RIA Intel

Exchange-traded funds (ETFs) are quickly emerging as the preferred choice for financial advisors, surpassing mutual funds for their liquidity, ease of use, and wide array of uses. As highlighted by the latest Cerulli Edge report on asset and wealth management in the Americas, there is a noticeable shift in the allocation of assets with financial advisors predicting that by 2026, 25% of their clients’ assets will be invested in ETFs compare to 24% in mutual funds.

Mandatory arbitration clauses in RIA contracts have been a point of contention for over a decade, and these clauses have re-entered the spotlight as the SEC recently deliberated over the issue once again. These clauses, which often compel clients to settle disputes out of court, have sparked heated debates about their fairness and impact on investor rights. Now, as the SEC revisits the issue, the stakes are high.

Institutional Investor recently spoke with Lisa Jacobs, Head of Product Management – intelliflo redblack at intelliflo. intelliflo is the global financial advice technology division of Invesco. We discussed how wealth managers and asset management firms implement new investment platforms such as intelliflo redblack, intelliflo’s award-winning rebalancing, trading, and order management solution. Here are the highlights of our conversation, edited for clarity.

Financial advisory firms are undergoing a significant transformation as more and more brokers are transitioning to Registered Investment Advisors (RIAs). This change is driven by a desire for greater autonomy, better fiduciary execution, and of course, improved compensation structures. As the industry evolves, RIAs are becoming the preferred model for many seeking to enhance their practice and deliver superior client outcomes.

A recent report by ISS Market Intelligence shows a significant shift in investment preferences among US-based financial advisors. The study, part of the ISS MI Advisor Pulse Series, surveyed over 800 advisors in July 2024 and revealed a growing preference for exchange-traded funds (ETFs) over traditional open-end mutual funds. As ETFs offer tax efficiency, liquidity, and active management options, ETFs are quickly becoming a portfolio mainstay for financial advisors and their clients.

Compliance with SEC and other regulations has long distracted many registered investment advisors (RIAs) who seek to provide exceptional service to their clients and expand their professional practices. Federal and often state regulations require advisors to devote time and attention to documenting and justifying their decisions on behalf of clients.

The registered investment advisory (RIA) market has been a hotbed of activity, with buyouts and mergers becoming increasingly common.

The journey to retirement is fraught with challenges that can derail even the most well-intentioned savers. A recent survey from Goldman Sachs has shed light on the financial struggles faced by working individuals and retirees, showing that Americans are falling behind on saving for retirement and highlighting the impact that financial advisors play in achieving retirement goals.

Advisors can provide more holistic wealth management services by managing clients’ tax liabilities using tax-loss harvesting and wash-sale optimization. These two approaches help to minimize client tax liabilities on anticipated or realized gains, and also offer opportunities to generate “tax alpha” and reduce clients’ overall tax bill at the end of the year. Offsetting investment gains with losses is, of course, a well-established practice among investors.

As wealth managers strive to expand their books of business, they work hard to attract the right clientele with marketing programs and referrals from current clients and members of adjacent professions. But ultimately, the choice of advisor falls to the client.