Alternative investments continue to move further into the mainstream, and there is little reason to think that momentum is slowing. According to the fourth annual CAIS/Mercer survey released in December 2025, nine out of ten financial advisors surveyed now allocate to alternative investments. Nearly half allocate more than 10% of client portfolios to alternatives, and 88% expect to increase those allocations over the next two years.
Those numbers represent tremendous progress for an industry that has spent years expanding access to private markets. But it is worth thinking about what that success has created.
More products, more managers and greater access mean more investments for someone to evaluate. Yet the basic process used to perform that evaluation has not changed nearly as quickly as the market it supports.
Have we modernized access to alternatives faster than we have modernized the way we evaluate them?
Access Has Scaled. Has Due Diligence?
Alternative investment due diligence has always required considerable human effort. Analysts review offering documents, research managers and investment teams, examine track records and portfolio companies, evaluate fund terms, conduct interviews, and prepare information for an investment committee or another decision maker.
Much of that work still matters. Alternatives can be complicated, and experienced professionals asking good questions should remain at the center of the process. The challenge is whether the process can keep up with the volume.
Every additional investment creates another research obligation. Someone has to review the documents, research the people involved, evaluate the strategy, identify potential concerns, and organize everything into something useful.
Information is not the problem. You have access to more of it than ever. The real constraint is the ability to gather, verify, organize, and interpret that information quickly enough to make a good decision.
Research Is Not the Same as Judgment
This is where the difference between gathering information and applying judgment becomes important.
Finding a manager's employment history is research. Deciding whether that experience demonstrates an ability to execute the strategy requires judgment. Identifying previous investments is research. Understanding what those investments reveal about a manager's capabilities requires judgment. Finding lawsuits, regulatory actions or personnel changes is research. Deciding whether any of those findings materially changes the investment thesis requires judgment.
We tend to put all of these activities under the heading of due diligence. But think about how differently they use an experienced professional's time.
Technology is becoming increasingly capable of handling much of the information gathering. That does not make experienced investment professionals less important. It should make their experience more valuable by giving them more time to focus on the work that actually requires judgment.
So, ask yourself a practical question: If technology can complete hours of information gathering in minutes, should highly experienced investment professionals still be spending so much of their time doing it manually?
What If Every Investment Started from the Same Place?
Investment opportunities rarely arrive in a standardized way. One manager provides a detailed presentation and data room. Another provides far less. Opportunities come through wholesalers, placement agents, conferences, referrals, and existing relationships. The first review can be just as inconsistent.
Now imagine that every opportunity entering your organization received the same initial review, regardless of who brought it in, how polished the presentation looked or how well known the manager happened to be.
The manager and investment team could be researched. Previous funds and portfolio companies could be examined. Claims made in offering materials could be compared with other available information. Fund terms could be organized consistently, with potential concerns identified early.
Then the opportunity could be considered against your organization's own criteria. Does it fit the strategy? Does the manager have the experience you require? Are there liquidity concerns? Does the available information support what you are being told? Is there anything that deserves a closer look?
The point is not to make the investment decision. It is to answer a much more practical question: Does this opportunity deserve more of your time?
As the volume of alternatives grows, being able to answer that question efficiently becomes much more important.
The Next Question Is the Portfolio
Screening an individual investment may only be the beginning.
As alternatives become a larger part of portfolios, you also need to understand what happens when another investment is added. Does it improve diversification? What happens to liquidity and expected cash flows? Does it create unintended concentration across managers, strategies, industries, or vintages?
Public market investors have had sophisticated tools for answering these questions for decades. Private markets are harder because information is less standardized, valuations are less frequent, and important details are often buried inside documents.
But as allocations grow, saying that private markets are different becomes a less satisfying reason for continuing to accept those limitations.
Technology Should Do More Searching. People Should Do More Thinking.
The conversation will inevitably turn to artificial intelligence. But focusing too heavily on AI can distract from the larger point. Technology should not tell an investment committee what to buy. It should help the committee begin with better information and spend more time asking better questions.
If hours of information gathering can be reduced, organized consistently, and supported by underlying evidence, experienced professionals can spend more time challenging assumptions, speaking with managers, understanding risks, and deciding how an investment fits within the broader portfolio.
That is where their expertise has the greatest value. The alternative investment industry spent years solving the access problem, and that effort worked. Now it may be time to address one of the consequences of that success.
More access creates more choices. More choices create more decisions. And more decisions require an infrastructure capable of separating the opportunities that deserve serious consideration from those that do not.
The investment professional should still make the decision. The better question is how much research should already be complete before the opportunity ever reaches the point where judgment is required.
