My Comments: Today, being Monday, is when my blog posts lean toward INVESTMENTS. And for the past three years, my advice as a financial advisor has been to include alternative investments in the portfolios I help manage for clients. Because, in this day and age, it works.

Mindful that my professional objectives are to help clients grow their money, and mindful that my compensation is largely a function of how well their money grows, I try to stay ahead of the curve because it results in less grief for my clients, and for me.

My source of “alternative investments” comes from a program called Managed Alternative Assets offered by Purcell Advisory Services, LLC out of Tacoma, Washington. Some of you already own some of this and that’s a good thing. I have no idea how the markets are going to play out over the next several years, but having “alternative assets” among your portfolio holdings will most likey prove to be an advantage.

By Paula Aven Gladych

Traditional diversification and portfolio construction strategies need a makeover, according to a new survey of 163 U.S.-based financial advisors.

Natixis Global Asset Management also found that advisors are questioning the relevance of asset allocation strategies that rely on a 60/40 mix of stocks and bonds and long-term, buy-and-hold approaches.

Investment advisors interviewed for the survey said they increasingly are turning to alternative investment strategies even for clients who aren’t considered high net worth. Half of advisors polled said they regularly employ alternative investing strategies across their client base, with 79 percent saying they do so to improve diversification, 68 percent to reduce risk, 51 percent to enhance returns, and 42 percent to dampen volatility.

The study, which was produced through NGAM’s Durable Portfolio Construction Research Center, found that nearly half of advisors are ambivalent about the benefits of the traditional 60/40 mix of stocks and bonds to achieve performance. Forty percent of advisors believe the traditional portfolio allocation is no longer the best way to pursue returns and manage investment risk compared to 22 percent who do.

A majority of advisors, 63 percent, do not believe in the long-term buy-and-hold strategies, and 77 percent say their clients are questioning this approach as well. Only 38 percent felt that longer holding periods decrease the likelihood of a negative annualized return.

Forty-six percent of advisors believe that new approaches in asset allocation and portfolio construction are needed, compared to 22 percent of those who favor the status quo.

Eighty percent of advisors said their clients are torn between wanting to increase their returns and keep their investments safe. Nearly half said that a majority of their clients are increasingly willing to take on more risk in search of returns. Fifty-eight percent say clients are beginning to place a higher priority on asset growth over protecting principal.

Advisors with more than 15 years of experience in the industry are more cautious about deploying alternative investments than less-seasoned advisors, with 59 percent of veterans saying they are inclined to recommend alternative strategies for mass market clients, while 76 percent of less-seasoned advisors would do so.

The biggest reasons cited for not implementing alternative investing strategies is that clients believe the fees are too high, they don’t understand how they work or they don’t believe alternatives should replace traditional investments.

The 2012 Natixis Global Asset Management U.S. Advisor study was based on a survey conducted by CoreData Research in March 2012.