Mind the Gap: Aligning recommendations with expectations on Alternatives
Alternative investments are becoming a key part of HNW clients' portfolio strategies. However, recent research highlights a gap between what many investors are seeking and what they are being offered. The findings from The Alternative Advantage, a study by Praemium, show that although 62% of advisers now recommend alternatives, clients often explore and access these investments through other channels.
Just 50% of HNW investors cite their adviser as their primary source of insight into alternatives. Instead, many are turning to peer networks (43%) or attending events (38%) to inform their decisions. Moreover, 43% of alternative investors say they took the initiative to invest after conducting their own research, compared to only 28% who say their adviser introduced the opportunity.
This trend suggests that while demand for alternatives is strong, many advisers may not be initiating the conversation early—or deeply—enough to maintain a central role in the investment decision.
Preference doesn't always match recommendation
Interestingly, the research shows that there is a notable misalignment between what advisers are recommending and what clients are choosing. While infrastructure is the most recommended alternative asset by advisers (85%), only 23% of HNW investors hold it. Meanwhile, venture capital and hedge funds - held by 45% of investors - are less commonly recommended.
This gap is likely a result of the practical challenges advisers face with these assets, including access, due diligence demands, or compliance requirements. Even so, it highlights a valuable opportunity for advisers to revisit how they align their investment offering with their clients' interests.
Education and access are key
Barriers to adoption still exist. More than half (55%) of HNW investors who have not yet invested in alternatives cite a lack of knowledge as their primary obstacle. This represents a clear opportunity for advisers to reassert their value, not just in providing access, but also through education and guidance.
Practical steps to close the gap include:
Initiating strategic conversations early - even if clients haven’t asked. Framing alternatives as a tool for potential needs such as diversification, legacy planning or ESG alignment can open dialogue.
Utilise the broader access options that have been created: Enhanced access to alternative investments has created greater accessibility for investors beyond the traditional institutional and HNW/UHNW options, with listed formats or even evergreen structures now available.
Engaging proactively with platforms and managers who can offer institutional-quality access, transparency and reporting on alternatives.
A generational shift
Perhaps most notably, younger investors (aged 18–40) are showing strong intent to enter the alternatives space, with 81% saying they are likely to invest in the next year. This demographic is more open to innovation, including digital assets, and is seeking greater personalisation.
For advisers looking to build their future HNW pipeline, ensuring a capability in alternatives is increasingly important, not just for current relevance, but long-term client acquisition and retention.
Alternatives are a fast-evolving space, and clients are moving quickly. Advisers don’t need to overhaul their entire proposition overnight, but by starting conversations, deepening their knowledge and reviewing access pathways, they can ensure their recommendations remain aligned with what today’s (and tomorrow’s) HNW investors are really seeking.
Download the full Alternative Advantage report from Praemium to explore the key insights and learn how advisers are successfully incorporating alternatives into their client strategies.