FPA report finds planners ramping up options, private credit allocations amid market turmoil

Financial planners are increasing their use of alternative investments amid growing uncertainty around economic conditions and market stability, according to new research from the Journal of Financial Planning and the Financial Planning Association.

The 2025 Trends in Investing Survey, conducted from March 23 to May 4 and based on responses from 195 planners, found a marked uptick in allocations to nontraditional assets.

Four-fifths of the respondents (79.39%) indicated they were CFP professionals, 51.5% said they were independent advisor representatives or RIA, and 55.3% said they had more than 21 years of experience in the financial services industry.

Among respondents, the reported usage of options surged from 8.65% in 2024 to 17.16% in 2025. Individually traded REITs climbed from 14.9 percent to 23.13%, and private debt rose from 12.5% to 19.4% over the same period.

"On the one hand, we see a doubling of the use of options. On the other hand, we see that the traditional 60/40 allocation remains a bedrock,” Lee Baker, practitioner editor of the Journal of Financial Planning and founder of Claris Financial Advisors in Atlanta, said in a statement unveiling the report on Wednesday. “The report provides a useful pulse check for advisers to see how they differ (or not) from other practitioners."

The data show that economic uncertainty (69%) and market volatility (63%) are the most frequently cited drivers of asset allocation reassessments. At the same time, 66 percent of respondents maintain at least some confidence in the 60/40 stock-bond strategy, indicating that planners are adapting rather than abandoning traditional approaches.

“The 2025 Trends in Investing Survey provides a crucial snapshot of how financial planners are navigating today's market and economy,” said Paul Brahim, president of the FPA.

Survey respondents also expressed growing dissatisfaction with previously popular themes. While 27% reported using ESG funds, just 8% expected to increase that allocation, and nearly 10% planned to reduce exposure. Cryptocurrencies remain on the periphery of client portfolios, used by just 5% of advisers, with minimal growth anticipated.

Alongside the rising interest in alternatives, separately managed accounts (SMAs) continued to gain traction. More than 43% of planners reported using SMAs, up from around one-quarter in 2019. However, high minimums and limited perceived value remain barriers for some. One respondent maintained that “SMAs are a lot of work to set up...not worth it at all.”

The survey also offered a glimpse into advisers' economic outlook, which varied from cautiousness to optimism over time. Across respondents, the weighted average score for sentiment was 3.53 (on a 1-to-5 bearishness scale) over the next six months, but dropped to 2.76 over the next year, 2.18 over two years, and 1.84 for the five-year outlook.

With respect to investment vehicles, exchange-traded funds remain the most widely used vehicle, with 93% of advisers currently allocating to ETFs and nearly two-thirds (63%) expecting to increase their usage. By contrast, nearly 30% anticipate decreasing exposure to traditional mutual funds despite current usage holding at 71 percent.

"Annuities of all stripes hold some favor with investment professionals, with roughly 3 in 10 saying current usage of fixed (38%), variable (36%), and indexed (31%) products," the report said.