Artivest Poll: Lack of RIA Access to Quality Products Resulting in Low Alternative Allocations

Jul 5 2016 | 7:29pm ET

Financial advisors broadly consider alternative investments to be a key element in growing their high-net-worth business, but poor access to quality products is resulting in low allocations, according to a new survey from alternative asset platform Artivest. 

The firm’s Alternative Investment Survey, which gauged advisors’ appetite for alternative investments, showed that 

Key findings of the survey include: 

  • 54% of advisors believe offering alternatives is important to retaining and attracting HNW investors
  • 26% of advisors think their adoption of alternatives is lower than institutions because of lack of access to quality products
  • 73% of advisors indicate that alternatives should make up more than 5% of an overall portfolio allocation
  • 90% of advisors maintain that a good digital experience is necessary to attract millennial HNW clients.

Advisors also cited higher retail client fees (22%), the length of time to identify and select managers (17%) and account paperwork/administration being too cumbersome (10%) as other top reasons for lack of adoption.

The Artivest investor survey polled 163 financial advisors and RIAs that attended Morningstar’s 2016 Investment Conference in mid-June.

The data suggests a perceived lack of access to quality products is creating a large missed opportunity for advisors, Artivest said in a statement. 

In fact, nearly three-fourths of advisors surveyed believe that alternative investments should make up more than 5%of a client’s overall investment portfolio. Among this percentage, 43% consider the ideal allocation to alternatives to be between 15-25%.

The actual level of allocations to alternatives reported by RIA industry publication Investment News in 2015 was 5%-10%. 

Those advisors who believe alternatives help attract HNW clients are three times as likely to want to allocate 15% or more of their clients’ portfolio to alternatives, Artivest’s survey revealed.

Survey findings also disclosed the importance of technology in attracting HNW clients, particularly among millennials; fully 90% of advisors surveyed indicated that a good digital experience is necessary to attract millennial HNW clients.

“We have seen an increase in demand for alternative investments from high-net-worth investors, and this survey confirms that advisors recognize the value of incorporating alternative investors in a client portfolio,” said James Waldinger, founder and CEO of Artivest. “As demand continues to grow, there is a clear need for greater advisor education around the vehicles available to access real, high-quality alternatives in a more efficient way.”

Founded in 2012, New York-based Artivest offers provides access to a select assortment of privately offered alternative investment funds at lower minimums via a proprietary, technology-driven investment platform. 

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