Financial advisors expect their allocations to exchange-traded funds (ETFs) to surpass mutual funds in the next two years. As exchange-traded funds (ETFs) become the preferred product vehicle across various asset classes, advisors value the competitive product information they receive from their wholesaler connections, according to the latest Cerulli Edge—The Americas Asset and Wealth Management Edition.

Financial advisors estimate that, by 2026, more of their clients' assets will be invested in ETFs (25%) than in mutual funds (24%), underscoring demand from wealth managers. ETFs have been heavily adopted by the wirehouse and independent registered investment advisor (RIA) channels, which combined make up more than half of retail ETF assets (54.6%).

As demand for ETFs continues to grow, advisors are turning to wholesaler connections—directly or through their home office—for product information and greater support. Nearly half (41%) of advisors consider competitive product information from wholesalers very valuable, followed by access to portfolio managers or product specialists (32%).

“Advisors often do not have time to independently conduct consistent and in-depth product research and wholesalers can create lasting relationships with advisors by becoming a source of product expertise,” says Daniil Shapiro, director. “As ETFs rise in popularity across new asset classes, asset managers should invest in ETF specialists to ensure they provide the product expertise advisors expect and value.”

Cerulli’s research finds client-approved educational or marketing materials (37%) are also highly valued by advisors. Asset managers offer ETF education via their wholesale teams and specialists, and Cerulli recommends advisors take advantage of their home office's product information and guidance as they seek to expand their ETF use.

“Advisor allocations to ETFs increase as they become more comfortable with the product and its use across asset classes, which is propelled by increased product education,” says Shapiro. “As advisors seek new and innovative ways to implement the vehicle across different asset classes and strategies, asset managers have an important role to play in advisor adoption and education of the vehicle.”