Advisors allocate 5% to alternatives; institutions 25%

The average advisor allocation to alternatives is roughly 5%, against 25% for institutions, according to an Oct. 27 WealthManagement.com column. The author said the shortfall comes from access, not demand.

Nine in 10 advisors already allocate to alternatives, the column said, citing CAIS and Mercer. Fidelity's allocation gap study, also cited, names limited manager access, fees, liquidity constraints and high minimums as the causes of the gap. The author said the best allocations are won through relationships, and terms are negotiated only when a buyer brings size and scale.

That means a small RIA buying through a platform gets the platform's terms, not its own.

Cerulli projects a 66 basis point average advisory fee on a $10 million client in 2026, about $66,000 a year. The column compared that fee with AI use: nearly three in four affluent investors use AI to help make investment decisions, while investors rank an advisor's judgment ahead of AI three to one, the column said, citing HSBC.

Clients now pay for access to private investments, the column concluded. It separates a firm that secured an allocation, negotiated terms and built a vehicle its investors could hold from one that listed a fund and added a fee.

Fidelity's $100 million custody minimum leaves 706 of 986 RIA relationships below it, Private Wealth Daily previously reported.

The column's worked example is sports franchises. Major League Baseball became the first major U.S. sports league to admit institutional funds as minority owners in 2019, followed by the NBA and NHL in 2021 and the NFL in 2024, according to the author. Qualified clients can now own a diversified pool of minority stakes across all four leagues through the right partner, the author said.

The column cited Standard Chartered for a correlation of approximately -0.01 between U.S. sports franchise values and global equities from 2007 to 2024. It contrasted that with 2022, when the S&P 500 fell 18.1% and the Bloomberg U.S. Aggregate Bond Index fell 13%. The correlation is for franchise values, not for the returns of a pooled vehicle holding minority stakes, so a client's net result depends on the vehicle's fees and terms, the same terms the column said only scale can negotiate.