By Sean Wilke, Head of Growth Strategy, Americas
The Security and Exchange Commission’s (SEC) March 4, 2026, roundtable on private market valuations and retailization generated plenty of industry coverage. Most of it focused on the high level: governance frameworks, defining accredited investors, valuation consistency. Four structural tensions deserve a closer look, because they’ll determine whether retailization succeeds.
The SEC convened a roundtable on private market valuations and retailization on March 4, 2026 in Washington, D.C. Regulators, fund managers, and valuation experts sat across from each other in Washington, D.C., to speak about governance frameworks, liquidity constructs, and the mechanics of fair value pricing as direct and indirect retail pathways to private markets open up. Chairman Paul Atkins called this shift “reasonable retailization”: the idea that risk alone shouldn’t exclude everyday investors from a $31 trillion asset class that has historically been gated behind accredited investor thresholds.
The industry recaps that followed have done a good job of summarizing the high-level takeaways, but they’ve barely skimmed the surface of the deeper conversations happening in the margins. These are the conversations with direct implications for how fund managers, fund administrators and family offices should operate as retail investors explore private markets.
From our perspective advising firms on SEC compliance, these are the four takeaways that matter most.
#1: Advisors are the real guardrail for retail investors
Beneath the expected discussion about prospectus disclosures and liquidity terms, panelists made something explicit that tends to get glossed over: in a retailized private markets environment, the broker or registered investment advisor is the client’s primary line of defense.
This was called the “intermediation” of retailization, where brokers and wealth advisors are increasingly relied upon to fulfill their fiduciary duties. “Inappropriate selling” was specifically flagged as a regulatory focus area, signaling that the SEC already knows unsuitable sales are occurring and expects distribution channel oversight to be part of how managers address the problem.
The operational implications are significant. A fund manager launching a retail-facing interval fund or tender offer fund must focus on both marketing and risk management by vetting distribution partners, training advisors on product mechanics and liquidity terms, and closely monitoring sales practices. As private markets expand into the wealth channel, we expect the SEC to scrutinize distribution practices with the same intensity it has historically applied to product-level disclosures.
Key takeaway: If a wealth advisor recommends a semi-liquid private credit fund to a client who needs liquidity in 18 months, no SEC rule will catch that in time. But the advisor should.
#2: The secondary market NAV problem is real
Secondary-market net asset value (NAV) transactions often look like this: a fund purchases a private asset on the secondary market at 80 cents on the dollar, a discount that reflects uncertainty about the underlying asset position. Under current ASC 820 accounting, that asset can be immediately marked up to full NAV at the time of purchase.
In an open-ended vehicle with active subscriptions, the implications are uncomfortable. The fund books an instant paper gain and new investors subscribe at a NAV including that markup. Existing investors benefit from the artificial lift, while new investors may be onboarding into an overstated NAV.
During the roundtable, the panelists suggested a fix: rather than recognizing the full discount recovery immediately, amortize it gradually over a defined period. This aligns reported NAV more closely with the underlying economics and reduces the distortion effect on subscriptions and redemptions. For now, though, what’s missing is any formal requirement to do it.
For fund administrators calculating NAV on vehicles that hold secondary positions, this is a live operational question. Our takeaway: document your approach now, before it becomes the subject of an SEC examination.
Key takeaway: Buying at a discount and marking to par is a NAV management tool, not a valuation method. Gradual amortization over a defined period will help smooth NAV impacts.
#3: Charging carry on unrealized gains has entered private equity
Private equity managers have spent forty years building fee structures around a simple premise: carry is earned when you exit at a profit. The institutional LP model (negotiated side letters, co-investment rights, carry crystallized only on realized returns) was designed for patient capital with long time horizons. It worked because both sides understood the game.
But the March 2026 SEC roundtable surfaced an emerging model: some evergreen private equity vehicles are now charging carried interest quarterly or annually on unrealized gains, modeled explicitly after hedge fund incentive fee structures. While traditional private equity (PE) carry is earned when an asset is sold, these structures charge carry on paper gains – positions that haven’t been exited, in portfolios that are harder to value precisely. A manager can collect carry on an asset marked up 20% internally, even if that markup is never validated by an actual transaction.
Layered on top of this is the 15C governance framework, which requires ‘40 Act fund boards to conduct annual fee reviews, benchmark against peer vehicles and push back on outlier compensation. Managers accustomed to LP-negotiated fee arrangements are entering a very different accountability structure marked by board oversight, public disclosure and peer benchmarking.
What does it all boil down to for private funds? Administrative details like fee calculation logic, expense allocation between vehicle types, and board reporting on fee methodologies should all be consistent, documented, and defensible under heightened scrutiny.
Key takeaway: Retail investors will eventually ask why they’re paying hedge fund-style fees on illiquid positions with no reliable mark-to-market. Funds should have a clear answer ready before that question becomes a regulatory inquiry.
#4: Democratizing access isn’t the same as democratizing returns
Some of the questions panelists discussed were deceptively simple. For instance: how do you answer a retail investor who’s asking whether an investment is actually “good”?
Panelists identified manager skill as the primary driver of private asset returns, with access to top-quartile managers as the critical variable. The research on this is consistent: performance dispersion in private equity and private credit is dramatically wider than in public markets. The gap between a top-quartile PE fund and a median PE fund has historically been 10 to 15 percentage points of net internal rate of return (IRR). In public equities, picking the wrong large-cap fund costs you maybe 200 basis points. In private markets, manager selection is the investment.
The underlying structural problem then becomes clear: retail access vehicles being built right now are not democratizing access to the best managers. Blackstone, Apollo, Ares, and other names with the distribution infrastructure and regulatory appetite to build retail-facing products are well-known quantities. But the broader market of interval funds, tender offer vehicles and non-traded real estate investment trusts (REITs) includes a wide range of managers with highly variable track records. A diversified retail interval fund might hold positions from 20 or 30 underlying managers with varying levels of skill. While the ‘40 Act wrapper provides regulatory legitimacy, it doesn’t solve the problem manager selection.
Key takeaway: Access to private markets for retail investors is not the same as access to the returns that made institutional investors want private markets in the first place. For fund managers, this shapes how retail products should be positioned. For family office managers, it clarifies why the institutional access model remains a genuine structural advantage.
What fund managers should be doing next
The March 2026 private markets roundtable was a clear signal: the SEC is moving deliberately toward broader retail access to private markets, and the firms that come out on top will be those that build proactive operational and compliance infrastructure to fit.
We’ve identified five areas that deserve immediate attention:
- Audit your distribution partner risk: Know which advisors are selling your retail-facing products, to what client profiles and with what disclosures. Distribution channel oversight is becoming a compliance function
- Document your secondary purchase accounting policy: If your fund holds secondary positions, your approach to the practical expedient and NAV amortization should be put down in writing before an SEC examiner asks
- Reconcile fee structures and board reporting across vehicle types: If you run both institutional and ‘40 Act vehicles, ensure fee disclosure and expense allocation logic is consistent, documented, and defensible under 15C scrutiny.
- Review valuation frequency for retail-facing vehicles: Quarterly is becoming a baseline expectation. If your operational infrastructure supports institutional quarterly cycles but not retail reporting cadences, now is the time to close that gap
- Build governance around AI and automated pricing tools: AI-assisted valuation is arriving fast. Your governance framework should explicitly address how algorithmic inputs are vetted and documented, including controls around material non-public information
How we support your compliance journey
The retailization of private markets is happening now and the regulatory scaffolding is going up as we speak. Past experience tells us that firms that leverage this period for operational growth will be best positioned for what comes next.
IQ-EQ’s compliance consulting team works as an extension of your firmdeveloping policies and procedures for SEC, NFA/CFTC, ’40 Act, and FINRA requirements. We provide ongoing compliance advice as regulations evolve, empowering you to stay ahead of industry changes.
If private markets expansion will touch your business, get in touch to learn whether your compliance infrastructure is ready.
Want more regulatory insights? Check out the latest episode of The IQ-EQ Angle, and subscribe to our Regulatory Compliance e-newsletter.
Key questions emerging from the roundtable
Who is ultimately responsible for protecting retail investors as private markets open up?
Advisors and brokers. The SEC made clear that distribution oversight and suitability checks, not disclosure alone, are the primary guardrails against inappropriate sales.
Why are secondary-market NAV marks becoming a regulatory concern?
Assets bought at a discount can be marked immediately to par under current rules, creating artificial NAV gains. Regulators signaled that documented, gradual amortization may better reflect economic reality.
Are private equity managers now charging carry on unrealized gains?
Yes. Some evergreen vehicles are adopting hedge fund-style incentive fees on paper gains, increasing the need for defensible valuation methods and board-level fee scrutiny.
Does broader retail access mean broader access to top private market returns?
Not necessarily. Performance dispersion in private markets remains wide, and access vehicles don’t automatically deliver exposure to top-quartile managers.
About the author:
Sean Wilke is Head of Growth Strategy, Compliance, Americas at IQ-EQ. He advises buy-side investment managers (including hedge funds, private equity firms, family offices, and registered investment companies) on regulatory, compliance, and operational matters, and was a lead contributor to the development of IQ-EQ’s gVUE regtech platform and regularly writes and speaks on U.S. regulatory compliance and operational considerations for investment firms.
