More Financial Advisors Are Using Alternative Investments
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Slightly more than 81% of financial advisors and other investment specialists are now using alternative investments for their clients, up from 74% a year ago, and nearly 69% plan to increase their use of these investments during the coming year, the online survey found. It included 925 registered investment advisors, registered representatives and other wealth managers. The survey results will be highlighted at FA and PW's upcoming 3rd Annual Alternative Strategies Conference July 30-31 in Denver.
"These findings are consistent with what we've been hearing anecdotally from our readers for several years, and the reason we decided to launch the first and largest alternative investments conference for advisors," commented David Smith , founding group publisher of Charter Financial Publishing Network (CFPN), which publishes FA and PW.
Financial advisors responding to the survey noted many reasons for using alternatives — investments including real estate, tax liens, precious metals and non-traded REITs, among others. One reason: As market volatility continues to raise client concerns, alternative investments are gaining traction as a way to smooth out the highs and lows for investors. Most advisors who responded say they come to this space because of its non-correlation to the rest of the market.
Most of the survey respondents were RIAs or reps for broker-dealers. Most respondents (60%) have been in the financial business for more than 15 years.
"The survey shows that because of market volatility, solutions are clearly needed for investors," said Ray Nolte , CIO of SkyBridge, an alternative asset manager with $6.3 billion in assets under advisement or management. "The adoption rate for alternatives [as one of those solutions] is quite strong. The survey reinforces the fact that RIAs and financial advisors are looking for solutions for their clients. Some 75% increased their use of alternatives in the last year and more than two-thirds plan to increase their use in the future. The standout [statistic] is that [nearly] 88% say they are using alternatives for diversification or low correlation to the market, which circles back to the market volatility that is causing this high adoption rate for alternatives."
Nolte points out that it is industry veterans with years of experience who are embracing these investments: 31% of those using alternatives have used them for two to five years, and 24.63% have been using them for five to 10 years. Nearly one-quarter have included alternatives in their clients' portfolios for 10 years or longer.
Most use a combination of different types of alternative products, but nearly 44% use managed futures and 35% use private equity. More than 30% like funds of hedge funds; nearly one-quarter use hedge funds; and 21% use hedge fund replicators. Most alternative investors (87.94%) say they like hedge funds or funds of hedge funds because of the risk management benefits, such as their low correlation to other asset classes and their diversification. About 40% use them for alpha generation.
CFPN, based in Shrewsbury, N.J., publishes Financial Advisor and Private Wealth magazines, as well as Journal Of Indexes and Exchange-Traded Funds Report. CFPN also sponsors and produces industry conferences, workshops and Webinars, and offers a wide range of digital content at http://www.fa-mag.com.
Financial Advisor Magazine
SOURCE Financial Advisor Magazine
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