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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.


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8 Questions to Evaluate Financial Planning Research

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Dave Yeske at Closing Circle of FPA Retreat 2016

In order to emerge as a true profession, the financial planning industry needs to base its practices on research-based writing.

That’s what Dave Yeske, DBA, CFP®, co-owner of the planning firm Yeske Buie, told FPA Retreat attendees at his session on how to read and apply research-based writing.

“We need to deepen our connection with academics,” Yeske said. “They know how to conduct research but they don’t always know what the critical questions are that you need answers to.”

The Journal of Financial Planning, of which Yeske is practitioner editor, is one of many outlets that supply practitioners with research-based writing, but those articles aren’t so helpful if you aren’t sure exactly how to read them.

Yeske provided eight questions to ask yourself in order to better evaluate research-based writing.

  1. What is the problem or question? What are the researchers trying to address?
  2. How did they conceptualize that problem, how did they structure it? Look for what the researchers are measuring. For example, client trust and relationship commitment have become well-represented measures in financial planning literature.
  3. What are the key findings from prior research? Good research will build on research that came before to lay the foundation for the current research to build upon.
  4. What was their methodology? Does it seem like the researchers make sense?
  5. What were the results of the testing? A formal academic paper will never prove anything, Yeske said, rather it will fail to disprove something.
  6. Were the results compelling? Did the authors connect all the dots for you? Did their data answer the question?
  7. What are the practical applications? Do the researchers tell you how you could use this information? If not, are you still able to find a practical use for the data that is being presented?
  8. Will this change the way I practice? Will I be able to incorporate this into my practice?

“As a profession we need to all become better at recognizing research-based writing and be able to apply it,” Yeske said.

See Yeske’s presentation here.

Yeske also has a remote course on this subject through Golden Gate University, where he serves as the director of financial planning. Find out more here.

Also, you could participate in the Financial Planning Association’s Theory in Practice Knowledge Circle.

Did you miss Retreat this year, or just want to register for 2017 early? Join us next year at Château Élan in North Atlanta, Georgia April 24-27, 2017. Use the code PARET17 for $100 off if you register before May 31, 2016.

AnaHeadshotAna Trujillo
Associate Editor
Journal of Financial Planning
Denver, Colo.