ETFs are a natural fit for fee-based advisors who charge clients a percentage of assets under management, rather than trading commissions. The model is designed to more closely align the interests of the advisor and the client.
Also, nearly half of advisors are using outside managers to assemble ETF portfolios.
“That outsourcing has brought about a boom in ETF strategy firms, which design and manage model portfolios for advisors to sell,” according to the report. “About 120 are in business today, compared with just 25 in 2008.”
Over the six months through March, Morningstar estimates that managed ETF portfolio assets grew by 34%, to $45 billion, according to the article.