A top-down sizing that starts from the bank's eligible clients and mandate split, and ends at a figure a fundraising plan can carry.
Size a private bank from its mandates, not from its assets. Take the AUM of clients eligible for the fund, multiply the discretionary part by the gap between the model allocation and what is already invested, add the advisory assets whose clients will act on the recommendation, keep the strategy's share and divide by the funds on the shelf. For an illustrative bank with 60 billion of client assets, that gives 54.45 million for one private equity fund: 9 basis points of the bank, against the 480 million the usual pitch-book arithmetic suggests.
Worked in full in The Private Wealth Fundraiser by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
Fundraising plans for the wealth channel often start from the wrong number. "The bank has 60 billion, its model portfolio wants 8 per cent in private markets, and we will be one of ten funds" produces a ticket that is almost nine times too large, and a forecast that misses for reasons nobody can trace afterwards. The calculation below follows how the money actually moves.
| Input | Value |
|---|---|
| Client assets | 60,000 |
| Share held by clients eligible for the fund | 55% |
| Eligible assets in discretionary mandates | 30% |
| Eligible assets in advisory mandates | 45% |
| Execution only (not addressable) | 25% |
| Discretionary model allocation to private markets | 8% |
| Already invested or committed | 5% |
| Advisory clients acting on the recommendation | 15% |
| Recommended private markets weight, advisory | 5% |
| Private equity share of the private markets sleeve | 40% |
| Private equity funds on the shelf | 3 |
Fund allocation = AUM × eligible × [disc × (target − current) + adv × uptake × rec] × strategy share ÷ funds on shelf
1. Eligible assets: 60,000 × 55% = 33,000. Discretionary 9,900; advisory 14,850.
2. Discretionary room: 9,900 × (8% − 5%) = 297.
3. Advisory demand: 14,850 × 15% × 5% = 111.38.
4. Private markets demand: 297 + 111.38 = 408.4. Private equity share, 40%: 163.35.
5. Shared by three funds: 54.45, of which 39.6 from discretionary and 14.9 from advisory.
Each line removes something the naive figure counts. Eligibility removes clients who cannot legally or suitably buy the product. The mandate split removes execution-only money no one at the bank allocates. The gap removes what the model portfolio already holds: a bank at 5 per cent of an 8 per cent target has 3 points to fill, not 8. And the shelf removes the other funds competing for the same strategy budget.
The naive calculation is 60,000 × 8% = 4,800 of private markets, divided by ten funds: 480. The realistic figure, 54.45, is 11.3 per cent of it. The pitch-book overstates by 8.8 times, and the gap is not a matter of optimism: it is four multiplications left out.
Discretionary money does most of the work. Discretionary mandates hold 9,900 of eligible assets against 14,850 advisory, yet supply 73 per cent of the demand. A distribution plan that counts relationship managers rather than discretionary portfolio managers is aiming at the smaller pool.
| Case | Allocation |
|---|---|
| Base case | 54.5 |
| Bank at 3% of its 8% target (more room) | 80.9 |
| Bank at 7% of its 8% target (nearly full) | 28.0 |
| Advisory uptake 30% instead of 15% | 69.3 |
| Only private equity fund on the shelf | 163.4 |
| Six funds on the shelf | 27.2 |
| Eligible clients 35% instead of 55% | 34.6 |
Two inputs dominate. The first is the shelf: being the only fund in the strategy triples the ticket, which is why platform exclusivity and timing of the shelf review matter more than a pitch. The second is the gap to target. A bank that has nearly filled its model allocation can take 28.0, however strong the relationship; one that has just raised its target is worth approaching first. By comparison, one more point on the discretionary target adds 13.2 to the fund, and doubling advisory uptake, a heroic effort with relationship managers, adds 14.8.
The common mistake is to apply the model portfolio weight to total client assets, as if every client were eligible, discretionary and empty. It overstates every bank by the same kind of factor, so a pipeline of ten banks sized this way is out by almost an order of magnitude, and the shortfall appears as a conversion problem when it was a sizing problem. The second mistake is to treat the allocation as annual. The discretionary room is a stock: once filled, the next year's flow comes from new client money, rebalancing and distributions, and is much smaller.
Before a bank goes into the forecast, get five numbers from the relationship: the eligible share of assets, the mandate split, the model weight, the current weight and the number of funds on the shelf in your strategy. They turn a 480 million hope into a 54.45 million plan that can be defended. To turn bank-level demand into the advisor coverage it takes, see how many financial advisors it takes to raise 100 million; the cohort forecast and coverage model for a whole channel are in the free workbooks for this book.
Usually a few basis points, not a percentage. In the illustrative case a 60 billion bank with 55 per cent eligible clients, a 3 point gap in its discretionary model and 15 per cent advisory uptake places 54.45 million in one of three private equity funds: 9 basis points of its client assets.
Discretionary, by a wide margin per unit of AUM, because the bank allocates by model rather than client by client. In the worked case discretionary mandates hold 9.9 billion against 14.85 billion advisory, yet supply 73 per cent of the demand: 39.6 million of the fund's 54.45 million.
Inversely, because the strategy budget is shared. In the illustrative case the bank's private equity demand is 163.35 million: an only fund on the shelf could take all of it, three funds take 54.5 million each and six take 27.2 million. Exclusivity on a shelf is worth more than a higher model allocation.
This article is one calculation from The Private Wealth Fundraiser. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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