technology — most promisingly, AI. The future of private markets will hinge on how quickly industry players can break down legacy silos and democratize sophisticated tools for every investor, not just the biggest institutions.

For those who want to explore more, Unlimited AI has launched as of this recording, aiming to solve exactly these problems for family offices and eventually for RIAs as well.