He suggested that advisors invest their time in online research and reading through prospectuses to understand the fee layers that can exist, as well as the situations where the asset management might be able to halt redemption. In addition, he said, iCapital and CAIS have advisor education programs that are helpful.
The survey also identified the reasons why alternative assets have been attractive to advisors who use them. The top three reasons are reducing exposure to public markets (69%), volatility dampening or downside risk protection (66%) and income generation (59%).
“It’s hard for advisors to get income elsewhere right now,” Shapiro said. “Bond funds are in the low single digits.”
Portfolio diversification came in at 52%, growth or enhanced return opportunity at 42% and inflation hedge at 31%. And finally, 22% said they’re using alternative investments to demonstrate their own advisory practice value proposition, and 19% said it’s simply to fill a client request.