Alternatives providers perceive a tremendous opportunity to gather retail assets—Cerulli estimates that U.S. financial advisors own $1.4 trillion in less than fully liquid alternative investment assets and projects they will boost this total to $2.5 trillion by year-end 2028. While alternatives providers estimate that just 13% of their assets under management (AUM) is sourced from the retail channel, they expect it to climb to 23% in the next three years, according to The Cerulli Report—U.S. Alternative Investments 2024.

To capitalize on this trillion-dollar opportunity, alternatives providers and asset managers are increasingly aligning through strategic partnerships. 53% of asset managers report they currently rely on such partnerships and half (50%) are planning to increase this reliance. “Strategic partnerships enable alternatives providers and asset managers to leverage each other's strengths to reach new client segments that either firm may have been unable to serve on their own,” says Daniil Shapiro, director.

As partnerships proliferate, demand and development of multimanager product have reemerged, simplifying how all but the wealthiest investor tiers access alternative exposures. According to the research, multimanager product can gather traction with a range of investors below the $20 million+ ultra-high-net-worth (UHNW) and $5 million+ high-net-worth (HNW) wealth tiers and enable access to advisors seeking to inch into alternative investments landscape with simplified solutions.

“Investors are looking for simple-access solutions to alternatives where one ticket can get them access to the broader alternatives universe or access to multiple exposures within one alternatives sub-asset class (e.g., varying types of private credit). Advisors using such products are likely to be helping their clients take initial steps of allocating to alternative investments,” says Shapiro.

While partnerships offer alternative providers a legitimate path to retail assets, careful consideration should be given to partnership risks, including culture clashes, overestimating partners’ distribution capabilities, and the ability of the brand and exposures to resonate with advisors. “Distribution synergies across channels should be vetted and the future product roadmap taken into account to ensure product market fit,” he concludes.