“Advisors should start with a liquidity budget, not a target allocation,” he said. “That means identifying near-term spending needs, emergency reserves, required distributions, potential capital calls, lockups, redemption terms, and the client’s behavioral comfort with not being able to access capital during market stress.”
From there, the allocation should be stress-tested against the client’s broader financial plan.
“The right question is not simply ‘how much can the client allocate?’ but ‘how much illiquidity can the plan comfortably absorb?'”
The suitability problem and the misconceptions behind it
As access has expanded – through interval funds, evergreen structures, and lower investment minimums – suitability has become the central challenge. “As access has expanded, suitability has become more important, not less,” Griggs said.
Private markets, he explained, are generally well suited for clients with stable liquidity needs, a long investment horizon, sufficient portfolio size to diversify across managers and vintages, and the ability to remain committed when pricing is less transparent or exits are unavailable. That profile does not describe every high-net-worth client, let alone mass affluent investors newly entering the space.