The prospect of integrating alternatives can be daunting for many advisors due to the complexities involved, including numerous strategies, managers, and differing operational and tax processes. Nonetheless, there are key considerations for advisors navigating this terrain such as understanding that not all alternatives are alike, categorized broadly into growth, income, and diversifiers, allows for tailored allocations to meet client objectives. Also accessibility to alternatives has increased substantially, with platforms like iCapital and CAIS democratizing access and simplifying investment processes.

Additionally, the inadequacy of the traditional 60/40 model has led advisors to seek non-correlated strategies to bolster portfolio resilience, particularly during market dislocations. Historical analysis indicates that adding a 20% allocation to alternatives in a 60/40 portfolio can enhance returns and lower volatility, supporting the case for inclusion.

Shifting perspectives on longevity and retirement planning diminish the importance of liquidity, making less liquid investment opportunities, like private equity, viable options for younger investors. Overall, as accessibility to alternatives grows and traditional strategies face challenges, advisors are primed to deliver superior performance and resilience to clients through diversified portfolios.

Finsum: Advisors have more options and opportunities in the alt space than ever and should pass those uncorrelated returns on to investors.