DOL Fiduciary Rule, Robo-Advisors May Fuel ETF Growth

Desire for low-cost options has been pushing investors towards ETFs for some time, but further analysis of the market points to continued growth thanks to the new DOL fiduciary rule. 

As investors flock to robo-advisors for their low cost advice solutions, robo-advisors have made ETFs an estimated 95% of their holdings. The DOL fiduciary rule, which takes full effect in 2018, will likely drive further adoption of robo-advisors, helping to fuel already substantial ETF growth, according to BBH’s Ryan Sullivan, VP of Global ETF Services.

“Assuming that ETFs continue to be the primary vehicle used in their models, robos could account for as much as 20%–or $300 billion in assets—of BBH’s estimated $1.5 trillion in ETF growth by 2021,” he writes in an Ignites op-ed.

Sullivan flags three reasons why the growth of robos (and, in turn, ETFs) is partially fueled by the DOL rule in the article: transition to low cost products, shifts in advisor compensation structures and advisors looking to reduce due-diligence burdens.

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