NEW YORK, Jan. 15, 2020 /PRNewswire/ -- Broadridge
Financial Solutions, Inc. (NYSE: BR), a global Fintech leader,
today released results from a new survey of over 500 financial
advisors, revealing that ETF demand is predicted to continue
increasing in 2020 and that advisors overwhelmingly plan to shift
away from actively managed mutual funds.
Eighty-three percent of advisors surveyed increased their asset
allocations to ETFs over the past two years, and 73% say they
anticipate that their allocation to ETFs will continue to increase
in 2020.
Among advisors planning to allocate more assets to ETFs, 55%
plan to primarily shift assets away from actively managed equity
mutual funds. Fifteen percent plan to primarily shift assets away
from individual stocks, followed by passive equity index mutual
funds (14%), cash and equivalents (9%) and bonds or fixed income
mutual funds (5%).
The likelihood of an advisor shifting from actively managed
funds to ETFs increases among younger financial advisors, with 64%
of advisors under the age of 40 planning to make this shift.
"As asset managers continue to engage with the next generation
of financial advisors, it is critical for them to consider the wind
change occurring in product flows," said Matthew Schiffman, Principal at Broadridge
Financial Solutions. "Advisors planning to allocate more assets to
ETFs next year are most likely to pull away assets from actively
managed funds, and it's a shift that's likely to become more
pronounced over time as lower fee ETFs continue to draw investors
away from higher cost investments."
Variations in ETF Usage Reveal Opportunities for Asset
Managers to Rethink Distribution Models
Thirty-six percent of advisors use ETFs primarily for core
positions, although usage varies by AUM and channel. Broken down by
advisor channel, RIAs are the most likely to use ETFs for core
portfolio positions (52%), followed by wirehouse advisors (36%) and
IBD/regional advisors (31%). Meanwhile, nearly half (48%) of larger
advisors (AUM of $500M+) use ETFs primarily for core positions.
Heavy ETF users (defined as having over 40% of AUM in ETFs) are
more likely to be found within the RIA channel (44%) compared to
IBD/regional and wirehouse channels, at 23% and 14%
respectively.
Wholesalers and websites are the primary resources advisors use
from ETF providers, but usage differs by channel. When researching
new products, RIAs were found to be more receptive to digital
marketing channels (e.g., webinars), while wirehouse and
IBD/regional advisors prefer to leverage wholesalers for product
information and selection. Across channels, only 16% of advisors
rate existing ETF information and analytical tools, from all
sources, as "excellent."
"While assets have shifted into ETFs across the investment
landscape, adoption by advisors is not equal across channels, nor
is the way advisors research and make decisions for clients," added
Schiffman. "This has important implications for asset managers in
terms of product development, distribution, marketing and overall
advisor engagement. No one-size-fits-all approach exists, but there
are clear opportunities for managers to establish mindshare around
new products, including non-transparent active ETFs and thematic
ETFs."
To download a summary of the survey results, click here.
Methodology
This Broadridge survey was conducted by 8 Acre Perspective Corp.
to assess ETF perspectives and trends. A total of 513
financial advisors across wire, regional, IBD and RIA channels
completed the survey, which was fielded from November 8 to December 5, 2019. For further
details on survey methodology, please contact a Broadridge media
representative.
About Broadridge
Broadridge Financial Solutions, Inc. (NYSE: BR), a $4 billion global Fintech leader, is a leading
provider of investor communications and technology-driven solutions
to banks, broker-dealers, asset and wealth managers and corporate
issuers. Broadridge's infrastructure underpins proxy voting
services for over 50 percent of public companies and mutual funds
globally, and processes on average more than U.S. $7 trillion in fixed income and equity securities
trades per day. Broadridge is part of the S&P 500® Index and
employs over 11,000 associates in 18 countries.
Media Contacts:
Matthew Luongo
Prosek Partners
+1 646-396-0966
mluongo@prosek.com
Linda Namias
Broadridge Financial Solutions
+1 631-254-7711
Linda.Namias@broadridge.com
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SOURCE Broadridge Financial Solutions, Inc.