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Alternatives Research
How are your peers using private markets?
New research from Cerulli Associates reveals that offering alternative investments such as private markets exposure can help advisors attract and retain high-net-worth clients
Download researchThe key findings
Alternative investments can help advisors achieve various client outcomes — opportunity for enhanced return, greater income potential, diversification¹ — while simultaneously enhancing their overall business profiles. Both low users and high users plan to increase their alternative allocations by 2025, and many respondents see particular opportunity in private equity and private credit.
Advisors plan to make alternatives a bigger part of their portfolios
Advisors told Cerulli that they are planning to increase allocations to alternative investments, with the optimal portfolio allocation for alternatives cited at 13%. The primary portfolio objectives mentioned by advisors include diversification, volatility dampening, and enhanced return opportunities.
Alternatives can help advisors stand out from their competitors
Advisors identified four key ways that an expanded shelf of alternative investments could help enhance their business²: by differentiating their practices, attracting high-net-worth clients, consolidating assets of clients who have alternative exposure elsewhere, and retaining the assets of clients with complex needs.
Advisors are seeking resources to explain alternatives to clients
Advisors are faced with a steep education hurdle for implementing alternative investments. In addition to understanding the products for their own sake, advisors must also be ready to explain the products to their clients in terms they will understand. By continuously weaving education into client conversations, advisors can provide a customized client experience.
About the study
Cerulli surveyed more than 200 upmarket advisors representing registered investment advisers (RIAs), wirehouses, independent broker-dealers, national/regional broker-dealers, private banks/bank trusts, retail banks, and insurance broker-dealers. On average, survey respondents had:
$663M Average practice AUM
These advisors have a higher AUM than the typical advisor and work with a wide range of client.
33% Have a core market above $2 million
These advisors’ wealthy clients make them an ideal prospect for private market opportunities.
54% Have an alts allocation of 5% or greater
Given their sophistication, advisors were more likely to have meaningful alternatives allocations.
Explore strategies and resources from Invesco
Building an alternatives practice may have its challenges, but Invesco has the strategies and resources to help you surpass them. The tools, coaching and content of Invesco Total CX can help you meet the full range of your clients’ needs and grow your business. And Invesco Real Estate has a decades-long track record of building global real estate investment programs for all types of investors.
Footnotes
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1
Diversification does not guarantee a profit or eliminate the risk of loss.
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2
There is no guarantee that addition of alternatives will result in increased business for any financial professional.
Get the full report
This report leverages insights gathered from a Cerulli survey of more than 200 advisors on their use of alternative investments, as well as 25 research calls to gather qualitative insights from advisors. To request a copy, please complete the form.
