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Survey: Advisers’ Use of ETFs Continues to Rise

2016 Trends in Investing Survey ReportExchange-Traded Funds remain the most popular investment among financial advisers, according to results from a recent survey conducted by the Journal of Financial Planning and the FPA Research and Practice Institute™, a program of the Financial Planning Association®.

FPA recently released results of its 2016 Trends in Investing Survey, which showed that 83 percent of financial advisers surveyed are currently using or recommending the use of ETFs with their clients. When the survey was first conducted in 2006, only 40 percent of advisers surveyed said they’d used or recommended ETFs. That number has steadily grown over the years, up to 79 percent in 2014 and 81 percent in 2015.

That number may grow next year as 46 percent of respondents indicated they plan to increase their use or recommendation of ETFs with clients in the next 12 months.

ETFs are popular, according to respondents, because they have lower costs, are more tax efficient, have a higher trading flexibility and have increased transparency of holdings.

“The vast majority of ETFs are based on indexes, including those that focus on ‘smart beta,’ and I think the growth in popularity is to a significant degree reflective of the ongoing shift among financial planners toward more ‘passive’ approaches to investing client assets,” Dr. Dave Yeske, DBA, CFP®, Practitioner Editor of the Journal of Financial Planning, said in a news release. “Even planners who still use ‘active’ investment strategies will often start with a core portfolio built around index funds, increasingly in the form of ETFs.“

The 2016 Trends in Investing Survey also found that advisers continue to move away from variable annuities—39 percent of respondents are currently using/recommending variable annuities, versus 49 percent in 2012, which was down from 58 percent in both 2006 and 2008.

The survey was conducted online in April 2016 and was completed by 283 financial advisers. Among respondents, 98 percent are Certified Financial Planner™ (CFP®) professionals and 49 percent work as independent IARs/RIAs.

Read the full survey findings here. FPA members can read a more detailed overview of the findings in the June issue of the Journal of Financial Planning.