Advisors push alternatives into the investing mainstream as client demand broadens

Alternative investments, once treated as niche diversifiers, are now firmly embedded in the typical advisory toolkit.

A new CAIS–Mercer survey of nearly 800 financial professionals shows the asset class moving decisively into the mainstream with 90% of advisors already allocating to alternatives and 88% expecting to boost exposure over the next two years.

Nearly half of the advisors surveyed said they now commit more than 10% of client assets to alternatives, while roughly three quarters allocate at least 5%. And what had been a space largely reserved for wealthier households is expanding with 80% of advisors working with non-accredited clients reporting using alternatives.

“This year’s results send a clear message: advisor demand for alternatives isn’t a passing trend, instead it’s a structural shift,” says Brad Walker, President of CAIS. “We’re seeing advisors integrate alternatives as a core part of portfolio construction. As technology and AI continue to streamline access, we expect these allocations to deepen even further.”

Many advisors flagged education and suitability reviews as essential guardrails as adoption widens and are rethinking the operational side of alternatives.

Model portfolios have become the preferred way to manage allocations with 77% saying they help simplify the process. More than half of respondents pointed to analytical tools as their most valuable piece of technology, while integrations and digitized workflows followed close behind.

However, even as automation advances, many advisors say learning is best done face-to-face. The survey notes that one-on-one discussions and in-person events remain the favored method of evaluating new alternative offerings.

“Four years of consistent results indicate that advisors have a level of conviction around alternatives that parallels other institutional investors,” says Gregg Sommer, Partner and US Financial Intermediaries Leader at Mercer. “As advisor adoption continues, enhanced due diligence and research tools intended for the advisor community will be crucial in helping meet this demand.”

Private equity, private credit and real estate continue to dominate advisor allocations, at 89%, 88% and 86% respectively; but thematic strategies are catching attention as well, especially those tied to AI (70%), tax-focused approaches (58%) and the energy transition (36%). Half of all advisors surveyed expect to increase or maintain exposure to structured notes over the coming year.