Alternative, Tactical Allocations on the Rise, Curian Survey Finds

• As a result of market volatility, nearly 4 out of 5 advisors report an increase in their clients’ demands for more conservative investments; in addition, 72% say their clients have an increased demand for guaranteed income features, 55% report an increase in demand for more tactical asset allocation, and 47% report an increase in demand for alternative investments.

• Nearly 80% of advisors using alternative asset classes report that their primary goal for including them is to diversify and further stabilize portfolio returns.

• 61% of advisors report that they plan to increase their use of alternative asset classes this year. Currently, 63% of advisors say their existing allocation to alternative asset classes (as a percentage of AUM) is 10% or less, while only 3% of advisors have 25% or more allocated to alternatives.

• The majority of respondents (38%) said that their main concern about using alternatives is that they are illiquid or less liquid in nature.

“Advisors are expected to wear two hats in managing their practices – both as financial advisors and as business owners – and they are becoming more sophisticated in what they expect from product providers,” Mark Schoenbeck, senior vice president of marketing for Curian, told AdvisorOne. “The survey makes it clear that advisors aren’t going to use a product unless it’s available to them in a user-friendly way, with functional online components and high-quality materials. And they also expect a high level of expertise and guidance to help them along the way. It’s up to product providers to continue to develop platforms that allow advisors do their jobs efficiently.”

The importance of streamlined wealth management systems is reflected in advisors’ goals for the coming year, the report adds. More than half of advisors cite improved efficiency and overall time management as their primary goal for 2012, while acquiring new clients remains a top objective.