Former E*Trade CEO: How to open private markets to retail investors the right way—with the benefit of hindsight

Ary·FinanceFormer E*Trade CEO: How to open private to retail investors—with the benefit of hindsightBY Mitchell CaplanBY Mitchell CaplanMitch Caplan

He now serves as interim CEO and chairman of the board at Yieldstreet

At a time when individual meant calling a broker during hours and relying on their recommendations, this simple transaction marked a radical departure

Overnight, nology shifted the balance of power from institutions to individuals, permanently reshaping how the world would interact with

Merrill Lynch’s chairman Daniel Tully captured the establishment’s reaction: “The do-it-yourself model of, centered on Internet trading, should be regarded as a serious threat to Americans’ financial s. ” Some of the skepticism ved well-founded

But by and large, people embraced these new tools and transformed both the market and their financial futures

As CEO of E*Trade at the time, I watched the forces that drove this revolution firsthand

Now, I see the same factors converging in private. (Disclaimer: I currently lead Yieldstreet, which among other things helps retail investors access private. ) We’ve already ven that nology can democratize closed

The question is whether we’ll design this next wave of access—to private —with a greater commitment to serving and tecting the average investor

What’s driving the trend

First, low-cost, accessible investment vehicles are emerging

Just as ETFs and index funds dramatically lowered barriers to stock market participation, new fractional ownership models and specialized funds are making private assets available at lower minimums

Second, nological infrastructure is catching up

Third, investor education is evolving alongside access

When E*Trade and Schwab opened the doors to trading, they created a massive knowledge gap

The Motley Fool, Investopedia, and countless creators emerged to fill it

Today, asset managers Hamilton Lane and Apollo are building robust educational infrastructure for private, and I expect a similar explosion of independent educators, YouTube channels, and new media platforms dedicated to demystifying these new assets

Fourth and finally, marketing is normalizing what was once exclusive

That same democratizing message is beginning to reshape how we think private

However, entrenched interests are fighting this change harder than they fought electronic trading

The same industry that warned electronic trading would harm small investors now claims private are too complex for ordinary people

Learning from the past The rise of electronic trading expanded opportunity but also created new risks

The dot-com bubble saw retail investors lose trillions as platforms prioritized volume over outcomes, gamifying rather than educating investors

If private open without per guardrails, we risk repeating these mistakes at an even greater scale

The solution starts with purpose-built ducts

Instead of retrofitting institutional vehicles with high fees and lock-ups, we need investments designed for individuals

Imagine target-date funds incorporating private assets for rs with long-time horizons

This transformation is overdue

While retail investors have gained easy access to public stocks, they’ve been locked out of private —where most value creation in the economy occurs

The companies staying private longer, the real estate developments reshaping cities, the innovation happening in venture-backed startups—all of it has been reserved for institutions and the ultra-wealthy

That’s finally changing

This time, however, we have the benefit of hindsight—and the responsibility to use it

The opinions expressed in Fortune

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