Wednesday, June 12, 2024

Strong retail appetite for alternatives — but concerns remain

Financial advisors want to send more private wealth money into alternatives, but the industry needs to overcome concerns over liquidity, ease of access and due diligence, new data suggests.

Among financial advisers surveyed at the CAIS Alternative Investment Summit last month, 88% intend to increase their allocations to alternative asset classes in the next two years.

Meanwhile 89% of alternatives managers have identified the private wealth channel as a greater priority compared to two years ago.

That bodes well for a retail revolution in allocations to alternatives, which are mostly sourced from institutions now.

But the survey by investment consultant Mercer and CAIS, a platform for financial advisers seeking information about alternatives, found that challenges remain.

Advisors cited high levels of administration (51%) and concerns around due diligence (42%) as key concerns, as well as lack of liquidity.

“The key is to provide independent financial advisors with the same research and resources currently available to larger institutions, especially when it comes to enhancing portfolio allocations and mitigating risk through private market opportunities.” said Gregg Sommer, partner and US financial intermediaries leader, Mercer.

Related: Mercer’s 2022 Global Wealth Management Investment Survey