For decades, the most interesting corners of finance, including private equity, private credit, real estate funds, and hedge strategies, were walled off behind high minimums and accredited-investor rules. Technology is taking those walls apart one brick at a time. The pool of individual investable assets is set to climb from about $70 trillion in 2018 to $106 trillion in 2025, yet the average individual still holds less than 5% in alternative investments, compared with 27% for pension funds, according to Preqin. That gap is the opportunity fintech is built to close.
What alternative investments and fintech mean together
Alternative investments are assets outside the standard mix of public stocks, bonds, and cash. They include private equity, private credit, real estate, infrastructure, hedge funds, commodities, and collectibles. Historically they offered higher potential returns and diversification, but they came with high minimums, long lock-ups, and heavy paperwork that kept ordinary investors out.
Fintech changes the access, not the asset. Digital platforms cut the minimum from millions to hundreds, automate the legal and onboarding work, and use fractional ownership to split a single asset among many buyers. The same online distribution that powers equity crowdfunding now reaches into private markets, turning what was a closed club into a product a person can buy from a phone.
How technology opened the door
Three shifts made this possible. First, regulators widened access, with the SEC expanding the accredited-investor definition and the Department of Labor clarifying that retirement plans can include certain private strategies. Second, platforms built the plumbing to handle fractional shares, compliance checks, and reporting at scale. Third, tokenization arrived, letting an asset be represented as a digital token that can be divided and traded more easily than a paper share.
That last shift is moving fast. The market for tokenized real-world assets is projected to reach $9.43 trillion by 2030, growing at a 72.8% compound annual rate, according to Next Move Strategy Consulting. Much of this rests on the same rails described in our guide to blockchain technology fundamentals, which give tokens a verifiable record of ownership.
Retirement money is part of the story. The Department of Labor has signaled that defined-contribution plans can include certain private-equity strategies inside diversified options such as target-date funds. With the US 401(k) market measured in trillions, even a small shift toward private assets would send large sums into a space that was once closed to everyday savers. That single channel could reshape how alternatives are funded over the next decade.
The numbers behind the shift
The direction of travel is clear in how managers see their own future. Among alternatives fund managers polled by Preqin, 35% expect retail investors to make up a larger share of their assets over the next five years, against 26% who expect the opposite.
| Investor type | Average allocation to alternatives |
|---|---|
| Individual investors | Less than 5% |
| Pension funds | 27% |
| Endowments | 29% |
Source: Preqin, Future of Alternatives 2025.
The size of the prize is easy to see in that table. If individuals moved even a few points of their $106 trillion toward the levels institutions hold, the flow into alternatives would be measured in trillions. Fintech platforms are positioning to capture that flow.
What it means for consumers
For an everyday investor, the benefit is diversification that used to be out of reach. A person can now own a slice of a commercial building, a basket of private loans, or a stake in a venture fund for a few hundred dollars. These assets often move differently from public stocks, which can steady a portfolio when markets fall. They sit naturally alongside the automated tools covered in our overview of wealth management technology.
The trade-offs are real. Most alternatives are illiquid, so money can be locked up for years. Fees tend to be higher than index funds, and the assets are harder to value. The convenience of a clean app can hide that complexity, so a buyer should read the terms before tapping invest.
Real estate has led the early wave. It made up close to a third of tokenized issuance in recent data, because a building is easy to describe, value periodically, and split into shares. Commodities are growing fastest, expanding at more than 50% a year, while private credit has become a favorite for its steady income. The mix shows that fintech is not opening one new market but many, each with its own risk and liquidity profile.
What it means for businesses
For asset managers, fintech is a new distribution channel. Reaching individuals at scale means building customer-centric features that institutions never demanded, including frequent reporting, simple statements, and easy onboarding. Preqin noted that managers chasing retail money will need exactly these capabilities. For platforms, the opportunity is to become the trusted front door to private markets, the place where a retail investor first buys an alternative asset.
Distribution partnerships are reshaping the industry too. Large banks and asset managers are building funds designed specifically for individuals, often with periodic liquidity windows rather than the classic decade-long lock-up. These products try to make private markets feel closer to public ones, with more frequent pricing and easier entry and exit. For fund managers, the choice is increasingly whether to build a retail channel of their own or partner with a platform that already has one.
The risks to weigh
Wider access brings new hazards. Illiquidity can trap investors who did not expect a multi-year lock-up. Valuations in private markets are infrequent and can lag reality, masking losses until much later. Tokenization adds technology risk, since a digital token is only as safe as the platform and code behind it. And easier access can tempt inexperienced buyers into assets they do not fully understand.
Alternative investments and fintech are converging on a simple promise, that ordinary people should be able to invest the way institutions do. The platforms that win will be the ones that pair access with honesty about liquidity and risk, rather than selling private markets as a frictionless upgrade.
