How to Talk to Your Clients About Alternatives

By Jason Plucinak via

Alternatives, the diverse class of investments that flies below the radar of analysts and media, has quietly grown to total $6.5 trillion worldwide, a ten percent increase from 2015 to 2016, according to research from Willis Towers Watson.

Ironically, if you’ve been advising clients for more than a decade, alternative investments probably haven’t been on the list of options you’ve discussed with most of them. Is now the time?

As the growth has shown, these less-than-traditional options have delivered on their promise of generating return on investment. Additionally, many of these alternative investments are not correlated with the broader market of stocks and bonds. The Great Recession drove home the need for greater diversification, and an extended low-interest-rate environment has nearly wiped out expected returns on bonds and cash investments. In the wake of such a shift, advisors are looking to reallocate client portfolios from a traditional 60/40 model to include at least 20% in alternatives. The question is this: How can you introduce alternatives to clients to get them on board? Here are three tips to help you guide the conversation with even the most traditional investors:

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