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

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.

About CAIS

CAIS is the pioneer in democratizing access to and education about alternative investments for independent financial advisors, empowering them to engage and transact with leading asset managers on a massive scale. CAIS delivers industry-leading technology, operational efficiency, and world-class client service throughout the pre-trade, trade, and post-trade experience.

CAIS provides advisors with a broad selection of alternative investment strategies, including hedge funds, private equity, private debt, real estate, digital assets, and structured notes, allowing them to capitalize on opportunities and withstand ever-changing markets. CAIS also helps advisors create custom fund vehicles around ideas they source.

As an extension of the platform, CAIS delivers an on-demand, online learning experience, CAIS IQ, which is designed exclusively to help advisors deepen their knowledge and increase their confidence in alternative investment strategies.

Most funds listed on the CAIS Marketplace undergo Mercer's independent due diligence and ongoing monitoring. CAIS streamlines the end-to-end transaction process through digital subscriptions and integrated reporting with the leading US custodians and reporting providers, which makes investing in alternatives simpler.

Founded in 2009, CAIS, a fintech leader, supports over 32,000 advisors who oversee more than $4 trillion in network assets. Since its inception, CAIS has facilitated over $25 billion in transaction volume. CAIS has offices in New York, Los Angeles, Austin, and London. For more information about CAIS, please visit www.caisgroup.com.

Securities offered through CAIS Capital LLC, member FINRA, SIPC.

About Mercer

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan, the world’s leading professional services firm in the areas of risk, strategy and people, with more than 85,000 colleagues and annual revenue of over $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and X.

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