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What Attracts New Assets More Than Anything Else

May 4, 2017

A good mix of passive and active products and incorporating a robo-advice platform are essential to luring new assets, Barron’s writes.

That’s if asset growth at Charles Schwab and Vanguard are anything to go by. The two discount brokerages added more than 10% in net new assets in the 12 months ending March 31, according to a recent Broadridge Financial Solutions report cited by Barron’s.

The rest of the financial services sector had a combined asset growth rate of just 2% during the time period, the publication writes. Broadridge attributes the discount brokerages’ higher growth to offering a mix of active products, index funds and ETFs and distributing them digitally via robo-advisors. And more firms across the financial services industry are heading toward exactly such a model, from Raymond James and Edward Jones to Blackrock and T. Rowe Price, Frank Polefrone, senior vice president of Broadridge’s data and analytics business, says in the report.

Nonetheless, in the 12 months ending March 31, the fastest-growing channel among financial services firms was the direct online channel, or what was previously known as discount brokerages, according to the report.

In the first quarter of 2017 the online channel grew 8.6%, beating the independent and wirehouse broker-dealer channels both on a percentage basis and in net new dollars, Broadridge found.

The RIA channel, however, grew faster than the online channel in the first quarter, adding $52 billion — the majority of it in index products and ETFs, according to the report.

By Alex Padalka
  • To read the Barron's article cited in this story, click here.