Alan Hess recently spoke with Asset TV to share new insights from the Advisor Pulse series, examining the forces driving advisors toward ETFs and the shifting priorities shaping vehicle selection across channels.
Watch the interview here
Advisor Pulse is a series of research reports providing unique and timely perspectives from advisors on the asset management landscape. Each report integrates feedback from hundreds of advisor surveys, supplemented by more than two decades of historical data, trend analysis, and deep industry expertise, to deliver actionable, data‑driven intelligence that helps firms optimize decision‑making and performance.
Why Advisor Sentiment Matters More Than Ever
Understanding advisor sentiment is critical to understanding future asset flows. Advisors serve as the primary gatekeepers between asset managers and end investors, translating product availability into real‑world portfolio decisions for clients who are often less directly engaged with the broader investment landscape.
When Strategies Look the Same, Many Advisors Choose ETFs
In the latest Advisor Pulse report, advisors were asked the following question:
“Assuming that the same strategy is available from one of your top asset managers as an open‑end mutual fund, a separately managed account (SMA), or an ETF, which are you most likely to invest client dollars into?”
60% of advisors selected ETFs, 30% preferred SMAs, and only 10% chose open‑end mutual funds. The preference for ETFs has steadily increased, as 53% of advisors selected the vehicle in 2022. Mutual fund interest meanwhile declined from 20% in 2022.
This finding highlights the extent to which ETFs have become the default vehicle of choice when advisors are evaluating comparable strategies across wrappers.
ETF Preference Varies by Channel but Remains Strong Across the Board
While ETF preference was evident across advisor channels, the degree of conviction varied meaningfully.
RIAs showed the strongest preference for ETFs, with 80% indicating ETFs as their preferred vehicle. This reflects the RIA channel’s emphasis on transparency, cost control, and tax efficiency.
Among bank‑independent and regional broker‑dealers, ETF preference remained a clear majority at approximately 60%, reinforcing their role as a core portfolio building block.
Wirehouse advisors were the only group to show a stronger preference for an alternative vehicle: SMAs, driven by the higher concentration of high‑net‑worth and ultra‑high‑net‑worth clients requiring customization and tax management. Even so, nearly 40% of wirehouse advisors still preferred ETFs, highlighting their continued relevance even in more complex client segments.
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