Affluent investors are dialing back their alternative investment targets even as access to the asset class broadens, according to Escalent's Cogent Syndicated division's annual Trends in Alternative Investments report. The study, which tracks adoption rates, asset allocation and access preferences among financial advisors and affluent investors, reveals a counterintuitive trend: the more investors learn about alternatives, the less they plan to allocate.
Average intended allocations among investors familiar with alternatives have dropped from 26% to 19% since 2025, bringing client expectations closer to the 14% to 16% range advisors typically recommend for liquid alternatives. On the advisor side, the share of heavy users—those with 10% or more of assets under management in alternatives—is projected to double from 21% to 40% within two years. Average advisor allocations are expected to climb from nearly 8% to around 11% over the same period.
“While demand for alternatives has remained resilient among advisors, liquidity constraints, high costs and complexity pose significant hurdles to expanded adoption. On top of these barriers, concerns around lack of knowledge and understanding of this asset class are prevalent,” said Kristin Hall, senior product manager in Escalent's Cogent Syndicated division.
Just over a third of affluent investors, 37%, said they understand only “a little” about alternative investments. “This suggests awareness is expanding, but knowledge remains limited among clients, highlighting a clear opportunity for advisors to provide specialized guidance and education,” Hall added.
That knowledge gap directly influences who initiates conversations about alternatives. Advisors, not clients, most often raise the subject. Among heavy users of alternative investments, however, clients initiate discussions 55% of the time, compared with 32% for light users, pointing to a link between investor familiarity and higher eventual allocations. This dynamic underscores the potential for advisors to deepen client engagement through education, as highlighted in RFG Advisory Integrates iCapital's Alternatives Platform to Meet Advisor Demand for Private Markets.
Millennials have been at the center of the sentiment shift. Initially drawn to alternatives in significant numbers, they are now recalibrating as market volatility brings risk into sharper focus. “Initially, millennials wanted to jump on the bandwagon with high allocations toward alternatives. But, as they learn more about the risks, especially following recent volatility, they are becoming much more realistic,” said Meredith Lloyd Rice, vice president in Escalent's Cogent Syndicated division. “As a result, we're seeing a shift in how millennials access these investment opportunities, with notable declines in platform-based access and advisors while continuing sustained interest in accessing via brokerage accounts.”
The findings align with broader industry trends. A separate Brookfield Survey: 56% of Wealthy Women Skip Alts, Awaiting Advisor Nudge similarly found that many affluent investors remain on the sidelines, waiting for advisor guidance. The Escalent report suggests that as knowledge grows, investor expectations are becoming more realistic, potentially narrowing the gap between client desires and advisor recommendations.
For advisors, the data presents both a challenge and an opportunity. With heavy users projected to double and average allocations rising, the demand for alternatives is expected to grow. However, overcoming liquidity, cost and complexity barriers—and addressing the knowledge gap—will be critical to capturing that demand. As the report notes, the shift in millennial behavior, from platform-based access to brokerage accounts, signals a need for tailored education and access strategies.
