‘Wise up or lose out’ as clients demand alts expertise
Wealth managers who lack expertise in alternatives could find themselves at risk of losing clients, according to iCapital, with a shift towards evergreen funds at play in asset allocation.
The firm’s Global Advisor Survey 2025 questioned 603 advisers globally and found 96 per cent of respondents said they plan to maintain or increase their exposure over the next year.
Globally, over half of advisers (56 per cent) said they were most interested in allocating private credit, but this rose to 71 per cent for those in Asia-Pacific. Similarly, 70 per cent were interested in hedge funds in Asia-Pacific compared to 54 per cent globally.
There was particular interest towards evergreen funds, with over three-quarters of advisers saying they expect them to make up 10 per cent or more of their clients’ portfolios, which iCapital described as a marked “shift” by advisers.
In a commentary, the firm said: “It is wealth managers and investors who are now aware that compared to a traditional 60/40 portfolio, a 50/30/20 allocation to alternative investments can enhance a portfolio’s growth and income potential while at the same time improving its volatility profile.
“In other instances, investors are simply questioning the ability of the traditional 60/40 portfolio to deliver above-average returns, especially if investors are concerned that we may be looking at a new world of anaemic stock market returns.”
However, this desire to adopt alternatives does not mean it is an easy path for advisers to implement them in portfolios. The top reason advisers cited as hindering them in their allocations was the difficulty in assessing liquidity and risk exposure across asset classes (55 per cent), followed by understanding how they would impact their broader portfolio construction (53 per cent).
This highlights the importance of financial education around this asset class, iCapital said, with gaps in advisers’ knowledge existing around fund structures, technology, and execution. Some 58 per cent said they would be interested in further education around technology and implementation of investing in alternatives, and 49 per cent sought investment fund-specific content.
The firm went so far as to state that those wealth managers who lack sufficient education to explain the assets to their clients are putting themselves at risk of losing clients.
“Those who do not build a core competency in alternative investments, whether due to a lack of knowledge, competing priorities, inadequate technology or fear of operational burdens will be creating business risk. In fact, absent a core competency, they should not be surprised to see their clients utilise another wealth management relationship.”
Financial advisers have previously told Money Management that they believe fund managers need to improve their education and communication about alternative funds as well as how they are relying on business development managers for information on the strategies.
Previous research by consultancy EY found 60 per cent of clients in Asia Pacific said they are currently using alternatives and 27 per cent are interested in doing so in the future. EY said it believes many clients are under-allocated to the asset class and that advisers are underestimating demand.
"Clients across every wealth segment are making a concerted effort to gain exposure to a growing range of investments, including real estate, private credit and digital assets.
“Our findings also suggest that advisers are missing opportunities to bring new investment ideas into client conversations. That is especially true for more specialised asset classes and investment strategies.”
Similarly, Hamilton Lane said Australian advised clients exhibit the highest enthusiasm for the asset class globally, with 61 per cent of clients described as “very interested”.
US firm iCapital is a fintech platform that enables asset managers and distributors to expand access to private markets.
Earlier this year, it worked with fintech platform GeoWealth to launch a model portfolio for asset manager BlackRock which delivers access to both private and public markets in a single managed account.
AUTHOR
Laura Dew
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