Ask an Advisor: Why are alternative assets often not included in portfolios?

Welcome back to “Ask an Advisor,” the advice column in which real financial professionals answer questions from real people. The topic can be anything in the world of finance, from retirement to taxes to wealth management — or even advice on advising.

Until recently, alternative investments have mainly been the province of the high net worth set. In the past few years, though, there has been a concerted effort to change that.

However, issues from lack of liquidity to extra taxation have caused many clients and advisors to steer clear.

This week, one advisor turned to his fellow professionals for insight as to this disparity:

Dear advisors,

Why do most advisors not include alternative investments in their portfolios?

Sincerely,

Stoy Hall
Founder and CEOBlack MammothAnkeny, Iowa

In response, advisors cited reasons for hesitancy around recommending alternative investments including being overly complicated, unfamiliar and illiquid and having higher fees, risks and opaque pricing structures.

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Here are some of the responses we received to this week’s question, edited lightly for clarity and length: