Use of alternative investments grows from 59%
to 67% between Q1 2022 and Q3 2022
NEW
YORK, Oct. 19, 2022 /PRNewswire/ -- A bi-annual
survey of 400 financial advisors released today 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.
Despite this surge, the surveyed advisors claim to lack sufficient
options and the right resources from asset managers needed to
implement these products in their portfolios.
![Private Fund/Alternative Products Used by Advisors 2022 Private Fund/Alternative Products Used by Advisors 2022](https://mma.prnewswire.com/media/1924566/Private_Fund_Usage_Chart_Oct_2022.jpg)
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%).
However, 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.
Asset managers are not adequately meeting financial advisors'
needs, despite an understandable surge in demand against the
backdrop of volatile public markets," said Matthew Schiffman, Principal of Distribution
Insight at Broadridge Financial Solutions. "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."
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 ("REITs") (70%), commodities
(39%), and private equity and venture capital (35%). Use of
cryptocurrency is at just 5%, unchanged since Q1
2022.
Advisors Continue to Outsource the
Investment Management Process
As the investment landscape becomes increasingly complex and
investors demand a high-touch customer experience, vehicles
allowing advisors to outsource the investment process and focus on
holistic planning continue to grow.
Separately-managed accounts ("SMAs") are on the rise with no
sign of slowing: 69% of advisors today are using SMAs, a
significant increase from the first quarter of 2021 (62%).
Fifty-three percent of current SMA users plan to increase usage in
the next 12 months.
Advisors surveyed also report that, on average, 57% of AUM is in
model portfolios. In-house portfolios are on the rise among
advisors, with usage rising from 55% in Q3 2021 to 66% in the third
quarter of 2022.
Additionally, of advisors who have some awareness of direct
indexing (85% of total), most have used or are considering it (only
32% have never used and are not considering using it).
Methodology
This survey was sponsored by Broadridge Financial Solutions and
conducted online. A total of 400 registered financial advisors
completed the survey, which was fielded in September 2022. For further details on survey
methodology, please contact a Broadridge media representative.
About Broadridge
Broadridge Financial Solutions (NYSE: BR), a global Fintech
leader with $5 billion in revenues,
provides the critical infrastructure that powers investing,
corporate governance and communications to enable better financial
lives. We deliver technology-driven solutions that drive business
transformation for banks, broker-dealers, asset and wealth managers
and public companies. Broadridge's infrastructure serves as a
global communications hub enabling corporate governance by linking
thousands of public companies and mutual funds to tens of millions
of individual and institutional investors around the world. Our
technology and operations platforms underpin the daily trading of
more than U.S. $9 trillion of
equities, fixed income and other securities globally. A certified
Great Place to Work®, Broadridge is part of the S&P 500® Index,
employing over 14,000 associates in 21 countries.
For more information about us and what we can do for you, please
visit www.broadridge.com.
Media Contact:
Matthew Luongo
Prosek Partners
+1 646-818-9279
mluongo@prosek.com
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SOURCE Broadridge Financial Solutions, Inc.