Key Takeaways
- • 61% of advisers now anticipate greater volatility over the next five years, up sharply from 34% in May 2023, signaling a structural shift in market sentiment and portfolio construction priorities among UK wealth advisers.
- • 36% of advisers increased alternatives exposure and 32% boosted emerging markets allocation over the past 12 months, with both trends expected to accelerate into 2026 as advisers seek uncorrelated returns and diversification.
- • 60% of clients in multi-asset and MPS portfolios now have access to liquid alternatives and gold, reflecting institutional adoption of non-traditional asset classes as core portfolio components rather than tactical overlays.
- • Equity and bond return expectations have deteriorated materially, with 31% of advisers expecting lower equity returns and 19% anticipating lower bond returns versus long-term averages—up from 18% and 13% respectively in November 2024.
- • Active management and portfolio resilience are driving allocation decisions, with Schroders' head of UK wealth emphasizing that diversified, multi-asset approaches now outperform cash holdings exposed to inflation erosion.
Summary
Advisers are substantially increasing exposure to alternative investments amid persistent concerns about market volatility and subpar equity returns, according to the latest Schroders Financial Adviser Survey of 221 UK wealth advisers. The survey reveals a sharp acceleration in volatility expectations, with 61% of respondents now anticipating greater market disruption over the coming five years—a significant jump from 43% a year ago and just 34% in May 2023. This deteriorating outlook is reshaping portfolio construction across the advisory community.
To hedge against expected volatility, advisers have shifted capital allocation meaningfully over the past 12 months. Thirty-six percent increased their exposure to alternative assets, while 32% expanded emerging markets allocations, with both trends projected to continue into 2026. Complementing these moves, 60% of clients invested in multi-asset and MPS (Model Portfolio Service) portfolios now have access to liquid alternatives and gold as explicit portfolio holdings, indicating that non-traditional assets have transitioned from niche positions to core diversification tools.
The survey also documents material downward revisions to return expectations across traditional asset classes. Thirty-one percent of advisers now expect equity returns below long-term historical averages, up from 18% in November 2024—a 13-percentage-point jump in just one year. Similarly, 19% anticipate below-average bond returns, compared to 13% six months prior. This confluence of higher volatility expectations and lower return forecasts is accelerating the case for active management and broader diversification across geographies and asset classes.
Jamie Fowler, head of UK wealth at Schroders, framed the shift as a necessary response to "global disruption and ongoing volatility" reshaping asset allocation decisions. He emphasized that "growing caution towards developed markets means advisers and clients will increasingly need to access a broader range of investments" and highlighted active management's role in constructing resilient portfolios. Fowler also cautioned that while cash appears safer than equities or bonds, inflation erosion presents a material long-term drag on purchasing power—a consideration supporting the case for alternatives and emerging market exposure as inflation hedges.
To hedge against expected volatility, advisers have shifted capital allocation meaningfully over the past 12 months. Thirty-six percent increased their exposure to alternative assets, while 32% expanded emerging markets allocations, with both trends projected to continue into 2026. Complementing these moves, 60% of clients invested in multi-asset and MPS (Model Portfolio Service) portfolios now have access to liquid alternatives and gold as explicit portfolio holdings, indicating that non-traditional assets have transitioned from niche positions to core diversification tools.
The survey also documents material downward revisions to return expectations across traditional asset classes. Thirty-one percent of advisers now expect equity returns below long-term historical averages, up from 18% in November 2024—a 13-percentage-point jump in just one year. Similarly, 19% anticipate below-average bond returns, compared to 13% six months prior. This confluence of higher volatility expectations and lower return forecasts is accelerating the case for active management and broader diversification across geographies and asset classes.
Jamie Fowler, head of UK wealth at Schroders, framed the shift as a necessary response to "global disruption and ongoing volatility" reshaping asset allocation decisions. He emphasized that "growing caution towards developed markets means advisers and clients will increasingly need to access a broader range of investments" and highlighted active management's role in constructing resilient portfolios. Fowler also cautioned that while cash appears safer than equities or bonds, inflation erosion presents a material long-term drag on purchasing power—a consideration supporting the case for alternatives and emerging market exposure as inflation hedges.
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