Why We Partner – A Q&A with John Toomey, CEO of HarbourVest

Question 1:

Private markets have grown significantly over the past decade. More recently, access has opened to include retail investors. What does this mean for the knowledge and skills investment professionals need today versus five or 10 years ago?

A: Five or 10 years ago, the conversation was about whether to allocate to private markets. Today it’s about how to build with them responsibly. The same forces that transformed public markets are reshaping private markets now. Long-term success in public markets depended on broad diversification across large, mid, and small cap, growth and value. Private markets require the same discipline across managers, strategies, geographies, sectors, and vintage years. That discipline is especially important as access expands to retail investors, where the fiduciary responsibility is high and the margin for error is small. Meeting that responsibility demands a different set of capabilities – portfolio construction, benchmarking, and the analytical rigor to understand how these assets behave across a full cycle. 

Question 2:

What knowledge areas are becoming non-negotiable for advisors evaluating opportunities in private markets today? 

A: Private markets spent decades solving for access. The next era is about solving for intentionally constructed exposures. That shift demands the ability to interpret data and turn it into better decisions. Portfolio construction is becoming just as important as manager selection. Clients are asking harder questions – about performance, about what they actually own, and about how it all fits together. The advisors who can answer those questions with data and clarity will be the ones who stand out. 

Question 3:

HarbourVest has been investing in private markets for over 40 years. What do you see as the biggest knowledge gaps among professionals today? 

A: A common misconception is that adding private markets automatically means diversification. It doesn’t. Stop collecting funds. Start building portfolios. Private markets aren’t one asset class – they require diversification across managers, strategies, geographies, sectors, and vintage years. Similar to stocks, owning a handful of funds doesn’t create a diversified portfolio. And without reliable benchmarks to evaluate what you own, you can’t build with confidence. That’s the gap the industry needs to close. 

Question 4:

What capabilities do you believe the industry is missing that CAIA.nxt™ can help address? 

A: There are two main areas: benchmarking and portfolio analytics. 

For benchmarking, private markets are still building a foundation: transparency, consistent reporting, and reliable measurement. Today, private market benchmarks can differ significantly over the same time period, for the same asset class. That dispersion creates real challenges around performance evaluation and decision-making. HarbourVest has built asset-level benchmarks that give a more granular look under the hood, identifying the drivers of return and alpha at the investment rather than fund level, and giving investors a clearer line of sight into what is actually driving returns. 

For portfolio analytics, investors need tools that help them monitor exposures, forecast cash flows, stress test against scenarios, and attribute performance. These capabilities are essential to making sound portfolio construction decisions. 

In public markets, both are table stakes – every advisor and allocator expects them. Private markets investing should be no different. As retail access expands, setting that standard has never been more important. But better tools and greater transparency must also be matched by the knowledge to interpret and apply them. That’s where CAIA.nxt™ can play an important role, helping investment professionals deepen their understanding of private markets and develop the practical skills and judgment needed to make more informed portfolio decisions.

Question 5:

Why does it matter that this education effort is practitioner-led rather than purely academic? 

A: Real fluency in private markets is built through experience. The decisions that shape outcomes – which managers to back, how to construct a portfolio, how to manage liquidity under stress – are learned through cycles, not classrooms. Practitioners bring decades of data, real relationships, and hard-won perspective that academic curriculum alone can’t replicate.  

Question 6:

Private markets have historically been the domain of large institutions. Do you see similarities between early institutional adoption and what’s happening now in the wealth channel? 

A: The similarity I’d like to go back to is how we saw public markets develop. History doesn’t repeat, but it does rhyme. Early public market investors focused on picking individual stocks and managers. Over time, the industry shifted from buying managers to buying exposures – going from star managers to investing in broad market building blocks.  Investors figured out that exposure, diversification, portfolio construction, and reliable benchmarks were what actually drove durable outcomes. The wealth channel is now at that same inflection point – and they don’t have decades to figure it out. That’s exactly why education matters so much right now. 

Question 7:

How does better education change what’s possible for wealth advisors and their clients? 

A: Education is how the wealth channel enters private markets the right way, with the right knowledge, the right expectations, and the right portfolio discipline. It gives advisors the tools to start with the investor, not the product, building portfolios around specific objectives, exposures, and needs. 

If five or 10 years from now we’ve helped investors move from product selection toward better portfolio construction and more durable outcomes, I would consider that a very successful outcome for both the industry and the investors it serves. 

Question 8:

What happens if the industry fails to raise education standards as retail access ​to private markets expands?

A: The biggest risk isn’t the asset class – the risk is over-concentration, lack of proper benchmarking and portfolio analytics, and advisors who don’t understand how these assets behave across a full cycle. Educating advisors and investors isn’t just good practice. It’s a fiduciary responsibility.