Amid the flood of new structures, strategies, and fund launches labeled “alts,” advisors face a deeper challenge—cutting through marketing noise to build durable, outcome-oriented portfolios. At Fiduciary Trust International, Erick Rawlings, Head of Manager Research, leads a methodical effort to do exactly that. He and his team approach alternatives as essential building blocks, not side bets, integrating private equity, hedge funds, and real assets with clear intent and expectations.
In an interview with The Wealth Advisor’s Scott Martin, Rawlings discussed how his team frames and sources alternatives, why manager selection is a nonnegotiable, and what advisors need to evaluate before recommending illiquid assets to clients.
Starting with the Asset Class, Not the Hype
Alternatives can mean many things—but Rawlings and his team define the universe with discipline and intentionality. He breaks the asset class into three core categories: private equity, private real estate, and hedge funds. Each category serves a distinct purpose within client portfolios, and each demands a different level of liquidity, timeline, and strategic fit.
“When we talk about alternatives, there really is a wide variety beneath that surface,” says Rawlings. “As you’re going through that, there’s an ebb and flow of opportunity sets within those categories.”
Private equity allocations aim to deliver equity-like returns but provide access to exposures that are difficult to replicate in the public sphere. “We get access to unique exposures that you can’t really gain in the public market,” says Rawlings. “So, think about early-stage investing, seed-stage investing, distressed, control premiums through buyout.”
Real estate, meanwhile, plays a different role. Rawlings notes that the market has shifted, and his team currently finds value on the debt side of the real estate capital structure. “We think real estate debt is still an attractive area to play in,” he says.
Hedge funds, in contrast, are positioned as a stabilizing force—focused on absolute return, low beta, and low correlation—serving as a complement to traditional fixed income. “That’s been a nice offset to some of the volatility that we’ve seen across the rate structure over the past three years now,” observes Rawlings.
Advisors must ensure each allocation has a clearly defined purpose within the portfolio. Without that discipline, alternatives are often miscast as high-octane alpha generators, rather than strategic tools for targeted outcomes.
“When we say alts and alts are this mysterious thing that’s supposed to solve all troubles and challenges in a portfolio, that’s really not the case,” he says. “They are tools in constructing a portfolio to help a client meet their objective, and with as little deviation on that path as possible.”
Aligning Portfolios with Client Intentions
Alternatives may offer compelling benefits, but they come with complexity and commitment. Rawlings stresses that before discussing products, advisors must assess whether clients are mentally and structurally prepared for the long haul.
“A client can have the ability to invest in alts, but is there the willingness behind that?” Rawlings asks. That distinction becomes especially critical in private equity, where holding periods stretch far beyond typical investment horizons. He draws a sharp analogy to illustrate how different strategies demand different levels of investor commitment. Public equity and fixed income? “That’s sort of like dating.” Hedge funds? “Serious dating.” And private equity? “Marriage.” He continues, “If you’re going to make a commitment, you are probably going to be in this thing for 10 years. So, the mentality and intention behind those allocations need to map to that commitment.”
Private equity’s long duration requires both emotional and financial discipline. More important, it amplifies the impact of manager selection. Rawlings points out that return dispersion across managers in private markets is often much wider than in public markets—raising both the risk and the opportunity.
Dispersion across private equity managers, especially in venture and buyout, can lead to dramatically different outcomes. While the difference between top-quartile and third-quartile public equity managers is typically just a few percentage points per year, he notes, in private markets, that spread can reach 30% in buyout and as much as 60% in venture capital. In fact, third-quartile venture managers have historically returned close to 0%, while top-quartile peers may compound at 60% annually.
Understanding the stakes, Rawlings sees his team’s job as more than just sourcing exposure. Their role extends to helping advisors and clients fully understand the structure and purpose behind each commitment—especially in strategies where long holding periods create added complexity.
“Our job is to help not only walk the client through, but what does it mean to commit to this allocation? But also, then, to make sure we execute and achieve the objective of that allocation, knowing that it can be a minefield out there,” he says.
The implication is stark: manager selection is not a back-office task—it directly affects long-term outcomes. Advisors who recommend private strategies without rigorous diligence risk tying client capital to underperforming managers for a decade or more.
Process-Driven Due Diligence
Fiduciary Trust International takes the challenge of manager selection seriously. Rawlings leads a dedicated team of 10 that focuses on sourcing managers with institutional processes and repeatable strategies.
“For us, we are really focused on process,” he says. “So, this is as true for looking at a public manager as it is for a private manager. What does the manager do? How do they source what they do? What do they do with the asset or the company when they own it? How do they sell it? Why would they sell it?”
The team looks for managers whose strategies align with well-defined investment theses and whose portfolios reflect those convictions. “The intention is to have very clear expectations upfront of what this manager is, what their process is, and what it is that they’ll tend to own,” explains Rawlings. “And then us saying, Yes, we think we have conviction behind that, and we want to gain exposure to those types of companies.”
Notably, Rawlings does not view performance as a stand-alone credential. “A track record is the byproduct of a process,” he says. “I can’t buy the track record. If I could, my job would be really easy because I would just download a universe, sort by return, and say, ‘Well, pick that one.’ I can’t do that.”
For his team, manager selection starts with understanding why results occurred and whether the underlying process is structured, consistent, and built to withstand future cycles—not simply chase what worked last time.
Debunking Myths and Managing Expectations
Advisors may understand that private strategies involve illiquidity, but many still underestimate the behavioral and operational challenges tied to long-term commitments. Misconceptions persist around liquidity, manager performance, and timeline.
Rawlings cautions against assuming that just any exposure to alternatives is sufficient. “The most eye-opening aspects are, one, that return dispersion of, ‘Oh, yeah, I do private equity, and I did this manager.’ Okay, that’s a start. Why did you pick that one?” he says. “And then the longevity that these asset classes can have tied to them.”
Liquidity-structured products like interval funds may appear to bridge that gap, but Rawlings urges a sober assessment. “Obviously, there’s been progress and trying to limit that liquidity penalty, I guess we’ll call it, with the interval funds and the growth of those in the marketplace. But even then, those can belie the underlying illiquidity in a particular environment,” he notes. “So, a caveat: just because you have the ability that’s step one, but really checking to make sure that you have the willingness to invest in these asset classes, and to do it in a regular and consistent basis, knowing and having that belief in what they do and what they can provide to that portfolio.”
Alternative allocations require more than just technical eligibility. Client intentions, risk tolerance, liquidity needs, and commitment level all need to be mapped to the realities of the strategy. Without that match, the portfolio risks becoming misaligned.
A Partner in Due Diligence
For firms and advisors lacking in-house alternatives research, Fiduciary Trust International aims to provide institutional rigor but without detachment from client outcomes. Rawlings credits his team’s effectiveness to collaboration and humility.
“We’ve been working together in some instances close to 15 years. So, there’s a well-earned trust amongst the group,” he says. “We think our process is institutional and repeatable in the same way that we expect our managers to have an institutional repeatable process. We think ours is as well.”
Internal discussions often focus not on selling ideas but on challenging assumptions. “When we discuss things, it’s not that we’re trying to convince everybody that we’re right,” Rawlings says. “It’s trying to ask the question, ‘What do I have wrong? What am I missing? Why is this a terrible idea?’”
That spirit of constant self-challenge defines how Fiduciary Trust International approaches research—not as a search for confirmation but as an ongoing effort to prove itself wrong before the market does. Rawlings and his team see this mindset as both essential to manager evaluation and a discipline worth mirroring in advisory practices.
Building with Intent, Not Noise
In a market saturated with products promising differentiated exposure or yield enhancement, Rawlings offers a reminder that alternatives are tools—not magic bullets. Properly deployed, they can help investors achieve their objectives with greater efficiency or reduced volatility. Improperly selected or misaligned with client goals, they can introduce unnecessary complexity and long-term drag.
Fiduciary Trust International seeks to guide advisors through that nuance by asking the right questions and aligning each allocation with clearly defined goals. For advisors navigating private equity, hedge funds, or real asset strategies, having a framework—and a partner—can make all the difference.
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