Onuekwusi, who took on his role at the FTSE 100 firm at the start of October, said in a roundtable dinner that the market still needs "to get [its] head around" what an open-ended private markets solution looks like for retail investors and wealth managers.
"There is a perception that private assets have become more saturated in the institutional space and now we can just start to move on to retail," he said. "I think that kind of language or argument is very dangerous, because the structures have to work.
"When we think about LTAFs and so on, I do not think we are quite there yet in terms of what really works for retail investors."
Justin Onuekwusi starts role as St James's Place CIO
The traditional limited partnership structure of a private markets fund involves long drawdown and investment periods, high minimums and significant illiquidity, which has limited the benefits of the sector to ultra-high-net-worth and institutional investors.
As institutional capital dries up, asset managers have been developing a range of new product types to cater to the individual investor, such as evergreen open-ended funds, the European long-term investment fund (ELTIF) and the Financial Conduct Authority's long-term asset fund (LTAF).
The CIO, who joined the wealth manager after a decade at Legal & General Investment Management, most recently as head of EMEA retail investments, said there is an argument for investors willing to be rewarded for the private market's illiquidity premium.
Private equity firms commonly use leverage to pursue buyout transactions and boost returns. When the leverage element is removed from the returns, however, Onuekwusi said the asset class looks less attractive.
Retailisation of private markets: Unlocking the discretionary space will be a 'game changer'
"It is really important that we do not just look at risk return statistics the way we would normally do and we try to smooth out the returns," he said.
"When you actually take out the leverage of private equity, and then you assume normal volatility as an asset class, that actually does not look that attractive."
St James's Place currently has direct exposure to private markets through a structure that blends private and public credit.