Advisors and securities lawyers are raising a collective eyebrow at a big push now underway by large firms and regulators to make private equity and other alternative investments more accessible to retail investors. Top industry watchdogs showed a general inclination to allow more ordinary investors to put their money into the sort of private funds that once were more or less the exclusive preserve of large institutions and the extremely wealthy. Natasha Vij Greiner, the director of the SEC’s investment management division, noted that many types of private equity, private credit and hedge fund opportunities remain open only to so-called accredited investors or qualified purchasers. Greiner suggested opening up private market opportunities to investors beyond those in those two categories. Adam Gana, the president of the Public Investors Advocate Bar Association, said the opaque nature of these products, and the barriers investors have to pulling money out, make them ripe for abuse. Erik Nero, the founder and president of First Step Wealth Planning, noted that the high returns many times promised by private investments are often eaten up by high fees charged to investors. Alternative assets should remain more or less exclusive to clients who can afford to pay the associated costs, Nero said. “Retail investors will not miss out on anything, as they will not be able to experience the returns due to the fee structures,” he said. “Making private markets available to retail investors will only benefit the firms offering the products to them.” Alex Caswell, a financial planner at Wealth Script Advisors said there are many reasons private markets can “create a dangerous environment for an investor. Most importantly, the lack of liquidity is something that I think even advisors don’t pay close attention to when it comes to choosing private investments,” he said. Morgan Stanley CEO Ted Pick said many of his firm’s clients’ portfolios are “underweight” in alternative assets like private equity and credit. Now hovering around 5% of the firm’s assets under management, the allocation could easily be increased to 15% or even more, Pick suggested. Pick said the SEC is now reviewing a proposal for a “fund of funds” Morgan Stanley wants to start offering to accredited investors as a way to give them greater exposure to alternatives. Pick said Morgan Stanley is positioning itself as an expert in the “distribution of alts in a different way, in a diversified way, to clients.” Greiner and other regulators called particular attention to how a type of investment vehicle known as a closed-end fund can be used to provide exposure to private markets. Unlike open-ended funds, whose managers can issue and buy back their own shares as much as they want, closed-end funds issue shares only once. They also have greater latitude to borrow money with the goal of boosting returns for investors but come with higher risks as a result.