Wealth management channel to account for more than U$3T in 2029
The importance of independent registered investment advisors and broker-dealers to the alternative investments market is highlighted in a new report.
These wealth management channels are estimated to account for U$1.37 trillion in alternative assets in the US, but this is set to grow exponentially to $3.03 trillion in 2029 at a CAGR of 17%, according to FUSE Research Network.
The asset management research and consulting firm says that the advisor-oriented wealth management market is the “next big frontier” in alts, with asset managers focusing their hedge, private equity, private debt, and other strategies towards high-net-worth and affluent investors.
With the overall alts market growing fast, FUSE believes that the wealth channels will see a larger share of the market as these assets, especially illiquid alts. While many asset classes are only available to accredited investors, the firm notes that investment gains mean a higher number of eligible investors with net worth of $1 million or more.
While some of the largest alternative asset managers including KKR, Blackstone, and Apollo already have advisor-oriented marketing and relationships, FUSE expects that more traditional firms will leverage marketing and sales expertise to expand their alts business with advisors.
“Traditional managers start with more advisor relationships in wealth channels, and 42% of asset managers surveyed by FUSE employ ‘alternatives specialists’ who supplement salespeople with in depth knowledge and education,” said Loren Fox, Director of Research at FUSE Research Network.
The firm expects seven key names to seek to drive growth of alts in the wealth management channels – BlackRock, Fidelity, Franklin Templeton, JPMorgan, Pimco, Nuveen, and Calamos.
“Having greater distribution resources helps improve advisor engagement, as FUSE sees from the firms that advisors named as among the top 10 alts brands,” said FUSE Research’s Fox. “But scale isn’t everything. Wealth-channel alternatives are still a relatively new development, and the ‘firms to watch’ list will undoubtedly change in coming years.”
