Respondents in a recent Jackson National survey showed a broad lack of knowledge regarding alternative investments, the company said.
When asked to define this asset group, 52 percent of the nearly 600 investors polled chose “anything that is not a stock, bond or cash”, while 42 percent chose “I honestly have no idea what alternative investments means”.
Forty percent of respondents chose “I don’t know” when asked what portion of their investment portfolio includes alternative investments.
The primary reason 24 percent of respondents said they don’t use alternative investments in their portfolios is because “they are unsafe/risky investments,” 21 percent answered “what is an alternative investment?,” and 18 percent said “I don’t understand them, they are too complex.”
A majority of respondents (57 percent) said they don’t know how alternative investments perform in the market relative to other types of investments. And more than two-thirds of respondents believe alternative investments carry more risk than traditional investment products.
When asked how they prefer to receive financial/investing knowledge and education, 43 percent chose “I want my advisor to explain potential benefits, risks and details of products and investments in my portfolio.” Only 7 percent of respondents chose “I want my advisor to tell me what to do.”
Jackson says these are important statistics for all of the stakeholders in the financial services industry. How financial services providers craft educational content for advisors, and how advisors pass on that education to their investor clients could lead to a greater understanding of and investment in alternative investments.
Jackson surveyed 574 investors with more than $200,000 in assets in January.