Why Some RIAs Want Bigger Slices of the ETF Pie than Others

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RIAs held more than a third of ETFs’ total assets at the end of 2024 — but their popularity among independent advisors isn’t universal.

The top 50 RIAs in the country vary widely in their discretionary asset allocations to ETFs, according to a recent AdvizorPro report analyzing regulatory filings. United Capital Financial Advisors, for example, has more than 80% of its total AUM allocated to ETFs, while NISA Investment Advisors has less than 2%. The divide arises from the fact that many firms continue to rely heavily on mutual funds — a trend experts said will likely reverse in the coming years as ETFs become more mainstream.

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“What I’m seeing with mutual fund issuers is they’re creating overlays. So it’s still the core strategies, but now they’re offered as an ETF,” said AdvizorPro’s Hesom Parhizkar, who contributed to the report. “[ETFs are] just a more agile vehicle.”

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ETFs FTW

While ETFs have been around since the ’90s, they only recently blew up as a major investment option. That followed the SEC’s adoption of the ETF Rule, which allowed issuers to bring the strategies straight to market without obtaining an exemption. The number of ETFs has exploded, and early adopters are more likely to be all in, said Amrita Nandakumar, president of Vident Asset Management. “It does not surprise me that firms like Creative Planning and Hightower continue to be at the top of the list, as they were among the first RIA adopters of ETFs,” she said. Still, the fact that there are roughly twice as many mutual funds available has meant that certain firms haven’t had to “venture too far into ETFs,” she added.

Other findings from the report include:

Captrust, which had the highest AUM of any of the firms included, at more than $1 trillion, had less than 2% of its assets allocated to ETFs. Valmark Advisors was second to United Capital in terms of the proportion of its AUM allocated to ETFs, at 80%. Churchill Management Group was third, at 77%.

Modera Wealth Management allocates roughly a third of its assets to ETFs, as many clients are in legacy mutual funds that they have no reason to sell, chief investment officer George Padula said. Modera’s proportion of new money going into ETFs, however, is 45% and expected to rise, he added.

Splitsville. There isn’t necessarily an ideological divide on ETFs, since things like mutual funds and alternatives might not be included in the public filings that the dataset is based on, Parhizkar said. The recent explosion in crypto ETF allocations has been “mind-boggling” and more a result of client demand than advisor recommendations, he added. “It’s much easier to buy [crypto] off of one the bigger custodians as an ETF vehicle, versus trying to set up a coin-based account and actually buy the underlying holding.”

This post first appeared on The Daily Upside. To receive financial advisor news, market insights, and practice management essentials, subscribe to our free Advisor Upside newsletter.

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