Rough says product providers--"whether it be mutual fund providers with some alternatives or an ETF provider or a managed futures shop or a commodity trading shop"--are taking on much of the responsibility for educating advisors. "Hopefully, that will broaden out in time so advisors have more sources to go to," he says.
Professional organizations, such as the National Association of Personal Financial Advisors and the Financial Planning Association, also help to educate advisors with seminars. Advisory firms that haven't worked with alternative investments often network with other firms that have more experience, Rough says.
Minimum investment requirements can be a hurdle for some advisors looking to use alternatives. Some broker/dealers are addressing that issue by creating sleeves of managed-account programs that provide a variety of alternative vehicles in one wrapper, Cerulli says. Also, the industry has created alternative offerings in vehicles accessible at all asset levels by structuring investments using exchange-traded funds or within mutual-fund wrappers, it says.
"For example, an advisor may use a direct investment in a hedge fund for a client with more than $5 million in investable assets, but opt for a fund of hedge funds or mutual funds using hedging strategies for a clients with less money to invest," Cerulli said in its report.
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