Over the last year Praemium has seen a 23% increase in funds allocated to alternatives, with alternatives now approaching $6bn in FUA on the platform and accounting for 11% of total FUA. It is a trend that aligns with the findings of the research and highlights the importance of advisers prioritising engagement and education to empower clients in navigating this shift in investment preferences.
Key statistics from the research include:
17% Adoption Rate: Over 17% of HNW investors are now diversifying their portfolios with alternative assets, showcasing a growing appetite for dynamic investment strategies.
27% Higher Engagement: HNW investors embracing alternative investments exhibit a remarkable 62% engagement with their portfolios compared to those adhering solely to traditional asset classes (35%), underlining the appeal of exploring new investment avenues.
Trend toward Self-Directed Investment: Despite adviser recommendations, 64% of HNW investors seek out their own methods for investing in alternatives, indicating a gap in adviser-client dialogue and the need for enhanced collaboration.
Risk of Independent Investment Decisions: Failure to engage clients on alternative assets, risks investors seeking investment opportunities independently, potentially leading to disjointed portfolio construction and increased risk.
Speaking on the research Praemium’s Chief Strategy Officer, Denis Orrock notes: “Advisers often cite liquidity and transparency as hurdles for investing in alternative assets. A key contributor to successfully implementing alternatives into portfolios and overcoming these hurdles is leveraging a platform partner equipped with the capabilities to facilitate seamless trade execution and deliver transparent reporting on complex assets. Praemium has extensive experience with supporting advice firms to access these diverse opportunities from capital call management for private equity strategies to more sophisticated specialist alternative strategies investors are seeking.
As the research highlights there is a significant opportunity for advisers to have the collaborative advice relationship HNWs are wanting which can strengthen client relationships, mitigate the risk of clients seeking opportunities independently, and help the adviser position themselves as a trusted partner to guide them through the complexities of this asset class.”