Cerulli: Advisors Cool Toward Holistic Income Planning

Regarding use of alternative investments, Cerulli's experts say that "tracking success in the institutional marketplace and the need for differentiation are primary drivers behind advisor adoption of alternative products."

Another factor is today's tough market environment, the researchers write in the November 2009 issue of The Cerulli–Edge Advisor Edition. Many alternative investment products can offer lower correlation to traditional asset classes, they explain. Also, "nothing else is performing and these (alternative investment) vehicles represent the best opportunity for them to generate revenue in a bear market."

But the search for performance "has to lead some advisors to allocate these investments less-intelligently to clients' portfolios," the researchers warn.

Education, say the researchers, is key to advisor success in this area. That presents opportunities for manufacturers and broker-dealers, who can distinguish themselves by demonstrating to advisors how alternative investments can improve client portfolios, the experts conclude.