October 2018 – Preparing Advisors for ETFs: ETF Products and Resources

For the past few years, exchange traded funds (ETFs) have been the investment vehicle of choice for many financial advisors. According to a 2018 study by the Financial Planning Association, 87% of advisors currently use or recommend ETFs with clients, up from 72% in 2010 and 44% in 2008. ETF usage will continue to climb, as 50% of advisors plan on increasing their recommendations for a client’s portfolio. The rise in popularity can be attributed in part to the funds’ low costs, broad diversification and tax benefits. This month’s Asset Management Monitor – Advisor Report profiles coverage group firms that offer proprietary ETFs. In addition to products, we cover related educational resources, such as dedicated centers, multimedia content, tools and commentaries.

All firms in our coverage group offer some form of smart beta ETFs. Most firms (86%) provide smart beta/factor investing strategies, while only 14% include ESG funds. All firms provide a dedicated center on the advisor site to house ETF products and related resources. Only 29% of firms prominently feature ETF homepage promotions, while 93% provide direct access to ETFs via the main menu dropdown. Two firms house ETF content, including products, educational resources and commentaries in comprehensive ancillary sites. Tools are a rare offering—from only 29% of firms—and two firms’ tools serve as stand-outs. All firms offer text-based articles, 71% offer commentaries, and 57% include explanatory videos. Top firms in this report provide a variety of educational resources that define ETFs and explain how to implement them in client portfolios.

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