Reframing the role of alternatives

A survey in partnership with InvestmentNews Research shows financial professionals and investors want more education on investing in alternatives.

Reframing the role of alternatives

A survey in partnership with InvestmentNews Research shows financial professionals and investors want more education on investing in alternatives.

Investor goals

Investors are focused on loss prevention and risk mitigation. In the survey, they named “protection from losses,” “reducing volatility” and “diversification” as areas they would like to concentrate on in discussions with their financial professionals.

The need for education

Financial professionals and their clients are searching for ways to navigate today’s challenges, especially as many investors are nearing or in retirement. Alternative investments may help – and our recent survey shows both are interested in alternatives. However, financial professionals and investors also said they need a stronger understanding of how to use alternatives in a portfolio to have better conversations on investing in alternatives.

Key takeaways

Financial professionals aim to increase client allocations to alternatives from 5% to 10% over the next 3 years and the number of products used from 4 to 6.

Investors are open to alternatives and financial professionals believe alternatives can help meet investor needs. Yet conversations between the two about alternatives aren’t taking place.

The largest impediment to more productive client conversations about alternatives is likely a knowledge gap. Financial professionals disclosed they need more education on alternatives and believe their clients do as well.

Conversations between financial professionals and investors should focus on explaining “why alternatives” and portfolio applications for various asset classes and strategies.

Learn more

Our white paper discusses how enhanced education can help clear up misperceptions and false assumptions financial professionals and their clients have about each other’s views on alternatives.

  • The FS Investments and InvestmentNews Research survey was administered through Qualtrics to a sampling of 864 individual investors between August 14, 2019 and September 6, 2019 and 342 financial professionals between August 22, 2019 and September 9, 2019. For their participation, financial professionals were offered a complimentary copy of the study and investors were eligible to enter a drawing for a chance to win one of five $50 Amazon gift cards.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

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