Broadridge Survey Reveals Use of Alts Surging as Advisors Seek Diversification
A bi-annual survey of 400 financial advisors released by Broadridge Financial Solutions Inc. (NYSE: BR), a global Fintech leader, finds that advisors are increasingly leaning on private funds and alternative investments amid volatile equity and bond markets.
A bi-annual survey of 400 financial advisors released by Broadridge Financial Solutions Inc. (NYSE: BR), finds that advisors are increasingly leaning on private funds and alternative investments amid volatile equity and bond markets.
Despite this surge, Broadridge said the surveyed advisors claim to lack sufficient options and the right resources from asset managers needed to implement these products in their portfolios.
According to the Broadridge research, the use of private fund and alternative investment products continues to steadily increase over recent years, particularly as investors and advisors look for diversified assets that are not correlated with traditional asset classes. Sixty-seven percent of advisors report using such products today, compared to 59% in the first quarter of 2022, and 52% of current users report that they plan to increase usage over the next two years. The survey also finds that diversification is the most common reason why advisors are using or considering such products (76% cite as a top reason), followed by non-correlation with equity markets (69%).
Broadridge claims that despite this, just 27% of financial advisors who use or plan to use alternatives are very satisfied with the private funds and alternative investments products and resources available through their firm, while 16% report dissatisfaction overall.
“Advisors are acutely feeling the need for diversification in their clients’ portfolios but remain dissatisfied with the private fund and alternative investment products and resources available to them, largely due to limited availability and restrictive options,” said Matthew Schiffman, principal of distribution insight at Broadridge. “Asset managers are not adequately meeting financial advisors’ needs, despite an understandable surge in demand against the backdrop of volatile public markets. We see this as a strong, long-term opportunity for asset managers to showcase their value by providing product options that meet the growing demand for alternative investments among retail investors.”
The company explained, as advisors seek diversification, many express that they do not view cryptocurrency as a viable option. Instead, financial advisors report using alternatives such as real estate and real estate investment trusts (70%), commodities (39%), and private equity and venture capital (35%). Use of cryptocurrency is at just 5%, unchanged since Q1 2022.
