ISSMI Survey Mentions RIAs and Cash
We learned from Ignites recently about a survey from ISS Market Intelligence titled, "RIA Market Insights - Refining the Opportunity," which states, "The Retail Registered Investment Advisor (RIA), including RIA only and hybrid RIAs, market has been around since the early 1990s, and it remains a source of innovation and growth in the financial advisor marketplace and a distribution opportunity for asset management firms, product providers, custodians, and investment and advisor platforms, TAMPs, and fintech providers. Yet, as the Retail RIA evolves, it continues to perplex and challenge firms seeking to distribute and support this market.... This report leverages data from across ISS Market Insights, including advisor sentiment and behavior based on eight proprietary surveys conducted annually with over 8,000 advisors across channels. Market sizing and segmentation data are sourced from ISS MI's Discovery Data and qualitative insights from in-depth interviews with asset managers, product providers, RIA custodians/platform providers, wholesalers, and related industry experts." A section on "Assets in cash says, "While market volatility drives interest in alternative investments and a non/low correlated investment, it is also driving assets out of the market and into cash. Assets in cash have been increasing over the past year. Across channels, 77% of wirehouses have increased their cash allocation, followed by regionals, IBDs, and banks at 62% and RIA only at 60%.... Money market funds are the top cash vehicle among 87% of RIA only and hybrid RIAs surveyed, followed by short-term bond funds and CDs. Treasuries rank a close fourth place among 42% of RIA only compared to hybrid RIAs, at 31%.... Preference for money market funds is driven by the ease of use and convenient access via platforms and custodians." The ISSMI survey speculates, "Cash has already begun moving off the sidelines, albeit gradually following the significant flight to safety in 2022 and early 2023. While cash positions remain high thanks to elevated interest rates, the likelihood is that much of the short-term asset build-up will ultimately be reactivated. Data reveals early trends in the directionality of the redeployment activity. RIAs anticipate active and passive ETFs will be the primary recipients, with 44% of RIA only likely or very likely to shift cash into passive ETFs and 29% shifting into active ETFs. [A]ctive ETFs hold a greater appeal for hybrid RIAs when combining likely and very likely scores (33%), narrowly edging out the scores for passive ETFs (30%)."
