Wall Street Wealth Chiefs See Hottest Money in Private Markets

Morgan Stanley and Citigroup Inc. wealth executives are seeing private markets increasingly shape their businesses, marking a major shift from liquid assets that historically drove financial markets.

Morgan Stanley has boosted offerings for rich clients investing in closely held businesses in recent years, largely as companies prolong their paths to initial public offerings, according to Elizabeth Dennis, Morgan Stanley’s head of private wealth management. Citigroup’s rich clients typically now have more than a quarter of their portfolios allocated to private markets, according to Ida Liu, global head of the New York-based firm’s private bank.

“The economy is private,” ...