ETFs adoption by retail investors accelerates fund marketing’s rotation to B2C
Key takeaways:
- Retail investors and RIAs drive initial ETF product sales
- Asset manager websites evolve to accommodate investor needs
- The rise of the retail direct channel is at the expense of advisor-intermediated channels
“And now don’t forget, you’re going to need to add a big ole Buy Now button on the page.”
Wait, what now?
Anticipating serving retail investors is one of the biggest adjustments a mutual fund marketing team needs to make as they prepare their first ETF launch. Our “Buy Now” button recommendation rocks everything they’ve understood about how assets are raised through intermediary distribution.
Apart from a very few products that leap onto wirehouse and national account recommended lists (which rarely happens), most ETFs’ first days and years are carried by RIAs and, yes, retail investors.
The most spectacular demonstration of this was the historic raise-up of more than $60 billion in net flows to bitcoin ETFs in 2024—an achievement notwithstanding the fact that the ETFs had yet to be approved by platforms and even one year later many financial advisors are reluctant to recommend them to clients. Where did that money come from? From traders, of course. And RIA sales teams played their part. But much of it was raised from retail investors.
To be sure, investors may have heard about the bitcoin ETFs from the extensive media coverage they received. But how did they get comfortable enough to invest? The ETF issuers’ websites, social media and full complement of marketing communications must have played a major role. The 2024 bitcoin ETF launch was a marketing success, there should be no doubt about that.
Signs of the pivot underway
There are more, less showy signals that asset management marketing is necessarily pivoting from a business-to-business orientation to business-to-consumer:
- Not so long ago, the individual investor user profile on a fund company site was understood to be for fund shareholders. Increasingly, asset managers are recognizing that many site users are there to manage their own money. See the BlackRock and Natixis examples below.
Big Active ETF Milestones on the horizon:
— Ben Johnson, CFA (@MstarBenJohnson) February 20, 2025
1.) At ~$995 Bil active ETF AUM is within spitting distance of the Cuatro Comas Club
2.) By count, active ETFs now represent ~49% of all ETFs. Soon there will be more active ETFs than index ETFs
3.) Fully discretionary active ETFs still… pic.twitter.com/kKkoKd05Xp
Default messaging on sites is increasingly directed to “you the investor,” with firms assuming the responsibility to offer direct help. In the Matthews Asia subscription form below, see the extension to new and experienced investors alike. And PIMCO’s description of how it’s helped millions of investors, with no mention of the involvement of an intermediary. See Vanguard's mike drop statement on its investor site: 50 million-plus investors and 84% of funds outperformed their peer group averages.
The brokerage platform as intermediary
In ETF sales there are two kinds of intermediaries: 1. financial advisors and 2. the brokerage platforms that several issuer sites now link to.
While there’s great consistency on most fund profiles on websites, the variance in how sites support the do-it-yourself retail investor (aka explaining how to buy) is a measure of the transition underway.
Legacy fund companies are more tentative and tend to continue to refer ETF browsers to their financial advisor. Again, we encourage our clients to include a call to action that provides directions on how to invest in each ETF fund profile. Not all firms do this, and we think that’s a mistake that dead-ends the would-be investor. “Buy now” too much for you? No worries, label the button How to Invest or whatever your team can get comfortable with.
Also, from a strict digital marketing perspective, wouldn’t you want to measure and report on clicks on that button?
Whatever the link or button is called and however prominent, all such features do no more than link to the respective fund page on a set of brokerage sites. Some sites nod to the involvement of an advisor, some don’t. Below are examples of three different approaches: AdvisorShares (top), iShares linking to just Fidelity, and Granny Shots with links to almost every platform out there (except just to the home page?).
Supporting the retail channel
For a former client-side intermediary marketer like myself and for those marketing exclusively mutual funds today, all this takes some getting used to.
Not so long ago, retail visitors to a fund company site were assumed to have a financial advisor, and an asset manager wouldn’t think of stepping in between an advisor and their client. The collecting of email addresses of anyone other than a licensed professional was discouraged. Where would you store them in the CRM? But more to the point, why would you take the risk of emailing something to someone’s client that could conflict with what they were hearing from their advisor?
These conventions are breaking down, with some firms adapting sooner than others.
“The retail direct channel presents a consistent threat to advisor-intermediated channels."
The broadening of what happens on asset managers’ websites rests squarely on the shoulders of those involved in digital marketing. As is always the way, nothing is getting turned off, just added to (also see SMAs and model portfolios stake their claim on asset manager websites).
Financial advisors continue to be highly desired traffic on sites as their engagement provides signals that Sales can use to sharpen communications. Of course, the focus remains on building out tools and capabilities to provide exceptional experiences for advisors.
But the need to welcome and educate retail investors is an added priority with a variety of implications that start with a plan to acquire traffic—your team will need bigger budgets to reach retail. And then you need to revisit your site design, prepare targeted content, create conversion paths, tune your analytics, etc. At many firms, retail will need to be acknowledged as a channel, with resources dedicated to it.
Late last December, Cerulli Associates released some research that warranted more attention than it got. “The retail direct channel presents a consistent threat to advisor-intermediated channels as end-investors are increasingly educated and have access to high-quality investment products at lower costs than ever seen before,” the firm reported.
Retail direct market share grew five percentage points over the eight years trailing 2023. Cerulli forecasts growth of another five percentage points over the next four years and a 10-point increase from 2016 to 2027. At the same time, wirehouses have lost four percentage points of market share since 2016 and are expected to lose another four percentage points by year-end 2027.
Beyond the data, especially provocative was Cerulli’s comment that the advisor’s role “must keep changing to prioritize offerings beyond just investment management.” In other words, investment management won’t be the focus or the exclusive province of financial advisors as clients get increasingly involved, interacting directly with what’s available from asset managers.
If that’s the case, this rotation to serving investors directly as well as investment professionals who distribute your products can be expected to further intensify and stretch existing capabilities.
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