Happy Thursday evening.
Today’s news is the Schwab purchase of Forge.
Let’s get into it:
Charles Schwab is paying $660 million for Forge Global. This follows Morgan Stanley acquiring EquityZen a few weeks ago.
The narrative is straightforward: wealth management giants are building infrastructure to give individual/retail clients access to pre-IPO shares. Private companies stay private longer, individual investors want exposure, and platforms like Forge and EquityZen connect them.
That story is obviously true. But it misses a more interesting structural shift happening underneath.
The 401(k) valuation problem
Trump's executive order in August accelerated momentum toward opening 401(k) plans to private markets. But some pretty big complications remain, especially on valuations 401(k) participants expect daily NAVs, but private equity funds report quarterly and often use internal models. The gap between what retirement savers expect and what private markets can deliver is not trivial.
The SEC made its concerns explicit in follow up to the August White House order. Its September advisory committee report on retail access highlighted the challenge of daily valuation requirements for illiquid assets. The report notes the “inherent lack of daily market prices for many private market assets raises the need for the Commission to establish standards for an impartial party to determine the valuation of the underlying assets, especially as fees are charged to investors typically based on the value of assets…”
That is the infrastructure problem private markets haven’t solved yet.
Why transaction data matters
Multiple firms are building valuation infrastructure for private markets. Companies like Chronograph and 73 Strings are working on this challenge. But transaction data is different from valuation models because it reflects what assets actually trade at, not what spreadsheets say they should be worth.
Forge has processed $17 billion in private company trades over its history. That is not a theoretical pricing model. That is real market clearing data across thousands of actual transactions. When 401(k) recordkeepers need to calculate daily NAVs for private assets, that transaction history becomes extremely valuable as a baseline for what securities actually trade at in real markets.
The SEC's report made the tension clear: funds offering daily liquidity will hold illiquid assets that also sit in institutional portfolios, and the question of acceptable valuation discrepancies between these funds remains unresolved.
The real acquisition thesis
Schwab and Morgan Stanley did not just buy marketplaces for pre-IPO trading. They bought years of transaction data that could become the foundation for pricing private securities when daily valuations become standard for retirement accounts. Other wealth platforms will need to solve the same problem, either through acquisition or partnership with the firms building valuation infrastructure.
Within 18 months, expect more deals focused specifically on private asset valuation and data. The firms that can provide defensible, auditable pricing for recordkeepers will have structural advantage in a market where the rules are still being written.
One thing is clear: Motive Partners saw this coming. Another infrastructure bet paying off.
The infrastructure layer is just beginning to take shape.
Thoughts? Let me know.
Marc.
PS: We’re launching a summit on exactly this topic: The Private Wealth Infra Summit. We’re very near to finalizing a May date and venue. Let me know if you want to come.
PPS: Some readers will have noticed this is the first newsletter in some time! Two October events kept us busy. But we’re back in this format and I want to keep it up, a few times a week, aligned with evening commutes.