Alternative investments were once reserved for institutional investors and ultra wealthy; new advancements have opened the door to a much broader population of individuals and their advisors.
iCapital and other platforms have modernized the alternatives lifecycle creating greater accessibility to wealth managers. At the same time, asset managers are introducing investment vehicles for alternatives that offer greater liquidity, lower accreditation thresholds, and investor-aligned fund structures.
With alternatives no longer confined to institutional portfolios, wealth managers must now navigate a broader, more complex investment universe. Traditional portfolio construction tools, built for public markets, fall short in evaluating the nuances of alternatives, from liquidity constraints to fund-level dispersion.
Architect is a first-of-its-kind portfolio construction tool enabling advisors to design portfolios that incorporate alternatives and structured investments alongside traditional assets. It was purpose-built to fill this alternatives analysis gap, offering a next-generation solution that empowers advisors to confidently integrate alternatives and structured investments into client portfolios.
The Growth of Alternatives in Wealth Management
As an investor segment, private clients already control roughly $140-$150 trillion in wealth, on par with the $135-$145 trillion overseen by institutional investors, but their allocations to alternatives remain a fraction of those of pensions, endowments, and insurers.1
| Investor Segment | 2022 Alt AUM | 2032 Alt AUM (proj.) | 10-yr CAGR |
| All investors | $33T | $61T | 9% |
| Institutional investors | $22T | $47T | 8% |
| Private-wealth investors | $4T | $13T | 12% |
However, over the next decade private wealth is expected to be the fastest growing segment, tripling its allocation as accessibility pushes further down market. Alternatives, and the technology that now delivers them efficiently, have moved from “nice to have” to table-stakes for wealth managers. Advisors who are not educating themselves on alternatives and structured investments today risk being left behind tomorrow.
Divergence in RIA Adoption
A recent Cerulli survey2 of 263,000 U.S. advisors shows a clear adoption curve:
- 56% of RIAs managing >$500 million already allocate to alternatives.
- Among practices under $25 million, just 18% use alternatives—meaning four out of five small RIAs remain on the sidelines.
High-AUM firms are harnessing alternatives and structured products to deliver differentiated return streams, potentially reduced portfolio volatility, and a more institutional-grade experience. In doing so, larger RIAs are widening the competitive moat versus smaller peers.
Advisor Challenges in a Shifting Landscape
Advisors evaluating alternatives for their clients for the first time are now faced with the difficult task of understanding and implementing unfamiliar asset types. In iCapital’s 2025 Global Advisor Survey,3 we uncovered the following insights from wealth managers allocating to alternatives and structured products. The challenge is clear:
- Understanding portfolio impact: 53% of advisors cited challenges in assessing how alternatives affect overall portfolio construction.
- Assessing liquidity and risk: 55% struggle to evaluate liquidity and risk across asset classes.
- Technology and implementation: 58% want better tools to implement alternatives effectively.
Without the right tools and insights, advisors may struggle to confidently integrate alternatives, potentially missing opportunities to enhance client outcomes and differentiate their practice in a rapidly evolving market.
Learning Needs Emphasize Alternative Integration
What are the biggest challenges in incorporating alternatives into your firm’s investment models and asset allocation strategies (select three)?
Let’s explore the ways iCapital’s Architect tool helps advisors meet the challenges of an evolving investment landscape.
Understanding Portfolio Impact of Alternatives
As alternatives become more accessible, wealth managers have typically been forced to rely on antiquated analysis tools using broad indices. The challenge is these proxies do not account for the vast return dispersions between alternative funds or varying liquidity provisions. Architect is the breakthrough solution that finally illuminates individual alternatives based on real reported fund performance.
Through a proprietary factor-based methodology, Architect produces hypothetical performance comparisons between alternatives, structured investments, and public assets to facilitate informed decisions. Wealth managers can seamlessly:
- Upload client portfolios to understand the impact of individual alternatives alongside public assets
- Leverage fund level insights to research, construct, and deploy model portfolios at scale
- Compare long-term portfolio returns and volatility metrics
- Analyze stress testing scenarios of the most volatile market environments over the past 20 years
Architect gives advisors the analytical resources to elevate client conversations and build portfolios that reflect the full spectrum of modern investment opportunities.
Quantifying Liquidity Risk
While alternatives have become a necessary category to consider within client portfolios, they present a new set of risks to assess. The most prominent being liquidity considerations compared to public investments. The varying withdrawal terms of alternatives create cash-flow “fault lines” that standard risk models simply do not capture.
Architect incorporates liquidity directly into its Alignment Scoring framework.
- Dynamic questionnaire: Captures client cash-flow requirements.
- Fund-level intelligence:The platform captures redemption mechanics by strategy (interval, tender-offer, drawdown, daily liquid ETF) and incorporates potential gating provisions.
- Holistic match: Architect cross-references the client’s liquidity profile with the portfolio’s aggregate lock-up characteristics, surfacing a clear Alignment Score that flags shortfalls before they become problems.
By quantifying liquidity alongside return and volatility, Architect equips advisors to construct portfolios that fit the client’s cash-flow reality. In a landscape where access to alternatives is no longer the hurdle, controlling liquidity risk is the new differentiator.
Architect is one of the few tools built to illuminate this critical dimension of portfolio construction.
Enhancing Client Engagement
Architect translates its sophisticated portfolio analytics into an exportable, client-friendly report for RIAs to contextualize the impact of alternatives in client portfolios.
The proposal generation feature allows advisors to:
- Simplify complex investment products into clear portfolio strategies that resonate with clients
- Support comprehensive client conversations to make informed investment decisions
- Instill confidence with clients that their advisor is evaluating every available investment to meet their long-term goals
Architect empowers advisors to lead with insight and deliver a high-touch experience to set your practice apart.
Streamlining Fund Implementation
Architect completes the investment lifecycle by connecting directly to iCapital’s multi-invest workflow, transforming analysis into execution with minimal friction. This includes:
- One-click transitions from portfolio analysis to trade execution
- Automated identification of investible alternative assets
- Streamlined documentation workflows with consolidated forms and electronic signatures
The end-to-end integration simplifies operations, accelerates time-to-investment, and empowers advisors to move from diligence to deployment with speed and confidence.
Best Practices Summary
By leveraging iCapital’s Architect portfolio construction tool, advisors can explore the alternatives and structured products markets with the most sophisticated analysis tool available to access:
- Portfolio impact of alternatives using real fund performance
- Quantifiable liquidity risk analysis
- Enhanced client engagement via sharable PDF reports4
- Streamlined fund implementation
As alternatives move from the periphery to a core asset consideration, embracing this shift is essential for wealth managers. With Architect, advisors are equipped to navigate this new landscape with clarity, conviction, and a competitive edge.
iCAPITAL ARCHITECT
Powerful analytics. Enhanced User Experience.
Explore our award-winning5 portfolio construction tool that empowers advisors to design portfolios with alternatives and structured investments and illustrate their impact to clients with ease.
ENDNOTES
1.Source: Bain & Company, GlobalData, Preqin Pro, iCapital Alternatives Decoded. Shown in iCapital Alternatives Decoded as of Jul. 31, 2025. Underlying data from 2022, sourced from the Bain & Company Analysis “Global Private Equity Report 2023” as of Nov. 9, 2023.
2. iCapital, Alternatives Decoded Quarter Two, July 31, 2025.
3. iCapital, Global Advisor Survey, May 2025.
4. As of October 2025, for US-Based RIAs.
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ALTERNATIVE INVESTMENTS ARE CONSIDERED COMPLEX PRODUCTS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. Prospective investors should be aware that an investment in an alternative investment is speculative and involves a high degree of risk. Alternative investments often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; may not be required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. There is no guarantee that an alternative investment will implement its investment strategy and/or achieve its objectives, generate profits, or avoid loss. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment.
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