Independent advisors have been slow to adopt alternatives, according to “Advisors and Alternatives,” a research report released on Thursday by New York-based iCapital Network, but it’s probably not for lack of enthusiasm or interest.

Among the three types of alternatives researched by iCapital, private equity, hedge funds and direct deals, independent advisors in the RIA and independent broker-dealer channels lagged wirehouse advisors in both rate of adoption and size of allocations.

For example, more than three-fifths of wirehouse advisors allocate 5 percent or more of their client portfolios to private equity funds, while fewer than one-third of independent broker-dealers and RIAs reported allocations equal or greater to 5 percent.

The difference may be driven by accessibility – wirehouses offer their advisors access to a range of private equity funds, but not all independent broker-dealers and RIAs do so, meaning more independent advisors have to access funds directly from general partners or use feeder funds to allocate to the asset class.

In addition to questions around liquidity and transparency, and the high minimums often carried by alternatives, the report found that advisors often struggle to find appropriate clients for the funds.

Tom Fortin, managing partner and chief operating officer at iCapital Network, suggested that advancements in alternative platforms should augment independent advisors’ ability to use asset classes like private equity and direct deals.

“Technology, new product structures and education are removing many of the barriers associated with investing in alternatives, but certain characteristics inherent to alternative investments that drive performance, like longer investing timeframes, will remain,” said Fortin in a released comment. “This places a greater emphasis on portfolio construction expertise for advisors seeking to reap the return and diversification benefits of alternatives.”

iCapital’s platform, launched with a goal of “democratizing alternative investments,” serviced more than $5.2 billion in capital invested in alternative strategies as of March 31.

Private equity funds are the most commonly held alternative investment, used by 77 percent of the total advisor respondents, followed by hedge funds, used by 66 percent of advisors and private direct deals, used by 15 percent.

While alternative investments may fill a variety of portfolio needs, including income generation and capital preservation, investment returns were advisors’ most-cited reason for using alternatives.

iCapital also found that there’s independent advisor demand for the niche its digital alternatives platform fills, as half of the study’s RIA and independent broker-dealer respondents complained that ease of access issues impacted their ability to allocate to private equity and hedge funds. Fewer than 10 percent of wirehouse respondents voiced similar complaints.

“This research shows that advisors recognize the potential benefits of investing in alternative asset classes,” said Lawrence Calcano, iCapital Network CEO, in a released comment. “However, the ability to access high quality alternative investments has historically varied widely based on the business model of an advisor. ... Our goal is to more broadly democratize alternative strategies and exposures for all high-net-worth advisors.”

RIAs were more likely to name diversification and unique investment opportunities as reasons to invest in private equity funds than advisors in other channels, according to iCapital, a difference that might be caused by their historically limited access to alternatives.

Private direct deals generated the most enthusiasm among the respondents, with 93 percent looking to maintain or increase their allocations over the next year. Enthusiasm for private equity funds was also high, with 87 percent planning to maintain or increase their allocations. Hedge funds were viewed less favorably, with 61 percent of the respondents planning to increase or maintain exposures.

For its report, iCapital surveyed 463 advisors during the second quarter of 2018, 99 percent of whom had been in business for at least 10 years and 60 percent of whom had more than 20 years of experience. Most of the advisors, 55 percent, had between $500 million and $750 million AUM, with 34 percent reporting AUM greater than $750 million and 11 percent reporting AUM less than $500 million.