CAIS - Mercer Survey Finds Advisor Demand Accelerating for Alternative Investments

Over 85% of advisors plan to increase alternative investment allocations in client portfolios in 2024

NEW YORK – December 5, 2023 – More than half (62%) of financial advisors currently allocate between 6% and 25% of clients’ portfolios to alternative asset classes, with (85%) of them expecting to increase allocations to one or more alternative asset classes further within the next year, according to a recent independent survey conducted by CAIS and Mercer.  

The survey, conducted at the second annual CAIS Alternative Investment Summit, a gathering of independent advisors and alternative asset managers, found that the majority of advisors acknowledge the role alts may play in bottom-line impact for their business, with 78% saying it helps clients meet goals and objectives and 59% suggesting that access to alternative investment opportunities is helping them win new clients. 

 “The transition to a three-dimensional portfolio including alternative investments is accelerating rapidly. Our latest data suggests that alts are also helping independent advisors differentiate from competitors and build their practices,” said Matt Brown, Founder and CEO of CAIS. “As the champion of the independent advisor community, we remain focused on helping them adopt, and benefit from, alternative investment strategies.” 

“As the wealth channel continues to embrace alternative investments, these findings underscore the independent advisor’s need for strategic partners that can help them streamline alts adoption,” said Gregg Sommer, Partner and US Financial Intermediaries Leader, Mercer. “Mercer provides independent due diligence and monitoring for funds available on the CAIS platform, with our reports and ratings made readily available to its users, to help advisers continue to differentiate their portfolios.” 

Despite the demand for alternatives, hurdles still exist, with 55% of respondents citing high levels of administration and paperwork as barriers to investing in these strategies. Advisors also cited lack of liquidity (47%) and concerns around due diligence and compliance (35%) as barriers to entry. 

 The survey also found that the vast majority of advisors currently allocated to alternatives were invested in real estate (96%), private equity (93%), and private debt (91%), with nearly seven in 10 respondents suggesting that they plan to increase allocations to private debt (68%) and private equity (68%) in the next 12 months. As allocations increase, advisors are also recognizing the different merits of each asset class – a majority (65%) indicated that they allocate to private equity for enhancing returns, 41% of responses suggest that advisors allocate to private debt to supplement income, while advisors’ motivation for investing in real estate strategies was split between diversifying risk (34%) and supplementing income (32%).  

To view the full report and findings, click here. 

Survey Methodology 

The survey was conducted from September 12 – October 30, 2023, including at the CAIS Alternative Investment Summit, a leading thought leadership event in Los Angeles, CA. Respondents included independent RIAs, broker-dealer affiliates, family offices and other advisor professionals. The data is based on responses from 260 financial advisor respondents.

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