Five in 10 advisors surveyed now allocate over 10% of client portfolios to alternative investments, with nine in 10 planning to boost allocations over next two years

Nine in 10 financial advisors surveyed (92%) currently incorporate alternative investments in client portfolios, with 91% planning to increase allocations over the next two years, according to the third annual independent survey conducted by CAIS and Mercer. Five in 10 advisors now allocate over 10% of client portfolios to alternatives, while more than three-quarters (76%) allocate at least 5%.

The survey also revealed that advisors are looking for more streamlined ways to access and allocate to alternatives, with 77% indicating a preference for model portfolios to streamline allocation. Advisors cited portfolio construction tools (54%) and model portfolios (47%) as their top resources to simplify the alternative investment process, and the majority (2/3) of advisors surveyed said they are more likely to consider registered funds than private funds. This demand coincides with the launch of CAIS Advisors, a registered investment advisor that provides discretionary investment advisory services to private funds and to registered investment companies. It will also create and provide advice on customized alternative investment model portfolios.

"Responses from the advisor community illustrate the evolving advisor sentiment around alternatives from optional components to pillars of a portfolio," said Neil Blundell, Chief Investment Officer of CAIS Advisors. "We're seeing a seismic shift in demand as advisors increasingly recognize the diversification and growth potential alternative investments provide. With trillions of dollars potentially moving from traditional assets into alternatives over the next decade¹, tools like model portfolios can assist advisors looking to refine and elevate their approach to alternative investing."

As allocations to alternatives increase, advisors are increasingly looking for a single-platform solution to help overcome traditional barriers to alternatives like administrative burdens and extensive paperwork. According to the survey, two-thirds (66%) of advisors regard platform integrations as their most valuable technology feature, closely followed by analysis tools (60%), emphasizing technology's role in centralizing alternative investment processes.

"The findings underscore the importance of equipping independent advisors with the same high-quality resources and due diligence capabilities that institutions have benefitted from," said Gregg Sommer, Partner and US Financial Intermediaries Leader at Mercer. "By providing due diligence and monitoring for funds on the CAIS platform, Mercer empowers advisors with research and risk management insights that extend far beyond the investment itself, helping them build differentiated portfolios with confidence and conviction.”

In addition to collaborating with CAIS, Mercer offers innovative strategies to firms serving individual investors. Through its global infrastructure, fortified by providing advice to large institutional clients for nearly five decades, Mercer offers financial advisory firms a range of capabilities in delegated solutions, manager research, alternative investments and portfolio construction.

The survey also highlighted shifting preferences and emerging trends across alternative asset classes. Advisor interest in structured notes showed significant growth, with 38% planning to increase allocations this year—a notable rise from 27% in 2023. Private debt (89%), private equity (86%), and real estate (85%) remain the top asset classes advisors are currently allocated to. Additionally, nearly four in 10 advisors (39%) indicated that tax-advantaged strategies are among the top themes they would like to present to their clients this year, followed by infrastructure (28%) and artificial intelligence (28%).

To view the full report and findings, click here.

Survey Methodology

The survey was conducted from September 10 – October 18, 2024, including at the CAIS Alternative Investment Summit, the industry’s marquee event for independent advisors and asset managers hosted in Beverly Hills, CA. Respondents included independent RIAs, broker-dealer affiliates, family offices, and other advisor professionals. The data is based on responses from 550 financial advisor respondents.

About CAIS

CAIS is the leading alternative investment platform for independent financial advisors. The CAIS platform powers the pre-trade, trade, and post-trade lifecycle of alternative investments providing financial advisors and alternative asset managers a single operating system for scale and efficiency.

CAIS serves over 2,000 wealth management firms that support more than 50,000 financial advisors who oversee approximately $6 trillion in end-client assets. Founded in 2009, CAIS is headquartered in New York City with offices in Austin and London.

CAIS continues to be recognized for its innovation and leadership including awards for Alternative Investment Firm of the Year by Wealth Solutions Report, WealthTech100 List by Fintech Global, Great Places to Work by Fortune, Best RIA Platform by SPi, Best Alternative Investments Solution by Finovate, and many others.

For more information about CAIS, please visit www.caisgroup.com or follow on LinkedIn or X.

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

About Mercer

Mercer, a business of Marsh McLennan, is a global leader in helping clients realize their investment objectives, shape the future of work and enhance health and retirement outcomes for their people. Marsh McLennan is a global leader in risk, strategy and people, advising clients in 130 countries across four businesses: Marsh, Guy Carpenter and Oliver Wyman. With annual revenue of $23 billion and more than 85,000 colleagues, Marsh McLennan helps build the confidence to thrive through the power of perspective. For more information, visit mercer.com or follow on LinkedIn and X.

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