New technology might get a lot of attention and high adoption growth, but the investment dollars available for those providers are dwarfed by those that go into asset distribution.
SEP 24, 2026
Alternative investments have gotten a lot of attention for their growth in recent years, yet they still remain a relatively small part of the overall investment landscape. For example, there is around $20 trillion invested in alternative assets like private equity and debt, hedge funds, and real estate, but that’s a relative drop in the bucket compared to the estimated $318 trillion in combined global public equity and fixed income outstanding. Which roughly aligns to the estimated 3% average allocation to alternative investments by RIAs. Although many alternatives managers and platforms have pushed for higher adoption, various factors – from higher fees and complexity to liquidity concerns to the difficulty of due diligence on many disparate alternatives managers – have made advisors wary of allocating a substantial amount of their clients’ assets to alternatives, such that when they do include alternatives they don’t tend to exceed 10%–15% of the client’s portfolio.
But even though the average advisor doesn’t allocate a large amount to alternatives, those numbers add up when applied to the entire RIA landscape. With RIAs managing around $13.8 trillion of assets for individual investors, an average 3% allocation still equates to around $414 billion allocated to alternative investments. And assuming those investments charge around 2% per year in fees, that equates to around an $8 billion annual revenue opportunity for alternative investment managers solely from RIAs and their clients.
And because alternatives are so operationally distinct from traditional investments, they have a whole ecosystem of technology and services to make them possible for advisory firms to implement. They don’t have public data listed on sites like Morningstar, so there are providers like Canoe, Alkymi, and Altidar to do research and due diligence. They don’t trade on traditional broker-dealer platforms, so alternatives marketplaces like CAIS and iCapital connect advisors and their clients with alternative investment options. They don’t feed into standard reporting software, so tools like Arch exist to pull in the data to feed into other tools. And the opportunity associated with all of these tools tracks along with the alternatives market as a whole.
Which is why we’ve recently seen a number of strikingly large investments into alternatives-related platforms over recent months. In July, the alternatives marketplace CAIS raised $170 million in Series D funding at a $2 billion valuation, the data and reporting provider Arch raised $52 million in Series B funding, and the alternatives data and research provider Canoe was acquired by Bloomberg for what was reportedly close to $1 billion. All of which came just about one year after iCapital’s own whopping $820 million capital raise. In other words, at least $2 billion of investment dollars have flowed into the alternatives space in the last year alone – not into the alternative funds themselves, but just the platforms that help to distribute and support them.
What’s striking about these numbers beyond their sheer size is how vast they are compared to the investments flowing into other advisor technology. For example, in the AI notetaker space, which has been one of the hottest categories in the advisor technology space, Jump has raised $104.6 million since the start of 2025, while Zocks has raised an additional $58.8 million, and Nevis has raised $35M. In other words, since the start of 2025, the most sought-after category in advisor technology attracted just under $200 million of investment – which was no more than 10% of the amount that went into alternative investment technology over that same time.
The difference between those relative investment levels speaks to the fundamental difference between revenue models that are based on flat fees versus those that come from basis points. On the advisory firm side, there’s a reason why the vast majority of advisory firms continue to bill based on AUM even as they base their value proposition more on planning and advice than on asset management: Basis points tend to be far more lucrative, as shown by Kitces Research on Advisor Productivity showing that AUM advisors charge 2X–3X the annual fees of flat-fee advisors. In the world of vendors serving advisors, the divide is clear from who buys booths at industry conventions: When it costs $10k or more for a booth, a technology company selling $75/month SaaS subscriptions will need to sell 12 new licenses to make up for the cost on an annual basis. Whereas if an asset manager or SMA provider charging 50bps can make up their cost if they can get a single advisor to allocate $2 million of client money to them. Hence the exhibit halls of advisory conventions tend to be dominated by asset managers and other companies that can charge via basis points.
And so venture capital investors likewise see a vast difference between the opportunities for an alternatives platform charging basis points and SaaS companies charging flat subscription fees. If a software company were to somehow sell a $100/month license to 100% of the estimated 300,000 financial advisors in the U.S., that would ‘only’ equate to $360 million in annual revenue – which is only 4.5% of the $8+ billion flowing from alternative investments. Hence, even though advisors might only allocate around 3% of client assets to alternatives, compared to 40%+ of advisors using meeting notetakers according to 2025 Kitces Research on Advisor Technology, with the adoption rate having surely increased since then – alternatives-related technology receives around 10X the investment of even the hottest SaaS category.
Which is ultimately just a reminder that when it comes to where dollars flow in the financial industry at large, there’s the dollars that participate in asset management and/or distribution, and then there’s everything else. Which is why even though new technology might get a lot of attention and high adoption growth, the investment dollars available for those providers are swamped by those that go into asset distribution.
This article first appeared on the Nerd’s Eye View at Kitces.com at https://kitc.es/advisortech-sep2026, and has been reprinted here with permission
Ben Henry-Moreland is a Senior Financial Planning Nerd at Kitces.com, where he specializes in writing and speaking on financial planning topics including tax, practice management, and technology. He also co-authors the monthly Kitces #AdvisorTech column. Drawing from his experience as a financial planner and a solo advisory firm owner, Ben is passionate about fulfilling the site’s mission of making financial advicers better and more successful.
Michael Kitces is Head of Planning Strategy at Focus Partners Wealth, which provides an evidence-based approach to private wealth management for near- and current retirees, and Focus Partners Advisor Solutions, a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.
In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.