Lisa Shidler and Brooke Southall

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ETF makers mostly have $500-million-plus-AUM RIAs to thank for growth, study shows

Frank Polefrone: RIAs are growing assets they manage at a faster rate than all other channels, especially the wirehouse channel. RIAs are utilizing lower-fee products index funds and ETFs in a bigger way.

Broadridge Financial Solutions

Frank Polefrone

A look at the numbers shows that exchange traded funds are starting to move in lockstep with RIAs and vice-versa. RIAs invested $496 billion in ETFs in the 12-month period ended June 30, 2015 – that’s a $78 billion increase compared to the same period the year before. By comparison, the wirehouse channel added 20% fewer ETF assets, or $397 billion in the last year; granted, an amount that was $70 billion greater than its aggregate investment during the same 12-month period the year before, according to Broadridge Financial Solutions. RIAs that manage portfolios and make discretionary investment choices for their clients value ETFs because they provide advisors with easy access to market segments at a cheap price – an especially important factor for RIAs who are compensated on an asset-fee basis. Fee-based advisors appreciate ETFs’ tax efficiency, liquidity and broad exposure at low cost. Conversely, RIAs are a prized channel for ETF-makers like State Street, Invesco, PowerShares, Vanguard Group and BlackRock. ETFs are also a major ingredient in portfolios devised by robo-advisors -- essentially automated RIAs -- for the mass affluent who invest more than 90% of their assets using ETFs.

ETFs

RIAs added half a trillion in assets to ETFs in a recent 12-month period, far outpacing wirehouse brokers

ETF makers mostly have $500-million-plus-AUM RIAs to thank for growth, study shows

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