Investors in 2025 are asking for more than traditional stock-and-bond portfolios. They’re seeking real diversification, better yield potential, and protection against market volatility. That demand drives strong interest in alternative investments, including private equity, private credit, infrastructure, and real estate. Recent data confirms that private markets deliver real performance, and institutional flows suggest this shift will only accelerate in the years ahead.
The numbers tell the story
According to MSCI’s Private Capital Universe:
- Private credit delivered 2% in Q1 2025, outperforming high-yield corporate bonds.
- Private equity posted a 1.8% gain.
- Infrastructure-led real assets with a 3.1% return.
Meanwhile, asset managers are projecting significant growth:
- Private credit AUM is forecast to grow from $1.5 trillion in 2023 to $2.6 trillion by 2029.
- Private equity is set to nearly double, from $5.8 trillion to almost $12 trillion over the same period.
These aren’t niche side bets anymore—they’re becoming a meaningful slice of institutional and high-net-worth portfolios.
Why this matters for IFAs
For many IFAs, alternatives have felt like something for big institutions. But that’s changing fast.
Here’s why:
Clients want more than 60/40
The old standard—60% equities, 40% bonds—is under pressure. Market volatility, rate uncertainty, and inflation are making clients question traditional portfolio models. They want assets that can diversify risk, hedge inflation, and deliver yield in a new environment. For advisers, this isn’t just about adding more products—it’s about rethinking what resilience looks like in client portfolios.
Demand is moving downstream
High-net-worth and even mass-affluent clients are asking their advisers: “What else can I invest in?”
Private credit, infrastructure, and secondaries are no longer exotic—they’re on the radar. It’s not just institutional investors or the ultra-wealthy asking about alternatives anymore. Clients are increasingly well-informed, reading about private markets and coming to advisers with pointed questions. Mass-affluent investors now want access to strategies they once considered “off-limits,” and even next-gen clients expect broader, more sophisticated conversations about their options. For advisers, this shift creates both opportunity and expectation, because when a client asks, you want to be ready with an informed, thoughtful answer that truly adds value.
Advisers must guide the conversation
But here’s the critical part: interest doesn’t automatically mean understanding. Clients might see headlines touting private credit’s yield or private equity’s strong historical returns, but they often don’t fully grasp the risks and variability in performance, the illiquidity that can lock up their capital for years, or the complexity of structures, fees, and transparency. This is exactly where advisers prove their value—by educating clients, helping them weigh not just the potential upside but also the trade-offs, and ultimately standing out as trusted, long-term partners.
The challenges to navigate
Alternatives aren’t a magic fix. Advisers need to be prepared for:
- Due diligence complexity – Products vary widely in quality and transparency. Advisers need to vet options carefully to protect client interests.
- Regulatory demands – Suitability requirements mean advisers must carefully assess client needs and risk tolerance.
- Liquidity considerations – Many private assets lock up capital for years, making them inappropriate for some clients.
How IFAs can respond
Alternatives don’t replace a core portfolio—they complement it. Advisers can respond by:
1. Expanding knowledge and partnerships
Stay informed about high-quality funds, providers, and structures. Build relationships with platforms and partners who can help you deliver these solutions responsibly.
2. Educating clients
Use clear, jargon-free language to explain the benefits and the risks. Help clients see where private assets might (or might not) fit into their long-term plans.
3. Integrating thoughtfully
Alternatives should be part of an overall strategy, not a bolt-on. Advisers can tailor allocations to individual goals, risk profiles, and liquidity needs.
Alternatives are no longer niche—they’re fast becoming a standard expectation among serious investors. Clients don’t just want access. They want clarity. Education. A trusted partner who can navigate complexity and help them make smart, informed choices. IFAs who prepare now—by building their knowledge, partnerships, and client education—will be best positioned to deliver that value in 2025 and beyond.
