Langlois: There's a lot of interest. But I also think that end investors don't quite know what to do with them. The interest comes more from the advisor than from the consumer. For advisors registered with broker-dealers, probably it's dependent on the position the broker-dealer takes with regard to whether they allow their registered reps to have access to alternatives. I think probably the biggest area of interest is REITs because of the yields.
Lynch: And of course, the growth of the hybrid firms, where they're having to deal with both the broker-dealer compliance and regulatory structure and the RIA, I think we're seeing a desire for growth there in terms of alternatives, and they are trying to keep up with that demand, in part, relying on the due diligence often of the broker-dealer. And so they're still trying to catch up.
Langlois: I'd like to clarify; I mean actually real estate is an asset class. It's an investment. That's the trouble because the alternatives are so big and vague. I'm talking about commodities.
FA: A lot of people are saying "buy and hold" is dead or passé. Do you think that's valid?
Atkinson: It depends what you're buying and holding, right? Just buying a mutual fund that owns like 30 securities and hoping those are the right 30 is not a good strategy. When I think of buy and hold, I go back to MPT and Dr. Markowitz's thesis that you have to have a balanced allocation between equities, fixed income and cash. And you think about that allocation mix-even in 2008, fixed income and cash were flat or positive. Now, most people's fixed income was negative because their managers were chasing yield or mortgage backed security type stuff and went out on the risk curve and got clobbered. But short-term fixed income, high-quality fixed income was positive; it was like 5% or 6% that year, and it all goes back to what are you putting into the client's portfolio. It's like building a house made of straw versus brick.
FA: Janine, I'm sure you have advisors who have clients calling them up, saying, "Buy gold. Buy gold." What's your view on that?
Wertheim: On the consumer panel today, when asked, "How would you define transparency?" they said that transparency to them means simplicity. If the advisor doesn't understand the investment inside out, it's hard for that advisor to invest the client's money in it. And you have to ensure the client understands the investment. We aren't hearing from our advisors that their clients are begging for gold. We're a pretty conservative shop, from an advisor perspective. While some advisors may utilize a more tactical approach to money management, the majority uses a more strategic core with some tactical overlay.
Carney: We have over $500 billion of account data we aggregate every night, and when you look at alternatives, REITs, hedge funds and private equity are the vast majority in dollar volume as well as units. Commodities are not even a fraction of a percent. It doesn't even show up; but the real estate does show up and hedge funds show up.
FA: Let's turn the questions back to something we touched on earlier-retirement income. Money market funds are hardly a great proposition, and that's really affected a generation of retirees who thought they had done everything right. Janine, are there any particular options your clients are favoring now?
Wertheim: Based on feedback from our advisors, they are mostly using a diversified group of fixed-income mutual funds including some high-yield bonds and variable annuities. In a recent survey of our advisors, there was considerable interest in exploring publicly traded REITs, ETFs and structured products. With interest rates so low in the fixed annuity space, the yield generators our advisors are using most are diversified portfolios of bond funds.