As economic turmoil and high inflation continue to pose challenges, the latest research by platform provider Praemium, in conjunction with CoreData, found that investors are utilising alternatives to diversify their portfolios as a form of protection against shifting public markets.
Of the 181 high-net-worth (HNW) investors surveyed, 22 per cent have already incorporated alternative assets into their portfolios, while a further 46 per cent are considering jumping on the bandwagon in the next 12 months.
Among those already invested in the asset class, 85 per cent said they intend to increase their allocation further.
With the appetite for alternatives quickly growing, professional financial advisers are becoming increasingly valuable as clients navigate the complexities that come with the asset class.
Highlighting this, the report found that nearly half of investors lacked familiarity with the range of alternative investments available, providing an opportunity for advisers to help them bridge the education gap.
As such, more than two-thirds (70 per cent) of respondents said they had engaged with financial professionals in the last year, with 84 per cent of the cohort opting to work with a financial adviser.
Praemium chief strategy officer Denis Orrock said the current environment has created a real opportunity for advisers to lead and support their clients as they navigate shifting markets.
“Clients want to understand how these assets perform in different market cycles, and they’re looking to their advisers to filter opportunities and provide clarity. Advisers who can bridge the access and education gap on alternatives will be well positioned to add value and differentiate their offer,” Orrock said.
He explained that platforms also have a key role to play in this by providing advisers with the necessary tools to support client demands effectively and streamline the administration and reporting process.
“While private markets have faced renewed scrutiny and valuation resets in recent months, wealthy investors continue to see alternatives as a strategic component of their portfolios,” Orrock said.
“The significant growth in funds allocated to alternatives on the Praemium platform, coupled with growing interest in our Spectrum solution, clearly signals that advisers are actively seeking platform partners with specialised expertise to support this dynamic asset class.”
