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Alternative investments are going mainstream as more advisors integrate them into client portfolios. Nine in 10 advisors now allocate to alternatives and nearly half dedicate more than 10% of client portfolios to these types of assets, according to the fourth annual CAIS Mercer survey.1 If you’re considering this approach or you’ve already introduced your clients to a broader range of investments, an efficient tracking system is essential. Learn how financial advisors track client allocations to alternatives.
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How Advisors Can Track Alternative Investments
The way you choose to monitor allocations to alternative investments is largely a matter of preference, though the type of investment can also play a role. The best tracking system is one that enables you to monitor your client’s portfolio, conduct analysis and use the data you collect to generate insightful reports.
Here are four tracking methods to consider.
1. Wealth Management/Portfolio Management Software
Wealth management and portfolio management software tools are a core component of any advisor’s tech stack. If you’re using this type of software, you may already have access to alternative investment tracking, eliminating the need to purchase additional software.
If your portfolio management tool doesn’t offer alternative investment tracking functionality, here are a few options you might consider.
| Software | Alternatives Tracked | Key Features |
|---|---|---|
| Zephyr | Private equity, hedge funds, real estate, commodities | Comprehensive exposure analysis, performance metrics, diversification benefits, custom reporting |
| eFront | Infrastructure, private equity, private debt, real estate | Streamlined data services, comprehensive workflows, enhanced reporting, dedicated client management tools |
| Masttro | Private equity, real estate, hedge funds, collectibles | Private cloud architecture, digital document vaults, AI-powered document processing, real-time private equity and venture capital valuations |
2. Alternative Investment Platforms
In addition to portfolio and wealth management software, advisors may use alternative investment platforms for tracking. These specialized platforms enable advisors to research and monitor a range of alternatives and some offer integrations with existing tech tools.
Here are a few options to consider.
| Platform | Alternatives Tracked | Key Features |
|---|---|---|
| CAIS | Private equity, private debt, real estate, hedge funds, structured notes | Automated customer profiles, digitized documentation, RIA custodian integrations, dedicated support specialists |
| iCapital | Private equity, hedge funds, private credit, real estate, structured investments, annuities | Comprehensive advisor education, custom portfolio construction, detailed fund profiles, optimized tracking and reporting |
| Opto | Infrastructure, private equity, private credit, real estate, venture capital | Model allocations, AI-powered workflows, streamlined fund comparison, guided intelligence |
3. Model Portfolios
Model portfolios feature a curated collection of investments, which can include alternative investments. From an advisor’s perspective, model portfolios offer an efficient, streamlined way to help clients reach their goals without forgoing diversification. These pre-built portfolios can be tailored to fit individual clients’ needs and risk tolerance.
On the alternative investment side, model portfolios may include:
- Private equity
- Private credit
- Venture capital
- Hedge funds
- Interval funds
- Managed futures
- Alternative funds
- Infrastructure investments
Model portfolios can be accessed and tracked through a third-party platform, or through integrations with your existing portfolio management software if available.
Envestnet, for example, offers professionally managed model portfolios that may include allocations to semi-liquid alternative investments alongside traditional assets. These capabilities are supported through strategic partnerships with firms such as BlackRock, Fidelity, Franklin Templeton and State Street Global Advisors, as well as Envestnet PMC. Through its platform, advisors can research model portfolios, generate client proposals, execute trades and monitor investments within an integrated technology environment.
4. Custodian Integrations
SEC rules require registered investment advisors (RIAs) to hold client assets with a qualified custodian. If you operate an SEC-registered investment advisory firm, your custodian may offer built-in tools for tracking alternative investments in client portfolios.
For instance, BNY Pershing offers alternative investment tracking, management and reporting to RIAs. You can execute trades and monitor performance for non-traditional assets, including hedge funds, private equity, real estate and managed futures. 2
If your current custodian does not support alternative investment tracking, you may consider whether it’s worth making a move elsewhere. When comparing RIA custodians, evaluate factors like cost, convenience and overall reputation, as well as alt investment tracking.
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Best Practices for Tracking Client Allocations to Alternatives
Developing a centralized method for tracking alternative investment allocations is just the first step. Once you have your system in place, consider how you can manage it efficiently and compliantly.
- Keep accurate records: When making recommendations to clients about alternatives, take detailed notes of what was recommended and why. Record these notes in your customer relationship management (CRM) platform or portfolio management software so you can easily refer back to them if needed.
- Track liquidity positions: Alternative investments can have a vastly different liquidity profile compared to traditional stocks, bonds or mutual funds/ETFs. In addition to monitoring price movements for individual investments and overall allocation, pay attention to each investment’s degree of liquidity.
- Identify risks: If you’ve performed your due diligence and researched alternative investments for clients, you should be familiar with the associated risks. Consider creating a detailed risk profile of each investment that you maintain for your records.
- Check for alignment: Alternative investments you recommend to a client should match that client’s risk tolerance, objectives and goals. Periodic reviews of client exposures to alternative investments can help you spot potential misalignments when allocations drift.
- Track the right metrics: Non-traditional investments require more granular monitoring, including tracking changes in net asset value (NAV), cash flows, internal rate of return (IRR) and liquidity to better gauge performance.
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Frequently Asked Questions
What are the primary challenges of tracking client allocations to alternative investments?
The first hurdle advisors may face in tracking allocations to alt investments is choosing the right tracking method. For some advisors, it makes sense to utilize portfolio management tools; for others, an alternative investment platform may be a better fit. Other challenges include understanding the mechanics of how these investments work and the degree of volatility that often accompanies these assets.
How can financial advisors track client allocations to alternative investments manually?
If you prefer to use a manual tracking approach, you might create a master spreadsheet to record client portfolio allocation information. However, that could be time-consuming to update and may present an elevated security risk if unauthorized persons gain access to the file. Using a digital solution, such as portfolio management software or custodian integrations, can offer a more secure, compliant method for tracking alternative investment allocations.
What due diligence is required for tracking alternative investments in client portfolios?
Tracking non-traditional investments requires due diligence in two stages. First, advisors must perform the proper due diligence to research the investment and the team behind it. This is necessary to assess the investment’s quality and risks to ensure that it’s appropriate for the client. The second stage of due diligence involves reviewing third-party vendors or custodians, if applicable, to ensure compliance with all industry requirements.
Bottom Line
Alternative investments may open up new horizons for less risk-averse clients. Given the complex nature of these investments, it’s important to have a system in place for monitoring their movements. As you incorporate alternative investments into client portfolios, consider which tracking method suits your needs and purposes.
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- Building out an RIA tech stack starts with reviewing your current technology tools to identify potential gaps. For example, if you’re not offering clients a secure account portal yet, consider whether that’s an investment worth making. If you aren’t on the AI bandwagon yet, think about how you could integrate artificial intelligence in small ways to test its effectiveness. Also, evaluate whether the tools you use now are still working for you and what may need to be replaced or upgraded.
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Article Sources
All articles are reviewed and updated by SmartAsset’s fact-checkers for accuracy. Visit our Editorial Policy for more details on our overall journalistic standards.
- Fourth Annual CAIS Mercer Survey Shows Alts Moving From Niche to Norm With Half of Advisors Now Allocating 10%+ to Alts. CAIS/Mercer, 10 Dec. 2025, https://www.caisgroup.com/our-company/press/fourth-annual-cais-mercer-survey-shows-alts-moving-from-niche-to-norm.
- “Alternative Investment Solutions.” BNY.com, https://www.bny.com/pershing/us/en/solutions/financial-solutions-investment-planning/investment-solutions/alternative-investment-solutions.html.