Interest in Alternatives: A WealthTech Theme of the Decade

Introduction 

Alternative investments have rapidly gained traction among individuals, financial institutions, and wealth managers. In response to market volatility and changing investment preferences, advisors and investors have increasingly turned to private equity, real estate, hedge funds, and private credit. Financial advisors’ recommendations of alternative investments have risen sharply in recent years, with CAIS reporting 9/10 advisors incorporating them in client portfolios, underscoring the growing demand for diversification and non-traditional asset classes. As clients are switching to passive ETF strategies, advisors are looking for other ways to add value. Platforms bolstered with alternative access are enabling RIAs to give a convincing pitch offering boutique private investment selection to their clients.  

However, as the alternative investment market expands, it has become clear that structural inefficiencies remain. Transparency, liquidity, research, education, and onboarding friction continue to pose significant challenges. Addressing these issues is critical for the broader adoption and seamless integration of alternative investments into the wealth management ecosystem. 

Challenges and Solutions in Alternative Investments 

Transparency 

One of the fundamental issues in alternative investments is the lack of transparency. Unlike public markets, where real-time pricing, financial disclosures, and performance data are readily available, private market investments often lack standardized reporting. Investors struggle to assess valuations, performance metrics, and underlying risk exposure. Additionally, capital calls, distributions, and fee structures are not always clearly communicated, making it difficult for advisors to maintain an accurate and holistic view of a portfolio. 

To improve transparency, firms are implementing advanced data aggregation platforms, AI-driven document processing, and standardized reporting tools. Enhanced benchmarking capabilities and analytics allow investors to compare private investments with their public counterparts. Digital platforms now integrate real-time tracking of capital flows, helping investors understand commitments, cash flow projections, and investment performance with greater clarity. These solutions aim to provide a clearer picture of private market assets and reduce the opacity that has historically defined alternative investments. 

Liquidity 

Liquidity constraints have long been a concern for investors allocating to alternative assets. Many private investments involve long lock-up periods, preventing investors from accessing capital when needed. Unlike publicly traded securities, alternatives often lack a secondary market, making exits difficult. 

In response, firms are developing structured liquidity solutions, including secondary markets for private securities, fractionalization of private assets, and tokenization of alternative investments. Some platforms are facilitating peer-to-peer transactions to create liquidity opportunities within traditionally illiquid markets. Additionally, the rise of interval funds and tender-offer funds offers periodic liquidity windows, allowing investors to exit certain private market positions under specific conditions. These innovations are gradually improving the accessibility and flexibility of alternative investments, making them more viable for a broader range of investors. 

Research and Due Diligence 

Advisors and investors often struggle with limited access to reliable research and due diligence tools when evaluating alternative investments. Private fund structures, varying manager performance, and complex fee arrangements make it difficult to assess the suitability and quality of investments. Unlike public markets, where extensive data is available, private markets require a higher level of individualized analysis and verification. 

To address these gaps, platforms are offering curated fund databases, independent due diligence reports, and AI-powered research tools that aggregate data from multiple sources. Third-party risk assessment solutions are also being integrated into investment platforms to provide objective analysis of fund managers and strategies. Standardized fund rating systems and institutional-grade research tools are being developed to help advisors conduct more thorough evaluations. These advancements are enhancing the ability of investors to make informed decisions while reducing the risks associated with opaque investment structures. 

Education and Adoption Barriers 

Many financial advisors and investors lack the necessary education and resources to fully explain alternative investments, particularly to clients with no financial training. The complexity of private markets, the different risk-return profiles, and the nuances of liquidity constraints make it difficult for advisors to confidently recommend alternatives to their clients. Additionally, regulatory requirements and compliance considerations add another layer of complexity, further deterring adoption. 

To overcome these barriers, wealth management platforms and investment firms are introducing structured learning modules, certification programs, and interactive educational content focused on alternative investments. Online courses, whitepapers, and advisory training programs are equipping financial professionals with the knowledge needed to navigate private markets. Additionally, regulatory technology solutions are being integrated into platforms to streamline compliance checks, investor accreditation verification, and documentation requirements. By enhancing education and simplifying compliance processes, firms are making alternative investments more accessible to advisors and investors alike. 

Onboarding Friction 

The process of investing in alternatives has traditionally been cumbersome, requiring extensive paperwork, manual document verification, and long processing times. Many investors face delays due to complex subscription agreements, accreditation checks, and compliance hurdles. Unlike public market investments, which can be executed with a few clicks, alternative investments often involve weeks of administrative work before transactions are completed. 

To streamline onboarding, firms are leveraging digital workflows, e-signature integrations, and automated accreditation checks to reduce inefficiencies. Subscription platforms now provide a seamless, end-to-end digital experience, enabling investors to complete onboarding in a fraction of the time previously required. These solutions are also improving accuracy by reducing manual errors and ensuring that investment documents are processed efficiently. By automating key steps in the subscription process, onboarding friction is being minimized, allowing advisors and investors to allocate capital to alternatives more easily. 

The Future of Alternative Investments 

Notably, global AUM is projected to reach $29.2 trillion by 2029, reflecting a 74% increase from 2023 levels. As the alternative investment industry continues to evolve, solving these core challenges will be essential for long-term growth. Transparency, liquidity, research, education, and onboarding improvements are driving the adoption of alternatives within wealth management.

While significant progress has been made, ongoing innovation and regulatory developments will make alternative investments more accessible, efficient, and investor friendly. As firms continue to refine their offerings and integrate these solutions into the broader wealth management ecosystem, the industry is moving toward a more seamless and scalable approach to alternative investing. 

©2025 WealthTech Strategy Partners LLC