When talking to clients about alternative investments, keep it simple: experts

Also remind clients that performance is “manager-dependent instead of market-dependent,” says Blackstone's Avi Sharon.

Nov 16, 2016 @ 2:46 pm

By Jeff Benjamin

The key to helping clients understand and embrace adding exposure to alternative investments is talking plainly and breaking the strategies down to simple terms, according to a panelists speaking Wednesday in Miami at InvestmentNews' Alternative Investments conference.

“When I bring any investment to the table I try to break it down as simple as possible,” said Jay Schechter, senior partner at Singer Xenos Wealth Management.

Mr. Schechter was joined on the panel by Ed Butowsky, managing partner at Chapwood Investments, and Avi Sharon, principal of the private wealth management group at Blackstone.

“Advisers need to be more adept, confident and fluent when it comes to discussing alternatives,” said Mr. Sharon. “Bring it down to the basics, because alternatives are not really a black box.”

Instead of presenting a mysterious and complex-sounding strategy, Mr. Sharon said the message to clients should be about the straight-forward distinctions such as varying liquidity and performance that is “manager-dependent instead of market-dependent.”

“Alternatives are not a new asset class, they are using existing asset classes in different ways,” he noted, adding that his reliance on alternatives is part of his value proposition.

“My job is to try and steal clients from all of you,” he told the audience of financial advisers.


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