A recent survey from ISS Market Intelligence confirms that when advisors are offered identical strategies across three wrappers—open-end mutual funds, separately managed accounts (SMAs), and exchange-traded funds (ETFs)—the ETF wins decisively. Sixty percent of respondents selected the ETF, followed by SMAs at 30%, and mutual funds at just 10%. This marks a sharp shift from 2022, when ETF preference stood at 53% and mutual funds captured 20%.
Channel-Specific Preferences
RIAs exhibit the strongest ETF conviction, with 80% choosing the wrapper as their first option, reflecting the channel's focus on transparency, cost control, and tax efficiency. Bank-independent and regional broker-dealer advisors follow at roughly 60%, solidifying ETFs as a core building block across mainstream advice channels. Wirehouse advisors are the exception, favoring SMAs due to a higher concentration of high-net-worth clients who benefit from customization and tax management. Still, nearly 40% of wirehouse advisors selected the ETF, indicating significant penetration even in this traditionally product-agnostic channel.
Standalone ETFs vs. Share Classes
The debate over ETF structure persists. FUSE Research's November survey of over 550 advisors found that 51% prefer standalone ETFs, with 28% expressing strong preference and 23% some preference. Only 13% favor ETF share classes tied to existing mutual funds, despite SEC approval. Mike Evans, partner at FUSE Research Network, noted that advisor enthusiasm for share classes remains measured, as most prioritize transparency, liquidity, and simplicity. Fee compression and operational readiness are key hurdles, and asset managers have selectively introduced share classes on established funds with sufficient scale.
Evans added, "Over time, as operational frameworks and distribution support evolve, we may see greater comfort and adoption. But for now, the standalone ETF remains the preferred vehicle for most advisors."
RIA Portfolio Trends
AdvizorPro's 2026 RIA ETF Trends Report, analyzing 13F filings from 4,237 RIAs from Q4 2024 to Q4 2025, shows a maturing but expanding ETF market. The average number of ETFs per firm rose 13.7% to 88.3, with 71.4% of firms increasing their count. The median climbed from 42 to 47, a gain of 11.9%. Rather than concentrating holdings, RIAs are diversifying across more funds and strategies.
Turnover declined to 36.3%, meaning roughly one-third of holdings changed year-over-year, compared with about half the prior year. New additions accounted for 41.9% of holdings, while removals fell to 18.1%, suggesting more deliberate portfolio construction. Among large providers, BlackRock's iShares saw a 7.7% decline in RIA allocators, Vanguard dropped 3.8%, and Invesco slipped 4.6%.
For context on broader market trends, advisors may also consider how wealth managers report a surge in demand for 'news-proof' portfolios amid persistent volatility, and how bond ETFs have become central to portfolio construction with $3 trillion in global assets. Additionally, MassMutual's wealth chief notes AI enhances efficiency but cannot replace human trust in advisor-client bonds.
