ETF and mutual fund providers need to rethink their sales and marketing strategies in light of the rapid growth in the sales of these products by registered investment advisors. RIAs have overtaken the top four wirehouses [Merrill, Wells Fargo, Morgan Stanley and UBS] in sales of ETFs and long-term mutual funds, according to Access Data, a Broadridge company. This complicates sales and marketing efforts since RIAs tend to be smaller and have diverse business strategies - ranging from single-person operations to large teams.
The asset numbers for long term mutual funds and ETFs over the last two years highlight some key differences between the two channels. The RIA channel for mutual funds and ETFs was $1.67 trillion at the end of the first quarter of 2014, surpassing the total gathered by wirehouses. During 2012 and 2013, the RIA channel grew slightly faster than the wirehouses in absolute terms, with total assets increasing by $328 billion, compared with wirehouse growth of $322 billion. This accelerated in the first quarter of 2014 with assets for the RIA channel increasing by $68 billion, versus an increase of $38 billion for the wirehouse channel.