Hedge fund managers have begun to consider marketing to a broader audience — particularly independent wealth managers. Although exact figures for the U.S. are not available, some surveys suggest that less than 20 percent of alternative assets under management is allocated by wealth managers. Unlike family offices, which have been a target market since the hedge fund industry’s inception, registered investment advisers (RIAs) in the prior regulatory environment were more difficult to approach.

Since most RIA practices have a client base encompassing a blend of both accredited and nonaccredited investors, it was challenging to market to the audience without potentially running afoul of private placement rules. The new regulations allow performance data and fund specifics to be broadly advertised, although investments are still restricted to qualified individuals. These rules put private fund offerings in a similar place as registered products when reaching out to RIAs.

In a cycle that is tough for raising assets under management, the prospect of a fresh pool of investors would seem to be a dream come true. But many industry professionals believe that the rise of so-called liquid alternative products — mutual funds and exchange-traded products that provide nontraditional strategies in a registered format — will stymie the efforts of these latecomers. “It’s an asset grab, and some of the biggest alternative managers such as AQR [Capital Management] have been successfully operating alternative mutual funds aimed at the adviser market for years,” says Julie Cooling, founder and CEO of RIA Database, a Charlotte, North Carolina–based firm that provides data and analysis of the independent wealth management industry for asset managers. “Hedge funds will find it difficult to sell higher-fee, lower-liquidity products in the space.”