More than half of advisors feel offering alternative investments is a key to attracting and keeping high-net-worth clients, according to Artivest, an alternative investment platform.
Despite this belief, the participation rate in alternative investments remains low, Artivest says, in part because advisor feel they do not have access to quality alternative products.
Fifty-four percent of the 163 financial advisors that Artivest surveyed say offering alternatives is important to retaining and attracting high-net-worth investors. At the same time, 73 percent believe alternative investments should make up more than 5 percent of a client’s overall investment portfolio, and 43 percent of that group says the ideal allocation is between 15 percent and 25 percent.
Currently, about 5 percent of investments are in alternatives. Those advisors who believe alternatives help attract high-net-worth clients are three times as likely to want to allocate 15 percent or more of their clients’ portfolios to alternatives, Artivest says.
Advisors blame a lack of access to quality funds, high retail client fees, the length of time it takes to identify and select managers and cumbersome account paperwork and administration as the top reasons they have not invested in more alternatives.
“We have seen an increase in demand for alternative investments from high-net-worth investors, and this survey confirms that advisors recognize the value of incorporating alternative investments in a client’s portfolio,” says James Waldinger, founder and CEO of Artivest. “There is a clear need for greater advisor education around the vehicles available to access high-quality alternatives in a more efficient way.”