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Survey finds baby boomers biggest users of ETFs


ETFs are most popular with investors between the ages of 51 and 70 according to a new white paper from Pershing LLC, a BNY Mellon company, in conjunction with Beacon Strategies LLC. 

The report, The Evolving ETF: Using Exchange Traded Funds in Client Portfolios, surveyed more than 1,500 advisors in the US and around the globe. More than two-thirds of advisors who use ETFs intend to increase their usage over the next 12 months, while 55 per cent said that more than half of their clients already have ETFs in their portfolios.
“The widespread assumption across the investment management industry is that the continued growth and popularity of ETFs is being driven by younger investors. However, advisors are telling us that this is not necessarily the case,” says Justin Fay, director of financial solutions for alternative investments and ETFs at Pershing.
“We found that ETF usage in portfolios is most prominent among the Baby Boomer and Greatest Generation populations, mainly because these investors have become increasingly aware of the cost efficiency and access to a variety of styles that ETFs may provide, which can help them achieve their financial goals,” he adds.
Pershing and Beacon Strategies’ white paper revealed a number of other key findings, such as that advisors view ETFs as critical investments in client portfolios; 64 per cent of advisors said ETFs are core to their clients’ portfolios, signalling greater acceptance of the asset class; while the percentage of ETFs included in client portfolios varies greatly, 55 per cent of advisors said more than half of their clients had ETFs in their portfolios.
Performance is the key criteria for choosing a specific ETF; when choosing a specific ETF, performance is most important (43 per cent) and the provider’s brand recognition is least important (2 per cent). The white paper also reveals that further education is needed around ETFs. ‘Concerns around the ETF structure’ was the biggest barrier to advisor use of ETFs, signalling a need for further education and potential market structure improvements.
 The white paper also incorporates interviews with various industry stakeholders, including advisors, registered investment advisor (RIA) executives, global wealth managers and ETF managers, looking at a range of other ETF-related issues such as the growth of ETFs across various channels; the increased interest and demand for ETFs and growth potential outside US markets and the impact of the Department of Labour (DOL) Conflict of Interest Rule as it relates to potential greater utilisation of ETFs.
“ETFs can be a particularly attractive investment option for advisors, offering customisable solutions and potentially lower-cost access to markets, countries and sectors than many other comparable investment vehicles. While the RIA channel continues to dominate in terms of ETF use, we are seeing increased adoption across other channels, particularly independent broker-dealers who are implementing ETFs more frequently within portfolios, and this trend is expected to continue,” concludes Fay.

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