Alternatives spark 'real' opportunities for HNW advisers

There are an increasing number of high-net-worth (HNW) investors using alternative assets to diversify, protect against inflation and lessen returns related to the public markets, with Praemium saying advisers should look to capitalise from this trend.

The research follows the company's recent report on HNW clients leaning towards investing in non-custody assets, which include alternatives.

Praemium revealed a surge in appetite for alternatives, showing that just under a quarter of Australia's HNW investors (22%) are already allocating to alternatives, with a significant proportion planning to invest further or enter the market in the next 12 months.

For those already investing in the space, 85% plan to increase their allocation in the next 12 months, while 46% of HNW investors who do not currently invest are considering doing so.

The research also highlights HNWs are becoming more proactive in the area, where 70% had engaged with financial professionals in the past year, and 84% of those are opting to work with financial advisers, establishing fruitful opportunities for advisers.

"There's a real opportunity for advisers to lead the conversation, particularly now," Praemium chief strategy officer Denis Orrock said.

"Clients want to understand how these assets perform in different market cycles, and they're looking to their advisers to filter opportunities and provide clarity.

"Advisers who can bridge the access and education gap on alternatives will be well positioned to add value and differentiate their offer."

Further, among the asset class, private equity remains a "common" holding, but there is growing interest in areas such as infrastructure, water rights, venture capital and hedge funds.

Orrock added that while private markets have faced scrutiny and valuation resets in recent months, HNW investors continue to see alternatives as a "strategic component."

"Platforms play a key role in helping advisers access the growing range of alternative assets while providing the administration, reporting, and execution support to implement them effectively," Orrock said.

"The significant growth in funds allocated to alternatives on the Praemium platform, coupled with growing interest in our Spectrum solution, clearly signals that advisers are actively seeking platform partners with specialised expertise to support this dynamic asset class."