Episode summary
Why Banks Are Increasing Private Market Exposure—A Manager Research View from PNC Bank
Dakota Live!
· · Hosts: Robert Morier · Guests: Scott Lavelle
Summary
PNC Bank is expanding private-market exposure in retail and wealth portfolios, but Scott Lavelle says the shift is being driven by manager research, governance, and fiduciary discipline rather than hype. He argues that most clients remain underallocated relative to PNC’s alternatives recommendation, so the firm is selectively adding strategies that are compelling on investment merit and operational quality.
Lavelle describes manager selection as a roster-building exercise that blends quantitative signals with qualitative judgment. The team looks for self-awareness, repeatable process, and the ability to perform across different market environments, while also testing whether a manager can earn its fee net of costs and taxes. For private markets, PNC has been cautious with evergreen structures and prefers direct manager selection except in venture, where fund-of-funds can still be worth the extra layer of fees for access.
Operational due diligence is treated as a separate and essential gate, not a checklist item. Lavelle says operational risk is not compensated risk, so the team works to avoid structures or controls that could create downside without improving return potential. Looking ahead to 2026, he expects continued, measured growth in alternatives, selective use of passive to express house views, and further monitoring of AI-related themes without making a concentrated bet.
Key takeaways
- PNC is adding private-market exposure selectively because Lavelle says many clients are still underallocated to alternatives versus the firm’s recommendation.
- Lavelle says the team evaluates managers on whether they can earn their fee net of costs, taxes, and implementation risk.
- Operational due diligence is a separate function at PNC because Lavelle says operational risk is downside-only and not paid for.
- He says passive is used when it best expresses a house view or improves fee efficiency, not as a default choice.
- For venture strategies, PNC still sees value in fund-of-funds if it improves access to top-tier managers.
Notable quotes
“we want to make sure that what we're doing is bringing on a very good investment opportunity and not simply a product that uh to shove assets into”
“operational risk is something that you do not get compensated for”
“our clients are underallocated. So to the extent that we can bring strategies to help move them closer to what our recommendation is”
“we have a question that the analysts have to answer which is do you believe they can earn their fee”
“the qualitative evaluation is the key part”
How the episode opens
Welcome to the Dakota Live podcast. I'm your host, Robert Morier. The goal of this podcast is to help you better know the people behind investment decisions.
We introduce you to chief investment officers, manager research professionals, investment consultants, and other important players in the industry who will help you sell in between the lines and better understand the investment sales ecosystem. If you're not familiar with Dakota and our Dakota live content, please check out our website at dakota.com. Before we get started, I need to read a brief disclosure.
This content is provided forformational purposes and should not be relied upon as recommendations or advice about investing in securities. All investments involve risk and may lose money. Dakota does not guarantee the accuracy of any of the information provided by the speaker who is not affiliated with Dakota.
Not a solicitation, testimonial, or an endorsement by Dakota or its affiliates. Nothing herein is intended to indicate approval, support, or recommendation of the investment adviser or its supervised persons by Dakota. Today's episode is brought to you by Dakota Marketplace.
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Our guest today is Scott Lavell. Scott is a managing director and head of investment advisor research and product management at PNC Bank based here in Philadelphia.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private market allocations
- manager research and due diligence
- operational due diligence
- private credit and private equity
- retail bank alternatives governance
Companies and tickers mentioned
- PNC
- PNC Bank
- PNC Financial Services Group
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Dakota Live!, this episode and its artwork belong to Robert Morier. Octagon is not affiliated with the show; this page is an independent summary.
