(Dow Jones) Financial advisors are shifting to more conservative investing approaches and making greater use of alternative investments, a move that requires an education in new types of risk, among other issues.

Research firm Cerulli Associates interviewed some 1,800 advisors online over the past year for its annual survey and found that "there is a hunger for education on newer strategies, such as alternatives or tactical asset allocation, designed to reduce risk in client portfolios."

Unless an advisor fully understands the issues involved, clients won't buy what they're offering, either in terms of strategy or specific products, says Katharine Wolf, a senior analyst at Cerulli.

"Given what happened this year, clients are less willing to take the advisor at their word and want more detail, more information, and demand increased levels of transparency," she says.

Ron Rough, director of portfolio management at Financial Services Advisory, an investment advisory firm in Rockville, Md., says the interest in alternatives clearly stems from stocks' poor performance in the last 10 years. Less clear is exactly which investment vehicles that entails.

"One of the issues with alternatives is what are we talking about-hedge funds, commodity or currency funds?" said Rough. "It can be pretty broad or more narrow, and they carry their own risks."

Chuck Roberson, a wealth manager at Modera Wealth Management in Westwood, N.J., notes a growing interest in investments like managed futures, for example, because they "had strong positive returns when everything else was such a big negative," he said.

His firm limits private placements, which aren't as liquid as some other investments, to typically no more than 25% of a client's portfolio. "All of those risks are something that an advisor needs to become more comfortable with and understand before they make recommendations for those kind of vehicles," Roberson said.

Many alternatives did poorly themselves in the downturn, but most still outperformed broad market benchmarks and offer diversification beyond the traditional mix of stocks and bonds, Cerulli says. Still, many advisors haven't used them in clients' portfolios and seem hesitant to start: Fewer than 10% of advisors surveyed by Cerulli put client money into hedge funds, limited partnerships, structured notes or private equity. Slightly more advisors use commodities (15%) and managed futures funds (13%).

Some advisors are increasingly turning to their broker-dealer's internal research teams through managed account programs that can offer client risk-profiling and incorporate a variety of strategies in one account, Cerulli found.

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