While stocks and bonds remain fundamental components of investment portfolios, HNWIs benefit from diversification across a broader spectrum of asset classes, which lower market risk. Alternative investments such as venture capital, private equity, real estate, art & wine, fine collectibles, and bespoke investments offer unique opportunities for enhancing returns and managing risk in today’s dynamic market environment.

Many alternative investments are also valuable when it comes to estate planning as they offer opportunities for intergenerational wealth transfer. Because these assets can appreciate in value as the prices of goods and services rise, they have the potential to provide long-term protection for future generations.

However, it’s crucial to acknowledge the inherent risks with non-traditional assets and to exercise caution. Factors such as illiquidity can pose a challenge, especially during unforeseen circumstances. Also, the regulatory landscape for alternative investments varies, exposing investors to risks like fraud or mismanagement.

Financial planners and advisors working with HNWIs should be well-versed in alternative investments to help clients pick the right products. By incorporating alternative assets strategically, advisors can help clients achieve greater portfolio resilience and long-term growth potential, while mitigating market risk.