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Alternative Market Briefing

68% of asset managers rate alternative retail distribution as a challenge

Thursday, August 11, 2022

Laxman Pai, Opalesque Asia:

68% of managers rate the distribution of alternatives as a major or moderate challenge, said a study.

After a wave of acquisitions, managers need to overcome retail distribution challenges as they seek to integrate alternative investment capabilities, said the new research from Cerulli Associates, 'U.S. Alternative Investments 2022: Delivering Alternative Capabilities to Retail Investors.'

According to the study, targeting retail channel assets with alternative investment capabilities is an exceptionally important industry trend.

Meanwhile, Managers appear less focused on acquiring alternative capabilities in 2022 than in 2021 (43% planned to increase acquisitions vs. 69% last year).

Whether they have built alternative capabilities internally or acquired them, firms will need to ensure that they have well-aligned and incentivized distribution functions, it said. "Alternatives distribution is exceptionally complex given the tremendous education requirement for advisors to become comfortable with the more expensive exposures that wholesalers will need to be heftily compensated to sell," said Daniil Shapiro, director, Cerulli Associates.

According to the research, 43% of distribution executives indicate that increasing the technical skills of existing wholesalers is a top-three priority. "Managers will also be faced with a talent war as a range of firms looks to staff up to distribute the product," adds Shapiro.

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