Many Affluent Investors ‘Have No Idea’ What Alt Investments Mean: Survey

44% of investors who work with advisors don't know whether their portfolio includes alternative investments

Jackson National survey finds affluent investors of all age groups need to be educated on alternative investments. Jackson National survey finds affluent investors of all age groups need to be educated on alternative investments.

Affluent investors across various age groups exhibit a lack of knowledge about alternative investments, with nearly 42% saying they have “no idea” what the term means, according to a just-released survey by Jackson National.

In its 2014 Alternative Investments Survey, Jackson National Life Insurance Co. found that of the 574 investors polled—which included affluent investors as young as 35 up to 65 that were not retired and had more than $200,000 in investable assets—52% of these investors defined alternative investments as “anything that is not a stock, bond or cash,” while close to 42% said they “honestly have no idea what alternative investments means.”

Of the 574 affluent investors polled, 327 respondents were currently working with an advisor. The survey notes that when the 327 were asked the same question about alternative investments, 141 (43.12%) also responded that they had “no idea what alternative investments means.”

Indeed, of those investors who work with an advisor, more than 44% said they don’t know whether or not their portfolio includes alternative investments.

In the same vein, the survey notes that the percentage of respondents who said they didn’t know how alternative investments perform in the market relative to other types of investments was slightly higher (57.19%) when considering those currently working with an advisor, as compared to the full results (56.79%).

For investors working with an advisor, more than 63% said they rely on their advisor to explain each investment in detail, with a further 11% giving full control to the advisor when it comes to their investment portfolio.

What’s more, 12.54%, the second highest percentage, said they would rather do their own research online using financial news sites, websites and blogs, regardless of the fact that they currently work with an advisor.

The survey notes that while the data paints a “dismal picture,” about affluent investors’ lack of knowledge regarding alternative investments, “select statistics” representing an overall interest in additional education and knowledge in the alternative investment space “provide a glimmer of hope, and an opportunity for all of the stakeholders in the financial services industry to work toward filling the gap.”

-- Related: Taming Risk in Alts to Fit Into Client Portfolios

Reprints Discuss this story
This is where the comments go.

Related

Diversification Is Futile; Economy a ‘House of Cards’: Axel Merk

Investors cannot rely on traditional investment principles at a time when government and consumers have a common interest in currency...