NEW YORK (January 24, 2025) – ISS Market Intelligence (MI), a leading provider of data, analytics, insights, media, and events solutions to the global financial services industry, announced the latest results of its ISS MI Advisor Pulse Series – Alternatives study, comprised of results from almost 700 interviews with U.S.-based financial advisors in November 2024.
Intermediary advisors are a critical source for asset managers to target when seeking to expand the distribution of their alternative offerings. The complexity of these strategies means many investors will require the expertise of an advisor to walk them through private and frequently opaque markets.
The report explores the consistent increase in financial advisors investing client dollars in alternatives. In 2024, 45 percent of advisors said they invested in alternatives, compared to 43 percent at the end of 2023 and 39 percent at the end of 2021.
Wirehouses showed the largest proportion of advisors investing in alternatives, with 72 percent of wirehouse advisors indicating that they invested client dollars in alternatives in 2024. Wirehouses also saw the largest increase in alternatives from the year before, growing from 61 percent at the end of 2023.
The findings underscore a growing trend among advisors and investors seeking diversification and resilience in the face of persistent market volatility and heightened correlation among traditional assets. When asked the leading reason why advisors are turning to alternatives in their clients’ portfolios, 65 percent said diversification was the strongest motivation, with 83 percent listing it as one of their top three reasons.
Among advisors investing client dollars in alternatives, private credit remains the top strategy overall, with 64 percent of advisors who invest in alternatives indicating they used private credit. Wirehouse advisors also have the heaviest involvement in private credit, with 79 percent of wirehouse advisors who invest in alternatives indicating they used private credit, a more than 20 percentage point gap over RIAs and other broker-dealer advisors who invest in private credit. Advisors further stated that, when adding alternatives to clients’ portfolios, they were most likely to decrease investment in taxable fixed income as a result, highlighting the importance of private credit for fixed income-oriented asset managers.
The inherent complexity and opacity of alternative investments, particularly in areas like private credit and private equity, highlight the critical role of financial advisors. Expertise is essential for navigating these markets and ensuring investors understand the risks and opportunities.
Alan Hess, lead researcher on the ISS MI Advisor Pulse Series, commented on the findings: “Our research highlights a pivotal moment for the industry. Financial advisors are critical in bridging the gap between complex alternative markets and investors’ needs, serving as partners to asset managers facing increased competition for their traditional active strategies. Private credit has become a standout option as investors have heightened concerns about correlation between equity and bond returns. The growth in alternative investments underscores the importance of trusted advisors who can demystify these strategies and align them with their clients’ long-term investment goals.”
The report emphasizes the importance of asset managers and advisors working together to promote alternatives, improve access, and empower investors to make informed decisions in these evolving markets. To learn more about ISS MI’s Advisor Pulse Series, visit https://page.issmarketintelligence.com/advisor-pulse-series
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ISS Market Intelligence (MI) is a leading provider of data, insights, and market engagement solutions to the global financial services industry. ISS MI empowers asset and wealth management firms, insurance companies, distributors, service providers, and technology firms to assess their target markets, identify and analyze the best opportunities within those markets, and execute on comprehensive go-to-market initiatives to grow their business. Clients benefit from our increasingly connected global platform that leverages a combination of proprietary data, powerful analytics, timely and relevant insights, in-depth research, as well as an extensive suite of industry-leading media brands that deliver unmatched market connectivity through news and editorial content, events, training, ratings, and awards.
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