Asset Managers Race to Crack the Alts Distribution Code as Advisor Demand Surges
Retail asset managers expanding into alternative investments are finding that product development is the easier half of the equation — distribution is where the real work begins. According to the latest Cerulli Edge—The Americas Asset and Wealth Management Edition, the industry has yet to converge on a clear best practice for getting alternatives in front of advisors, even as demand from high-net-worth practices accelerates.
Among firms currently offering alternative investments, 54% rely on a hybrid model pairing a generalist wholesaler with an advisor-facing alternatives product specialist. Another 26% depend solely on generalist wholesalers, 15% use only an alternatives-specific wholesaler, and just 6% deploy an alternatives-specific wholesaler sharing territory with a generalist counterpart.
“One of the largest hurdles for managers is how to build or blend distribution teams to provide advisors the best client service,” said Andrew Blake, associate director at Cerulli. “Although resources vary significantly among firms, the mix of approaches shows a lack of a clear industry best practice.”
The stakes are rising. Advisors managing at least $500 million in assets currently allocate 4.4% of their portfolios to illiquid alternatives, a figure Cerulli projects will grow to 5.7% by 2027.
Yet advisor education remains the primary bottleneck. Three-quarters of asset managers surveyed identify it as the single most significant obstacle to distributing alternatives effectively. Cerulli recommends that managers address this by integrating product specialists more deeply into their wholesaling teams and equipping sales staff with substantive product data and portfolio construction tools.
“Wholesalers who collaborate with product specialists are more likely to be perceived as providing superior client service to advisors,” Blake added. “This approach can help foster trust and loyalty among advisors, ultimately contributing to a more resilient and collaborative investment environment.”