Private Alternatives Drive High Brokerage Commissions
Ben Haber, CEO of Monark, on building the DTCC for the private markets
Private alternatives matter to brokerages because they turn investing back into a sales business, not just an order routing business. In public stocks, zero commission trading pushed economics down toward tiny payment for order flow spreads. In private stocks and private funds, the customer often pays an upfront load of roughly 3.5% to 5%, and brokerages can keep about 2% to 3% of dollars sold, which is large enough to justify product work, compliance effort, and home screen placement.
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The workflow is much closer to mutual fund distribution than stock trading. An investor taps into a SpaceX SPV or a Blackstone style evergreen fund from an existing brokerage cash balance, the fee is deducted upfront, and the brokerage shares that fee with the infrastructure provider after admin costs.
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That economics gap is why brokerages are adding private assets even though the operations are harder. Platforms need suitability checks, accreditation, money movement, reconciliation, custody handling, and reporting, all things that do not exist in a normal stock trade but can support far richer revenue per dollar invested.
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The competitive line is shifting from direct to consumer alt apps like Yieldstreet and Forge toward infrastructure sold into existing brokerages and clearing firms. The winner is the company that plugs private assets into the same account, statement, and app where customers already trade stocks, options, and crypto.
The next step is broadening from single name pre-IPO demand into repeatable fund distribution across RIAs, neobrokers, and clearing platforms. As custody, reporting, and investor limit constraints improve, private assets can become a standard menu item inside brokerage accounts, with commissions that look more like old school wealth management than modern zero commission trading.