CAIS & Mercer | Wealth Advisors Accelerate Alternative Investment Push Despite Market Uncertainty
- Editor
- Jan 11
- 2 min read
What's New
A comprehensive survey of 550 financial advisors reveals that 91% plan to increase their alternative investment allocations over the next two years, with structured notes seeing a notable uptick in interest from 27% to 38% year-over-year.
Why It Matters
This shift signals a fundamental transformation in wealth management, as alternatives move from peripheral investments to core portfolio components, driven by advisors seeking both portfolio diversification and practice differentiation in an increasingly competitive landscape.
Big Picture Drivers
Technology Adoption: 66% of advisors rank integrations with custodians and reporting providers as their most valuable investment technology feature
Portfolio Construction: 54% rely primarily on portfolio construction tools rather than peer advice when building client portfolios
Product Evolution: Two-thirds of advisors prefer registered funds over traditional private funds, indicating a push toward more accessible alternative investment vehicles
Client Demographics: Higher alternative allocations correlate strongly with qualified purchaser clients, suggesting wealth level remains a key determinant
Market Environment: Survey conducted amid strong public equity performance and first Fed rate cut since COVID-19 pandemic
By The Numbers
92% of advisors currently allocate to alternatives
76% allocate more than 5% to alternatives
86% say alternatives help differentiate their practice
39% plan to focus on tax-advantaged investment strategies
Key Trends to Watch Alternative investment platforms are addressing operational challenges with enhanced integration and digitization features. Private debt remains the most popular alternative asset class, with 89% of advisors indicating some allocation. Infrastructure investments are gaining traction, with 51% of advisors planning to increase allocations. Artificial intelligence and tax-advantaged investments emerge as leading thematic opportunities for 2025.
The Bottom Line for Investors As alternatives become more accessible through technological innovation and product evolution, advisors are increasingly viewing them as essential portfolio components rather than optional diversifiers, suggesting a structural shift in wealth management that could reshape portfolio construction approaches for years to come.
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