Data & Research February 1, 2010

Advisers Increasingly Turn to Alternative Investments

The majority of financial advisers are looking to alternative investments as a way to diversify their portfolios, believing that traditional stocks, bonds and cash do not provide adequate portfolio diversification, according to a new survey.
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In fact, the survey from Rydex|SGI found, 81% of registered investment advisers (RIAs) and 78% of broker-dealer and wirehouse representatives (brokers) surveyed cite diversification as the main driver of alternatives usage.

Despite a feeling that the survey found that alternative investment usage and awareness is in the “adolescent” stage for RIAs versus the “infancy” stage for brokers. Only 8% of RIAs say that they have “little familiarity” with alternatives compared to 16% of brokers.

Although the majority of RIAs (96%) and brokers (95%) surveyed already employ alternatives in their client portfolios and most RIAs (61%) and brokers (53%) advocate using alternatives for many clients, 26% of RIAs and 35% of brokers think alternatives should be used only for a select few clients.

Overall, financial advisers indicate a significant appetite for additional education regarding alternative investments, with RIAs universally wanting to enhance their knowledge and 86% of brokers saying they would carve out time to learn more about using alternatives.

Security Global Investors in conjunction with Amplitude Research conducted this survey of 291 financial professionals (100 RIAs, 94 independent brokers and 97 wirehouse brokers) in November and December 2009.

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