I was asked to comment on the results of an Ignites (A Financial Times Service) poll of financial services employees and their thoughts on retirement. About 84% of respondents say that they are saving enough for retirement, although 52% said that while there current savings rates are sufficient, they still feel that they should be putting more money aside.

This contrasts to a recent Gallop poll which found that 46% of non-retireed Americans do not feel that they will have enough money to retire comfortably.

First, why are we in the financial services industry so much more comfortable with our outlooks for retirement? To quote from the article:  “As Andy Klausner, founder and principal of AK Advisory Partners says, “You would expect fund industry employees to be more tuned in to retirement and saving for retirement than the average person simply through their day-to-day exposure to the issues.

“Even if they aren’t directly involved in the products, for example, they are certainly more aware of the advertising and marketing that their firms do. This goes for all [fund industry] employees,” he writes in an e-mail response.

Additionally, fund firms themselves are taking an active role in helping their employees prepare for retirement. One way that firms, such as Invesco and Vanguard. accomplish this is by making their employees eligible to participate in their 401(k) plans from the day they start employment, rather than requiring a waiting period.”

Secondly, however, why do we feel that we should still put away more? I think there are a number of reasons: 1) people are living longer than ever before, so the fear of outliving your savings, no matter how large it may be, is great; and 2)  to quote from the article again: “A number of factors can hinder professionals from saving enough, Klausner acknowledges. For example, living costs usually are higher in the large cities where financial services firms tend to be located, such as New York. Plus these professionals may not be seeing their compensation rise as quickly as it did before the 2008 financial crisis, he says.”

Any thoughts to add?

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Hardly a day goes by that another firm doesn’t either enter into the retail alternative investment space, or expand their offerings; Fidelity and Schwab just announced major initiatives. Becoming more common as well, however, are firms closing retail alternative investment products; two firms recently shuttered their alternative (long/short) investment ETF offerings.

As investors seek higher yield in today’s low return environment, they naturally are turning to alternative investments and the hope and promise of higher and often uncorrelated returns. This trend scares me – almost a  much as today’s stock market, which is fueled by the Fed’s free money policy more so than by economic fundamentals. The complexity of many alternative investments have necessitated that they have historically been for institutional or very high net worth investors only – has anything really changed to fuel today’s growth in the retail marketplace?

I caution advisors to tread carefully if they are exploring or increasing their clients’ exposure to alternative investments. At least make the commitment to educate your clients fully on the inherent risks of these types of investments. You don’t want to be one of the last to jump on the bandwagon just before …

Back to my question: What Is An Alternative Investment? The answer is quite complicated, because the category spans everything from private equity to mutual funds to ETFs – from liquid types of investments to illiquid types of investments – from those that require investors be qualified (meeting certain income and net worth requirements) to those that don’t. In fact, investing in timber is considered by many to be an alternative investment.

My point? Advisors need to be extra careful in ensuring that before clients venture into any alternative investments that the investment is appropriate for their investment profile and asset allocation and that they fully understand the risks involved as well as any liquidity restraints. Is the additional risk being taken worth it?

I am not opposed to alternative investments – when and where they fit. I just fear that they are becoming the latest bubble in the industry, and that clients who are still struggling from the losses incurred since 2008 are about to make another mistake. Advisors – it’s your job to help your clients avoid such mistakes as opposed to helping them chase return.