More than nine out of 10 advisors anticipate a significant increase in their use of alternative asset classes over the next year. Of those who expect an increase, more than half said the activity would jump 15 percent or more while nearly a third said they would raise their alternative asset activity by 20 percent or more.
The findings come on the heels of the Elite Access Alternative Investment Survey conducted by Jackson National Life Insurance Company (Jackson), Lansing, MI. The survey, comprised of responses from over 2,000 financial advisors, sought to gauge their current use of alternative investment products as well as to pinpoint their most crucial needs from product providers.
Unsurprisingly, the responses showed a zealous interest in increasing the expected use of alternative investments to isolate and diversify client’s portfolios from the current volatility of the market. Since the financial upheaval began in 2008, alternative assets that are uncorrelated to the market have become increasingly alluring to advisors.
The reason for increased interest in alternative investments was fairly consistent among all advisors surveyed, with nearly two-thirds citing further diversification as their primary reason. Although there is a palpable excitement among advisors, many of those surveyed admitted to some trepidation. Advisors said that they were particularly fuzzy about the practical use of alternatives as well as understanding how to utilize them in their client’s portfolios.
There is a conspicuous knowledge gap that advisors have when it comes to implementing alternative assets, those surveyed hope that guided strategies from product providers will be able to collapse that space. More than 95 percent of respondents said that guided strategies would be very or somewhat important in their construction of client portfolios.
“The trend toward alternative asset classes among retail investors has been growing steadily for the past several years and this survey highlights the growing demand for new strategies. Over the last decade, markets have experienced record volatility. We’re entering a new era of diversification and alternative asset classes are becoming a significant part of that development,” said Clifford Jack, executive vice president and head of retail for Jackson.