How Should I Discuss Investing in Alternative Assets With Clients?

Alternative assets, distinct from traditional stocks and bonds, can offer an attractive opportunity for diversification and increased returns.

Because of this, 53% of financial advisors plan to increase alternative investment allocations to over 15% in the next two years, with 20% aiming for allocations exceeding 25%.

But how do you talk to your clients about integrating alternative assets? This blog post will show you – giving insights on communication techniques, education strategies and how you can really understand what your clients want. 

1)      Effective Communication Strategies

To effectively communicate with clients about alternative assets, simplicity is key. Break down complex concepts into easily understandable terms. 

Walter Davis, an alternatives investment strategist for Invesco Ltd, highlights this:

“We need to simplify the way we talk about alternatives to clients and move away from Wall Street-speak.”

Being specific is also important. Try highlighting the tangible benefits of a specific investment, like small business finance investment notes, rather than talking about the advantages of alternative assets more generally.

2)      Educating Clients

In a recent survey conducted by Morningstar, investors were asked about their knowledge across nine popular asset classes. 

The findings showed that many investors felt uncertain about alternative asset classes, with over half admitting they couldn’t confidently define most options.

But research shows that Generation X and Millennials investors are particularly interested in learning about alternatives. This shows the importance of providing educational tools on alternative investments.

You can use our educational tools to help your clients learn about the advantages, risks, and potential returns that alternative assets can provide. 

3)      Understanding Client Needs

To know which alternative assets your clients might be interested in, it’s important to understand their financial goals, risk tolerance, and investment preferences.

Try asking your clients questions like:

• What’s your biggest worry about your investments?

• How do you feel about short-term losses for long-term gains?

• How important is liquidity for you?

By understanding your clients’ unique situations and aspirations, you can customize investment strategies to suit them.

This personalized approach boosts client satisfaction and also fosters trust and loyalty in the long run.

What can I do now?

Implement effective communication, education, and personalized investment strategies as ways of talking to your clients about investing in alternative assets. 

If you want to learn more about how to use alternative assets click here, or take one of our interactive quizzes.