According to a report and survey conducted by Cerulli Associates, Invesco, and the Investment & Wealth Institute, most advisors believe that alternative investments can help differentiate their practices from competitors, recruit high net worth clients, and help with consolidating and recruiting assets. Yet, half of the advisors surveyed report an allocation to alternatives that is less than 5% despite self-reporting that the optimal allocation was 13%. 

Most decisions to allocate to alternative investments are driven by advisors given that clients are often unaware of these options and their benefits. Many alternative investments are only available to retail investors through advisors such as investing in private markets. This can also help in recruiting clients who may be interested in these types of investments in addition to better returns, income, and diversification for clients. 

The survey results also showed that 56% of advisors see increasing allocations to alternatives due to increasing liquidity, and 52% believe that increasing transparency will also lead to more allocations. Some of the drawbacks of the asset class are high levels of complexity and less liquidity that require advisors to spend time in conducting due diligence especially if they are recommending it to clients. 

Finsum: According to a report on advisors and their perspectives on alternative investments, most advisors are underexposed to the asset class despite it offering specific benefits to clients and advisors.