We recently had the opportunity to speak at the 2013 AMPS annual conference. It was a great event and the speakers were knowledgeable and informative.

I gave my 20 minute view of the altenative investment market, titled “The Rise and Fall of Alternative Investments”. It was based on our annual alternative investment market report (download your copy for free here) and I threw in a couple of quick polls of the room on some key issues. The poll results were the most interesting part of the presentation, so I thought I’d share them here:

What do you think is the right allocation to alternatives within a portfolio?

• 10-20% of the portfolio (48% of the votes)
• Less than 10% of the portfolio (42% of the votes)
• No allocation (5% of the votes)
• More than 20% of the portfolio (5% of the votes)

My view is that this result shows us that the industry does see the benefit of alternative investments as an additional diversification, but only in the right concentrations with the vast majority agreeing that more than 20% of a portfolio would be too much.

Who do you think should be allowed to invest in alternatives?

• Only high net worth investors (47% of the votes)
• Anybody (53% of the votes)

Again, this was very interesting. And there was a much more pronounced split in the room here. Although the first poll indicated that there were good reasons to hold alternatives, the second poll indicates that roughly half of the audience felt that these benefits only became worthwhile once an investor had amassed enough wealth to be considered high net worth and have more capacity to absorb any losses.

How do you think alternatives should be sold to investors?

• Advised sales only (51% of the votes)
  
• Advised or execution only sales (49% of the votes)

Another split! It appears that while some take the view that investors must be protected from themselves by restrictions and an obligation to take advice, others have a much more laissez-faire view that investors should be permitted to do as they wish. I think perhaps this is a fundamental difference in people’s world views. 

For the record, my view is that people should be allowed to do as they wish, but only from an informed viewpoint and only in a fair and transparent market – so some regulation is necessary and indeed vitally important to ensure these pre-conditions are met.

But the big take-away – if the industry is split on these topics, how confusing must that feel for our customers?

Dan

P.S.

I’ll post the full results from the polls shortly.

P.P.S

This article about Intelligent Partnership at AMPS also appeared in IFA Online: here