Finance
Appetite For Alternative Assets Grows In Private Banking
Wealthy investors are expected to look beyond stocks and bonds, prompting private banks to expand offerings and expertise.
Publicly traded stocks and bonds have been great investments over the last 15 years, but wealthy investors are increasingly looking for alternatives to what the public securities markets offer them.
Whether from fear that public stocks are overvalued, that inflation will rise again, or that market volatility will increase going forward, wealthy investors want a change from the traditional.
Private banks are gearing up to help provide alternatives.
“Historically, [private investors] have been under-allocated to alternative assets compared to institutional investors, but we’re seeing a strong rise in demand,” says Mark Sutterlin, head of alternative investments at Bank of America Private Bank and Merrill Lynch. “We think most of our clients would be better off with an alternatives allocation around 25%.”
That would represent a huge shift in investing behavior for high-net-worth (HNW) investors. According to a 2023 report from consulting firm Bain & Co, ultra-high-net-worth investors and family offices with more than $30 million in assets already have 22% of their wealth invested in alternatives. But those with $5 million to $30 million in assets allocate only an average 3% to alternatives and those with $1 million to $5 million just 0.7%.
With individual investors and family offices holding more than half of the $289 trillion in global assets under management, that represents a huge, largely untapped pool of capital for alternative asset managers. It also represents a major challenge for private bankers aiming to help their HNW clients navigate new investment markets.
Preqin, an alternatives research firm, is forecasting that alternative assets under management—including private equity and credit, venture capital, hedge funds, real estate, and infrastructure investments—will rise from $16.8 trillion at the end of 2023 to $29.22 trillion by the end of 2029. Increased fundraising from private banks, family offices, and individual investors is expected to fuel the growth.
While Preqin is forecasting growth in all segments of the alternatives market—including hedge funds, which suffered an abysmal 2022 when both stocks and bonds took double digit losses—private equity and credit are the hottest markets.
“There’s been a tremendous amount of interest in private equity and private credit all along the wealth spectrum,” says William Whitt, analyst with Datos Insights who focuses on wealth management. “I expect the strong demand will likely last a couple more years as long as the economy stays healthy.”
Kinder, Gentler Offerings
Fueling the demand are kinder, gentler investment offerings from private asset managers.
“The preeminent sponsors recognize the opportunity and have become better partners with investors,” says Sutterlin. Large firms like Blackstone Group, KKR & Co, and Apollo Global Management have launched funds with smaller investment minimums, lower fees, greater transparency and even a degree of liquidity (see sidebar). “Investors are getting better access to the best strategies on better terms. Everything is changing in favor of end investors.”
Some banks are launching separate entities to help shepherd investors into private markets. Deutsche Bank launched DB Investment Partners just over a year ago to give institutional and HNW investors access to private credit investments. With floating interest rates, these vehicles have been in high demand for the last several years. DB Investment Partners operates independently and Deutsche is retaining its existing private credit business.
While the demand for alternatives is most developed in North America and Europe, Asia too is trending alternative.
“We’re seeing much more demand from our clients across the spectrum of alternative assets,” says Chee Jiun Wen, head of alternative investments at Bank of Singapore. “It’s not just about reducing risks but generating alpha and accessing opportunities you can’t get in the public markets.”
The bank, formerly known as ING Asia Private Bank, has been hiring people with institutional backgrounds and experience in alternatives markets. Its roughly 500 relationship managers get in-house training on alternative asset classes and how to incorporate them into client portfolios.
“We’ve been able to expand the investment universe for our clients and provide access to more investment solutions and investing strategies,” says Chee.
The bank is doing the same for its financial intermediary clients. Last year it launched a digital platform in partnership with global fintech firm iCapital that provides independent asset managers (IAMs) with access to over 1,600 funds from 600-plus firms. The site also offers research and tools for due diligence and reports and performance updates on fund investments.
“We’re a first mover in this space in Asia,” says Chee. “We’re giving IAMs the power to pick and choose the managers and investing strategies that make sense for their clients.”
A Key Differentiator
For private banks, helping wealthy clients increase their exposure to alternative assets smoothly and successfully will be a key differentiator in the wealth management industry going forward. While most have experience investing in alternatives for their wealthiest clients, the scale of the expected shift into alternatives in the HNW client space will be a major challenge for firms.
“There is a huge opportunity in private wealth, but banks need to be prepared for the growth,” says Trish Halper, CIO in the family office practice at Northern Trust. Halper’s clients have been investing in alternatives for decades with average allocations between 30% and 50%. “Family offices were early adopters in the alternatives space and high-net-worth investors are now catching up.”
The workload for financial advisors is significantly heavier with private market assets than with publicly traded stocks and bonds.
“The dispersion of returns is much wider in private markets than in public markets, which makes manager selection really important,” says Halper. “Banks need to devote enough resources for strong due diligence because access to information and data is much less in the private markets.”
The sourcing of quality investments is just the beginning. Private asset portfolios need to be diversified across sectors, vintages, and financial sponsors to reduce risk; the investments and the asset managers themselves need to be monitored; capital call obligations must be executed; and distributions need to be managed when investments mature.
“There are a lot more operational and administrative tasks involved in private investments,” Halper notes.
The growth in alternative asset markets represents a major shift in the private banking landscape. Banks across global markets are investing in technology and talent to handle the transition and to ensure that alternatives allocations help to optimize clients’ portfolios and meet their financial goals.
“The capital markets have evolved,” argues Bank of America’s Sutterlin. “For investors who want a truly diversified portfolio, if they’re not invested in private markets in both equities and fixed income, they’re not in a big part of the capital markets now.”
For a company navigating one of the most consequential transformations in its history, financial clarity is not optional—it is essential. Natura &Co, the Brazilian personal care and cosmetics group behind iconic brands such as Natura and Avon, has long been committed to combining purpose-driven business with commercial performance. After a period of strategic portfolio reshaping, including the divestiture of its Aesop and The Body Shop holdings, the company is now sharpening its focus on profitability and operational excellence across Latin America and global markets.
At the center of that effort sits a deceptively complex challenge: understanding, in real time, which revenue and cost factors are driving or eroding gross margin across a highly diversified business. For years, answering that question meant manual reporting, delayed insights, and finance teams spending valuable time on data gathering rather than analysis.
That’s now changing, thanks to a co-innovation initiative developed together with SAP and Numen, a global SAP partner specializing in digital transformation and enterprise software implementation.
From manual reporting to proactive decision intelligence
The project’s goal was to replace a labor-intensive gross margin analysis process with a generative AI application embedded directly into Natura &Co’s financial workflows. Built on SAP Business AI Platform, SAP’s unified foundation integrating business technology, data, and AI capabilities, the application connects directly to data in SAP S/4HANA to provide finance teams with automated insights and narrative recommendations in real time, without the need for manual data pulls or offline reporting.
The application enables users to explore revenue, cost, and margin drivers interactively, identifying at a glance which elements are protecting or eroding margin performance across markets and product lines. Crucially, human oversight remains central to the design: the AI application generates insights, while finance professionals retain full control over interpretation and decisions.
“The implementation of gross margin analysis using AI in SAP S/4HANA marked an inflection point in the analytical capability of our finance area,” said Rogério Dias Garcia, tech manager, ERP Latam, Natura &Co. “We overcame delays and raised the standard of insights by integrating margin analysis from SAP S/4HANA with a large language model connected via the SAP AI Core layer. This architecture allowed us to provide, in an agile, secure, and completely anonymous manner, a stratified and precise view of gross margin offenders and protectors—discriminating exactly which revenue or cost elements were driving market performance.”
A collaborative architecture for scalable AI adoption
Natura &Co’s application derived from a prototype SAP partner Numen created in early 2024 at SAP’s global Hack2Build on business AI, leveraging the generative AI capabilities of SAP Business AI Platform. The solution was designed and developed through close collaboration between Natura &Co, Numen, and SAP. From the outset, the approach was to align AI adoption with concrete business priorities, ensuring the application would be scalable and production-ready rather than a standalone prototype.
Numen brought deep SAP implementation expertise to the project, combining knowledge of SAP S/4HANA architecture with hands-on experience in building solutions on SAP Business AI Platform. The technology stack—SAP S/4HANA, SAP AI Core, SAP Fiori, and SAP Business Technology Platform—provided the secure, integrated foundation needed to connect financial data with generative AI capabilities in an enterprise context.
“SAP enabled the transformation by providing the technological foundation and expert support,” said Carlos Aravechia, head of Data Design & Intelligence at Numen.
The success of the project has validated a broader conviction at Natura &Co: that generative AI, embedded directly in ERP workflows, can fundamentally reposition finance from a transactional function to a strategic business partner.
A blueprint for other businesses
The Natura &Co project demonstrates a pattern that other organizations can replicate, particularly those running SAP S/4HANA. The combination of structured ERP data with the contextual reasoning capabilities of large language models creates a foundation for decision intelligence that goes well beyond traditional business intelligence tools.
The project was built within a six-month co-innovation sprint and went live in August 2025. It is currently in use across Natura &Co’s Equador operations.
Looking ahead, Natura &Co is already planning the next phase: integrating Joule Agents to further automate the extraction of standard analytical content and deepen the AI-driven optimization of financial processes.
“The success of this initiative validates the transformative potential of embedded AI within our ERP,” Dias Garcia noted. “We are now ready to move forward—deepening these insights and integrating the capability of Joule Agents to maximize the extraction of standard content and further optimize our business decisions.”
For SAP customers evaluating how to move from AI experimentation to AI in production, the Natura &Co project offers a concrete, replicable model: start with a high-value, well-defined business process, embed AI directly into existing workflows, and build in human oversight from the start.
A girl from a disadvantaged rural family in central China topped this year’s gaokao, attracting numerous live-streamers eager to finance her education, which she declined.
The home of 18-year-old secondary school graduate Han Yaping in a Henan province village was recently bustling with live-streamers.
This attention came after Han achieved an impressive score of 699 out of 750 in the gaokao, China’s national college entrance exam.
She has received offers from China’s two leading universities, Tsinghua University and Peking University.
Han’s accomplishment is particularly remarkable given her family’s impoverished circumstances.
Her mother suffers from ankylosing spondylitis, an inflammatory arthritis affecting the spine, preventing her from working. Her father, who earns a living through farming and odd jobs, serves as the family’s sole provider. Han also has a younger sister.
The UK’s Financial Conduct Authority (FCA) published a landmark review on Monday that proposes recommendations to regulate the impact of artificial intelligence (AI) on the financial decisions made by consumers.
The review, titled the Mills Review, anticipates that both consumers and firms will start delegating “more financial decision-making to AI systems,” including for agreements, initiating transactions, and executing decisions “within agreed parameters.” One of the key findings of the review outlined that while AI can help bridge advice gaps and “support growth,” there remain risks “associated with fraud, cyber security, and consumer harm.” Conducting the review, Sheldon Mills highlighted that “AI can also amplify risks: bias, discrimination, exclusion, opaque decision-making (particularly when multiple AI models interact), misleading or hallucinatory advice and erosion of consumer trust.”
The review stated that presently, one in five adults in the UK are “already open to AI making decisions for them,” particularly when decisions feel “complex or high stakes.” It found that roughly 26 percent of the population “trust general-purpose tools such as ChatGPT, Claude or Gemini for financial advice” with little awareness that such platforms provide no “formal routes to recourse” or protections.
Overall, the Mills Review identified four areas that it anticipates will be impacted by AI in the financial sector: “the transformation of firms,” “new consumer journeys,” “a reshaped competition landscape,” and “amplified financial crime and cyber risk.” The FCA projected the shift in how consumers and firms consult AI to take place by 2030.
The Mills Review put forth seven “priority” recommendations to be considered by the FCA Board. It recommended that any transitions to autonomous AI models be monitored and that regulatory frameworks and perimeters be adapted and secured. The review called for the strengthening of “system-wide coordination and oversight,” the scaling up of the FCA’s AI Lab to enable it to support AI models and innovation for agentic finance, and an “AI-enabled agentic supervisory model” to be built and adopted. Finally, it recommended that a trusted “public-interest AI-enabled financial capability service” be developed.
The FCA announced, in the press release, that it will launch an AI “good and poor practice publication” in late 2026.
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