CAIS Mercer Survey: Advisors See Alts as Way to Diversify Risk

Core Insights - Advisors are increasingly turning to private market assets for risk diversification in client portfolios, indicating a structural shift rather than a temporary trend [1][3] Allocation Trends - 90% of advisors currently allocate to alternative investments, with 88% planning to increase these allocations over the next two years [2] - Nearly half of the surveyed advisors (49%) allocate more than 10% of client portfolios to private market assets [2] - Significant allocations reported include private equity (89%), private credit (88%), and real estate (86%) [3] Investment Preferences - Advisors primarily cite risk diversification as the reason for allocating to various private market asset classes, with private equity and digital assets viewed as return enhancers [3] - Interest in thematic investment areas is growing, including artificial intelligence (70%), tax-advantaged strategies (58%), and energy transition-related investments (36%) [3] Challenges Faced - The top barrier for advisors remains "high levels of administration and paperwork," though this concern has decreased from 48% to 40% year-over-year [4] - Lack of liquidity is the second largest obstacle, cited by 38% of respondents [4] - Advisors prefer managing public and private investments on a single platform, a functionality that TAMPs are working to develop [4]