The key innovation of evergreen funds for individual investors isn't just liquidity, but the upfront, fully-funded structure. This removes the operational complexity of managing capital calls and distributions—a major historical barrier for even wealthy individuals who found the process too complicated.

Offering daily liquidity while pursuing a multi-year investment strategy creates a dangerous duration mismatch. When investors inevitably demand their cash during a downturn, the long-term thesis is shattered, forcing fire sales and destroying value. A fund's liquidity terms must align with its investment horizon.

For moderate-risk, ultra-high-net-worth clients, Goldman Sachs advocates a surprisingly high 27% portfolio allocation to alternatives. The main challenge is implementation, so the firm uses proprietary "commitment planners" to help clients methodically invest capital annually, ensuring diversification across vintage years, strategies, and managers.

Institutions must manage four primary risks: failing to meet liabilities (shortfall), path-of-return volatility (drawdown), access to capital (liquidity), and the reputational risk of underperforming peers, which Matt Bank calls “embarrassment risk.” This last one is often the most delicate and hard to quantify.

To solve the critical illiquidity problem for individual investors, Goldman Sachs operates a proprietary, quarterly secondary market developed over 20 years. This platform allows its wealth clients to list and sell their alternative investment positions, transacting over a billion dollars in NAV annually and providing a crucial liquidity solution.

In the early 2000s, when hedge funds operated like opaque family offices, Frontpoint Partners gained an edge by providing institutional-grade transparency. They offered detailed reporting on holdings, risk contributions, and processes, making institutions comfortable by speaking their language and demystifying the alternative investment 'black box'.

While client education is important, Goldman Sachs identifies financial advisors as the primary bottleneck for growth. Many advisors outside the ultra-high-net-worth space lack knowledge on alternatives, making comprehensive advisor education paramount for broader market penetration and successful product distribution.

While retail investors may demand daily pricing for private assets, this eliminates the "hidden benefit" of illiquidity that historically forced a long-term perspective. Constant valuation updates could encourage emotional, short-term trading, negating a core advantage of the asset class: staying the course.

Just as 1700s British aristocrats had lower life expectancies from accessing ineffective but expensive "quack" medicine, today's wealthy investors can access complex financial instruments that often act as financial poison. These products peddle hope but can dramatically increase the odds of ruin, a danger unavailable to ordinary investors.