They are “active in a different way,” Wurzbach said. “They’re active in terms of their asset allocation and their asset management, and the way they think about indexing and ETFs are as powerful tools that they use to construct an asset allocation that’s risk managed for their clients.”

Index providers help active advisors see under the hood and understand how index-based tools can better work for their clients.

After decades where index-based investment have dominated the investment landscape, more institutional clients are also looking at ways index providers can expand beyond the traditional market capitalization-weighted methodology. Consequently, we may continue to see innovation and more smart beta or factor based indices, along with passive ETFs that track them.

“It’s a time of innovation and disruption within the industry, so good ideas are coming from all places,” Wurzbach  added.