There's some of that, but there's also magical thinking - that there's some great financial product out there just for rich people like them that will make them even richer.
There are, but most aren't rich enough! Proper private equity and the like, but we are talking minimum $20M, and preferably $100M+. The private equity us poor schmucks can buy bundled up in a fund or trust is usually the leftovers.
There are plenty of other direct investments we can't access.
I disagree.
There are certainly hedge funds which have minimums of $500k to several million but (and this is the really important part) - they don't perform any better than all the various index funds, target retirement funds, and actively managed funds that us 'poor souls' can afford. 3-decades-or-so ago the average investor couldn't buy many stocks (or any stocks without a high-price broker); now they're all available.
what those hedge funds with the >$500k minimum do offer is hand-holding, fancy dinners and direct phone calls. These clients know their manager and they expect their manager to know them and to return their calls and to meet with them on demand at a nice restaurant to talk about 'wealth-management strategies' and 'mitigtating downslope risk,' which these guys are more than happy to do for ~1%/yr of a $1MM+ account.
PSA:
https://www.atominvest.co/
Invest in private equity, venture capital, private debt, real estate, hedge funds, with smaller investment sizes of $100,000+.
...
I'm not doubting that there are funds which have investment sizes far beyond us 'normal people' (see above).
I'm objecting to the idea that these funds offer investment opportunities that are somehow unavailable to your average middle-class investor, albeit with another company/fund/package or series of ETFs.
I bring this up because I think it is a pervasive myth that rich people somehow have access to investments which somehow give out-sized returns and lower risk. I have yet to see any hard data showing this is the case, and I have two close friends who work for funds with account minimums at $250k.
In sum my position is this: People with $5MM to invest do not have 'better' investment options than someone with $50k, they just have more full-service funds available.
Correct.
One branch of my dad's extended family is very rich through hard work etc. But they secured a windfall a few years back when a foreign company bought the business. As a result each family member has net worth from USD 5-20M. Thus they opened a family investment office in the UAE (not where they live), run by one of the sons, a Harvard-MBA-grad. That's his first job out of grad school. I asked him why he turned down offers from Wall Street, he said he had to manage this windfall. (My guess is that silver-spoon boy doesn't have the
cojones to work for not-family.)
There's a pervasive thought that rich families require a family investment office to handle this money, as it has to be 'actively managed' otherwise it may run away. Fucking green soldiers can mutiny, damn bastards! "When there's a lot of money, we need to invest in hedge funds and private equity and IPOs and exotic investments as we're at a higher <asshole> level."
Meanwhile, I have 2 friends who work at a local family investment office which oversees over USD 100M invested. One friend had some issues with database reports, excel, etc. She came over with her laptop, and while helping her, I got to see what they invest in (didn't get to see names of investors). It was a mix of mostly active mutual funds, blue chip stocks, and Treasury Notes/Bills/Bonds.
Let the myth propagate like a STD. You can't change the minds of people who have more money than you. And one can get full service with VG Flagship status or the Schwab/otherfundco equivalent.
It will be interesting to meet atominvest-cousin and familyoffice-cousin in a couple of months. There will be some drinking-and-bragging-sessions. Let the good times roll...