The Best of Both Worlds

This past summer the Journal of Financial Planning released findings from The 2018 Trends in Investing Survey, which represents the views of largely IAR/RIA, fee-based or hybrid financial advisors.

Not surprisingly, current usage of ETFs by advisors was high (at 87%) and expected to continue to rise in upcoming years. However, the belief in passive management was not unreserved. The table below shows that in 2018 just 22% of advisors believed that 100% passive portfolios produced the best overall investment performance even after account management costs. (Of course, the belief in fully active portfolios was even weaker at just 12%)

Instead, advisors overwhelmingly favored a blend of active and passive management. This is consistent with the growing trend toward core-satellite portfolios that use low cost passive vehicles for more efficient asset classes and high alpha products for asset classes where active management can add value.

We expect core-satellite portfolios to continue to grow in popularity among RIAs and advisors using model management approaches. We also expect managed portfolios from leading asset managers to continue to add active/passive options to their product line ups.

Interested in the full report? Click here.

Source: 2018 Trends in Investing Survey, Financial Planning Association (FPA) | Journal of Financial Planning | FPA Research and Practice Institute™