CONSHOHOCKEN, Pa.--(BUSINESS WIRE)--A new survey from PPB Capital Partners (“PPB”) found that 98% of responding wealth advisors indicated they plan to increase or maintain client exposure to alternative investments in the coming year.
PPB, a provider of alternative investment solutions and streamlined processing for wealth advisors, surveyed the nation’s top advisors to better understand how they are thinking about alternative investments in this market environment and how they plan to use these strategies within their clients’ portfolios in 2021.
For those looking to add to their exposure, 85% indicated that they plan to increase their allocation between 5%-10% over the next 12-months. This is a big difference from 2017, when PPB’s survey revealed that 7% of respondents planned to decrease their clients’ alternatives allocations.
The survey results are based on the responses of 130 wealth advisors. Of those surveyed, 83% were RIAs or Bank Wealth Groups, 9% were Family Offices, and the remaining respondents were a combination of Institutions, Consultants, or High Net Worth Investors. About two-thirds of respondents manage over $1B in assets.
“These results are significant,” said PPB’s Founder and CEO Brendan Lake. “Almost 50% of wealth advisors said over half of their clients own alternative investments. For 24% of wealth advisors, the increased volatility seen in the markets during the COVID-19 pandemic has changed their view on the need for alternatives. But, implementing alternative investments can present operational challenges for wealth advisors and their clients.”
Strategies for Diversification and Return Enhancement
The majority of wealth advisors said that they use alternative strategies for diversification, risk management, and/or to enhance returns. Only 36% said they use alternatives for income, and less than 15% said they use alternatives to fulfill a client- or firm-driven initiative.
The strategies most likely to see an increase in allocation are real estate, private equity and/or private credit. Advisors planning to decrease alternatives exposure indicated the reduction will likely come from hedge fund strategies.
Overcoming Operational and Investment Hurdles
The largest hurdle wealth advisors face in increasing their alternative allocations over the next 12-months is dedicating the team resources needed for proper manager due diligence, the survey found. Once a manager and strategy have been selected, firms are often overwhelmed by gathering the required client documentation and completing the lengthy subscription process. This remains true across the industry, despite 62% of wealth advisors stating they use electronic subscription platforms.
“Some alternative investment platforms have chosen to make significant investments in technology to provide quick-fix, flashy, web-based tools,” said Lake. “While PPB uses technology to simplify and streamline the investment and operational processes, including electronic subscriptions, we believe that human connections matter. We prioritize personalized support to wealth advisors looking to allocate to alternative investments through our platform. This differentiates PPB from our tech-based competitors.”
Lake added that, "PPB is committed to providing value-added solutions to wealth advisors as they look to provide the benefits of alternative investments to their clients. Our goal is to simplify the process, remove many of the operational burdens and provide exposure to strategies and services that are typically only available to large institutions.”
For more information, please contact Jessica Sherburne at 413-237-3799 or js@ppbadvisors.com.
About PPB Capital Partners
Launched in July of 2008, PPB Capital Partners, LLC brings premier alternative investment solutions and streamlined processing to the wealth advisor community.
Important Disclosures
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