Attracting new clients is the top reason U.S. financial advisors add alternative investment options to their portfolios, according to the 2025 iCapital Global Advisor Survey released this week.

However, advisors say that challenges assessing the liquidity of the investments and understanding their impact on the overall portfolio remain the top challenges to broader adoption.

The survey included responses from 603 registered financial professionals across nine countries and found that advisors strongly favor private equity, private credit, hedge funds and real estate among alternative investment options.

More than half of the surveyed advisors said they were interested in putting their clients’ money in private equity or private credit, at 66% and 54%, respectively. Another 54% were interested in hedge funds, and 44% in real estate. Interest fell off considerably, to 26% of advisors, when it came to investing in venture capital and other real assets (21%).

The majority of advisors (77%) also expect that within the next two years, evergreen funds will account for 11% to 15% of their clients’ portfolio allocations. Another 22% forecast an evergreen allocation of between 5% and 10%.

The main challenge in advisors’ adaptation of alternatives remains the difficulty of accurately assessing liquidity and other risks, with 55% citing those factors.

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Another 53% talked about the issue of understanding how alternative allocations will impact overall portfolio construction.

About half (51%) noted the limited quantity of both institutional-grade alternative investment options and model portfolios that incorporate alternatives that they can access. Forty-eight percent pointed to concerns around compliance, and 42% cited a lack of basic education around alternatives.

Less cited challenges include client reporting (20%) and documentation/due diligence (13%). An additional 13% pointed to investor eligibility standards, and 11% cited limited or no access to investment offerings in the category.

Only 10% of advisors found the products’ complexity to be a barrier to wider adoption.

A third-party research firm conducted the survey on behalf of iCapital in the first quarter of 2025. The survey was conducted through phone interviews, with online follow-ups. It included responses from 603 professionals across the private wealth, broker/dealer and RIA channels.