Alternative assets to gain share in client portfolios, say advisors

A significant number of advisors will be stepping up allocations to alternative investments within their clients' portfolios in 2025, according to a pair of new surveys. 

A poll from the Digital Assets Council of Financial Professionals, sponsored by Franklin Templeton Digital Assets, found that 24 percent of advisors now have a majority of clients invested in digital assets, marking a 25 percent increase from the previous quarter.

The quarterly snapshot survey, taken between October and November, also found that 20 percent of advisors now recommend cryptocurrencies to all their clients – nearly double the percentage reported in DACFP's third quarter survey last year. The percentage of respondents encouraging 10 percent to 14 percent allocations also edged up by 3 percent quarter-on-quarter.

Two-thirds (65 percent) of the polled advisors said they have recommended crypto to at least 10 percent of their clients, including more than a third (35 percent) who discussed it with at least half of their client base. Among advisors not yet recommending crypto, 46 percent said they plan to do so, including 33 percent who said they'll begin within six months.

The climate for cryptocurrencies has grown even sunnier since President Donald Trump's November victory at the polls. With the launch of the SEC's crypto task force, a series of upcoming CFTC roundtables on digital assets and other market innovations, and hints of subtle approval from the Fed, advisors may very well warm up further to those alternative assets in the coming months.

Meanwhile, a separate global survey from Hamilton Lane found that 30 percent of financial advisors plan to allocate 20 percent or more of client portfolios to private markets in 2025. A three-fifths majority (59 percent) of respondents expect to allocate more than 10 percent to these investments, reflecting a 15 percent increase from the firm’s 2024 palpation.

"Just a few years ago, we would never have expected to see nearly 60 percent of advisors planning to allocate 10 percent or more of clients' portfolios to this asset class in the coming year," Steve Brennan, head of private wealth solutions at Hamilton Lane, said in a statement revealing the findings. "To us, this reinforces the growing understanding of the wealth creation opportunities within the private markets."

Among private market investments, infrastructure is gaining the most attention. One in two respondents (48 percent) revealed plans to raise their exposure to the asset class citing high barriers to entry, stable cash flows, income potential, and diversification benefits. Still, private equity and private credit remained the most widely held private market strategies, leading the way in terms of portfolio allocations.

More than three-fourths (76 percent) of advisors said their clients see private markets as offering higher return potential than traditional investments, with performance and diversification cited as the main factors driving interest.

Regional interest in private markets is particularly strong in Asia Pacific (51 percent) and the Americas (48 percent), where nearly half of advisors saying their clients are "very interested" in these assets.