According to the Investment News, more than three-quarters of retail advisers are now using alternative investments in their client’s portfolios.
Alternative investments include venture capital investments, private equity investments, hedge funds, structured products and other such investments.
While alternative investments can be appropriate in small amounts as part of a larger diversification strategy, as the amount of money pouring into alternative investments increases, so has the amount of litigation.
The downside to alternative investments is that they are often extremely complex, they are generally less liquid than traditional investments (stock, bonds, mutual funds, etc.), and they usually pay a high commission to the broker that recommends them (increasing the risk of abuse by unscrupulous brokers).
In our experience, independent advisers are the heaviest users of alternatives in part because the supervision and compliance is less stringent that at larger, more traditional brokerage firms like Morgan Stanley Smith Barney and Merrill Lynch.
If your financial advisor recommended that you invest a large percentage of your net worth in alternative investments, this may be a sign of a problem. If you are concerned about an alternative investment recommended to you by your financial professional, please feel free to contact The White Law Group at 312/238-9650 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at www.whitesecuritieslaw.com.