CAIA: Hurdles Remain For Advisors Looking To Add Alts

New Report States Advisors Are Increasingly Interested In Adding Alts But Are Having Problems Integrating Them
Aaron Filbeck, Managing Director and Head of UniFi by CAIA at CAIA Association
Aaron Filbeck, Managing Director and Head of UniFi by CAIA at CAIA Association

Advisors and other wealth management professionals have an improved understanding now of why they should be offering clients alternatives and access to alts has improved significantly, according to the Chartered Alternative Investment Analyst (CAIA) Association.

But the “practical implementation” of them – the “how” – “frequently remains underdeveloped,” CAIA said Monday as it released a new report, “Crossing the Threshold: Mapping a Journey Towards Alternative Investments in Wealth Management.

The report was designed to serve as a “roadmap” for asset and wealth management professionals to thoughtfully move into what CAIA calls a “second phase of democratization” of alternative investments, which began post-global financial crisis.

Fifteen years after the industry’s experimentation with liquid alternatives, an even broader selection of private market products have been made available to many investors, according to CAIA.

However, this time there is improved technology and access points, CAIA said.

Contributors to the new report included CAIA leadership and four widely recognized senior professionals across the wealth management industry, including: Sandy Kaul, Senior Vice President and Head of Industry Advisory Services at Franklin Templeton; Fran Kinniry, Principal and Head of the Vanguard Advisor Research Center; Sylvia Kwan, Chief Investment Officer at Ellevest; and Shannon Saccocia, Chief Investment Officer at NB Private Wealth.

“Over the past decade, there has been a collective effort across wealth and asset management firms to broaden access to alternative investments for individual clients,” according to Aaron Filbeck, Managing Director and Head of UniFi by CAIA at CAIA Association.

There’s still a lot of room for [alternative investment] growth when you look at current average allocations relative to those found in institutional portfolios.

Aaron Filbeck, Managing Director and Head of UniFi by CAIA

“Yet there’s still a lot of room for growth when you look at current average allocations relative to those found in institutional portfolios,” he said. “While there’s always work to be done on ‘the why’ behind including or not including alternatives, many firms are looking for guidance on the ‘the how.’ Implementation is a journey, and each contributor provides thought-provoking insights, important questions to ask, and approaches to help navigate that path.”

In the report, Filbeck reflected on the past, saying: “Relative to individual investors, institutional investors have had a multi-decade head start regarding alternative investments. Their size and scale have allowed them to efficiently invest across multiple risk premia and generate attractive risk-adjusted returns for their constituents over multiple economic regimes.”

The CAIA Association represents professionals in over 100 countries.

Jeff Berman, Contributing Editor & Reporter at Wealth Solutions Report, can be reached at jberman@wealthsolutionsreport.com.

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