Home Alternative Investments Advisors See Barriers to Broader Adoption of Alternative Investments

Advisors See Barriers to Broader Adoption of Alternative Investments


Advisors expect to slightly increase their exposure to alternative investments, but they’re not rushing in headlong. 

That’s according to a new white paper from Cerulli, a research and consulting firm, in collaboration with the management consulting firm Blue Vault Partners.


Alternative investments, essentially anything that is an alternative to publicly-traded stocks and bonds, run the gamut and include real estate, collectibles, commodities, private equity, private debt, and derivatives. These types of investments continue to generate interest among clients for income and diversification purposes, and managers are starting to offer more options for retail investors. It behooves financial advisors to become familiar with the various options so they can satisfy clients’ demand, Cerulli says.

Advisors say they plan to boost exposure in alternative assets to 11.8% in two years, up from their current allocation of 10.5%, according to the white paper. But challenges to broadening this exposure persist. Liquidity is a major consideration, cited by 54% of advisors. Thirty-nine percent of advisors said the available products are too expensive, while 37% cited complexity as a barrier. 

Certainly, it’s an area that’s expected to continue to grow. A notable 70% of advisors said their firm encourages the use of certain alternative investments. The space could grow even faster if more products offering liquidity become available. Enhanced liquidity would encourage 60% of advisors to up their allocations, Cerulli found.

Another area that may generate more interest in the years ahead: cryptocurrency. Only a “sliver” of advisors currently use cryptocurrency products, according to Cerulli. This, however, is likely to change as client demand increases.


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