Don Calcagni may be Mercer Advisors‘ chief investment officer, chairing the $115 billion RIA’s committee that stewards its wealthy clients’ money, but he also helps oversee Aspen Partners, the firm’s two-year-old proprietary private markets fund-of-funds platform for its wealthiest clients.
Aspen Partners represents a shift in the industry: that a sufficiently large registered investment adviser can act as its own general partner—sourcing, underwriting and managing institutional-grade private equity, venture and credit exposure in-house—rather than routing client capital through intermediary platforms like iCapital or CAIS. It’s a bet a growing cohort of RIAs, Mercer among the largest, are increasingly willing to make, as scale economics let them hire the private markets talent, and command the service-provider relationships, once reserved for institutional allocators and multi-family offices.
Denver-based Mercer’s ultra-high-net-worth clients were already paying an advisory fee, and much of the private markets access available to them was ad hoc, expensive, and had inconsistent due diligence. Standing up an in-house GP entity run by Mercer employees with its own investment committee lets the firm negotiate directly with managers, strip out a layer of fees, and apply the same institutional rigor to sourcing and underwriting that pensions and endowments use, according to Calcagni.
The following conversation was condensed and edited for clarity.
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Don Calcagni
PitchBook: Why does it feel like RIA-run, proprietary fund-of-funds vehicles are becoming more common now, when they weren’t a few years ago?
Calcagni: Part of it is that you’re now seeing truly institutional-caliber RIAs emerge. Mercer manages about $115 billion, which is bigger than most firms in the industry, and that scale lets us build relationships with providers like Deloitte and Paul Weiss for fund formation and hire dedicated, professionally trained private markets people. You didn’t see that before because these firms were subscale. That’s the void iCapital and CAIS filled for the smaller RIA and the broker-dealer channel.
Second, you’re seeing fintech platforms like Opto Investments (Mercer’s technology partner) and Arch offer RIAs turnkey solutions where they can stand up their own fund-of-funds and just plug in.
Why build your own vehicle rather than partnering with a platform like iCapital or CAIS?
We observed that a lot of fund-of-funds structures get stuffed with mediocre GPs and layered with a 1-and-10 or 1-and-15 fee on top.
Our view was: We’re already charging clients an advisory fee, so we don’t need to double-dip. We don’t charge a separate management fee or carry to run the fund. Clients pay us to source, underwrite and manage a diversified allocation of roughly six to eight LP interests, full stop. And because we’re pooling capital across our client base, we can negotiate our own economics directly with GPs rather than paying rack rate.
Who is this vehicle actually built for?
It’s not the only way our clients access private markets. Our ultra-high-net-worth families, with a large enough mandate, get direct, multi-vintage allocations we build individually for them.
The fund-of-funds structure is really built for that $10 million to $50 million investable-asset client. High-quality GPs typically have $1 million to $5 million minimum tickets, and a client in that window can’t build a properly diversified, multi-vintage private markets allocation on their own. That’s the segment we were trying to serve.
How much capital has come into Aspen Partners, and how do you think about measuring that?
We raised $100 million in the first year, and we’re launching the next vintage now.
But that’s not really how we measure success. A PE manager would point to fund size as the metric. We look at it at the household level: About 325 families have collectively entrusted us with roughly $3 billion in total capital. That’s the relationship we’re protecting—families who could have taken their wealth elsewhere if we hadn’t built this.
Why would a GP want capital from a vehicle like yours over other sources?
The RIA channel is growing rapidly, while a lot of institutional LPs have gone quiet until they see distributions again. We’re a more reliable, recurring provider of capital than, say, a pension fund that’s effectively a client of one.
Where we might surprise GPs is the depth of our diligence. We’ve hired people who came directly from private equity and venture, and our process, an 80-question RFP with full data-room access, tends to catch firms off guard. Some of them are used to wealth management being easy money.
Beyond writing the check, what value do you provide a GP as an LP?
We’re basically their investor relations team. A GP doesn’t have to field calls from 300 individual LPs—they get one Form 1099 from us. Look at what’s happening right now in software-oriented private credit: Because we manage our clients’ whole balance sheet, with liquidity planning and other allocations already in place, our clients aren’t panicking and trying to redeem. If I’m a GP, Mercer Advisors is one client that makes my life a lot easier.
