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Making Alternatives Feel Less...Alternative

 “The single biggest problem in communication is the illusion that it has taken place.” - George Bernard Shaw

A portfolio that works great on a spreadsheet is of no use if the end recipient lacks the confidence, understanding, and/or patience to stick with it until it bears fruit.

Truly diversifying alternative investments can be a valuable arrow in the allocator's quiver in meeting investor objectives and delivering successful outcomes. That being said, the experience of owning them can be difficult at times. 

Alternative investments are not typically implemented by DIY investors. Instead, they are guided by the counsel of a trusted advisor. There are many "jobs to be done" by allocators when it comes to non-traditional assets - idea sourcing, manager selection and due diligence, portfolio construction, position sizing, asset location. But perhaps the most important job is that of setting appropriate expectations and translating them in a manner that the intended audience can comprehend. This involves:

  • Making the unfamiliar familiar
  • Demystifying the mysterious
  • Simplifying the complex

In short, it means making alternative investments feel less...alternative.

Few organizations embody the spirit of empowering investors through education like the CAIA Association. I've had the pleasure of partnering with them recently on a couple of content initiatives and am excited to share them below.

First is the video of a webinar I recoded a couple of weeks ago with CAIA's Managing Director, Aaron Filbeck, CAIA, CFA, CIPM, FDP. We discussed my new book, The Allocator’s Edge, and how financial advisors might best approach building portfolios in a challenging return environment. 

In addition, I just published a guest post on CAIA's bog, Portfolio for the Future™. This post is a deep dive into some of the tactics and best practices financial advisors can use in their alts-focused conversations with clients. Here is a link to the full post:

Sharpening the Allocator’s Edge: Managing the Client Experience of Owning Alternative Investments Through Effective Communication (CAIA Association)

About the author

Phil Huber, CFA, CFP®

Phil is the Head of Portfolio Solutions for Cliffwater, a leading alternative investment adviser and fund manager. Prior to joining Cliffwater in 2024, Phil was the Chief Investment Officer for Savant Wealth Management, a multi-billion dollar wealth management firm. Phil has been involved in the financial services industry since 2007. He earned a bachelor’s degree in finance from the Kelley School of Business at Indiana University. He is a member of the CFA Society of Chicago. More about me here. Twitter: @bpsandpieces

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