CHICAGO--(BUSINESS WIRE)--Sep 6, 2018--FlexShares, the ETF unit of Northern Trust Asset Management, today released its fifth biennial study on financial advisors’ views of and adoption of external investment management services. It reveals that advisors are increasingly seeking out ways to make their businesses more efficient through the use of third party services and other means. First conducted in 2010, the survey measures advisors’ attitudes toward and adoption of third party investment managers and also tracks advisors who manage investments in-house. This year’s survey was completed by over 500 financial advisors from across various firm sizes and service models.

Findings show that a growing minority of advisors (43 percent) currently employ third-party investment management solutions and devote an increasing amount of assets to external providers. Advisors reported outsourcing an average of 57 percent of client assets under management (AUM) in 2018, up from 53 percent in 2016. The key drivers behind the decision to outsource include “freeing up time in my practice” (61 percent), “access to institutional quality due diligence/monitoring” (47 percent) and “gaining access to a variety of investment product strategies” (43 percent). Advisors particularly sought out external help for more niche strategies including alternative investments (65 percent), emerging/frontier markets (43 percent), ESG (17 percent) and factor-based or ‘smart beta’ investments (14 percent).

Advisors choosing to outsource either part of or all their investment strategies are increasingly satisfied with their decision. Satisfaction rates among advisors with external managers have consistently increased, up from 92 percent in 2010 to 97 percent today. Sixty two percent of advisors have grown their client base as a result of external management, and 30 percent have realized an increase in revenue.

“As advisors adapt to a growing demand for financial planning services and rising pressures on their bottom-line, they are increasingly looking to employ external investment management services and to focus on activities through which they can add the greatest value,” said Laura Gregg, Director of Client Development at FlexShares. “As they dedicate more client assets to outsourcing, advisors are able to benefit by spending more focused time with clients as well as concentrating on business development activities.”

Although overall satisfaction rates are up, using an external manager is not embraced by all advisors. Consistent with past years, many respondents are hesitant to use external investment managers because investment research remains a core part of their firm’s value proposition. However, the data shows that this attitude may be changing as the percentage of advisors that cite this reason has declined over time – to 32 percent in 2018, down from 45 percent in 2016 and 56 percent in 2014. The desire to maintain flexibility was also cited as an important consideration by 15 percent of non-outsourcers. The survey reveals that these advisors still want outside help. The desire for external marketing support (48 percent) tops the list followed by compliance (29 percent) and social media training (24 percent).

A new part of this year’s survey was an examination of the rise of digital advice platforms and how advisors are implementing them within their practices. While a strong majority of advisors choose not to employ digital advice strategies, six percent of respondents indicated that they currently utilize a digital advice platform and 12 percent plan to incorporate one within the next year or two. Among the primary drivers for offering one are “attracting new clients,” “increasing the range of services offered on the firm’s platform with a lower fee,” “remaining competitive in the market,” and “reducing costs.”

About the Survey

To conduct this year’s survey, the fifth in a series examining advisor views on external investment management, FlexShares worked with InvestmentNews, which fielded the electronic survey to more than 170,000 advisors across the United States from a variety of firm channels, sizes, and service models between February 13 and March 3, 2018. Nearly 600 responses are included in the final report. The sponsor was not identified in the survey.

Respondents represented the following firm types: Independent broker-dealers (40%), RIAs (28%), hybrids (10%), insurance broker-dealers (9%), regional broker-dealers (8%), bank/trust companies (3%), and other financial advisory firms (1%). Of those responding, 39% identified their firms as wealth managers, 24% as financial planning firms, 18% as investment advisories, and 17% as investment managers.

To download a survey infographic and the summary of results, “The Race to Scalability 2018: Advisor Research on Investment Management Trends,” and to register for more information, including a an advisor benchmarking paper and a report for asset managers, visit

About FlexShares

FlexShares Exchange Traded Funds are designed to pursue specific investment goals across both passive and active strategies. FlexShares offers differentiated ETF strategies that can improve and simplify the investment decision process for the long-term investor. Follow us on Twitter @FlexSharesETFs.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 23 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2018, Northern Trust had assets under custody/administration of US$10.7 trillion, and assets under management of US$1.1 trillion. For more than 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit or follow us on Twitter @NorthernTrust.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at

Before investing, carefully consider the FlexShares investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting  . Read the prospectus carefully before you invest.

Foreside Fund Services, LLC, distributor.

An investment in FlexShares is subject to numerous risks, including possible loss of principal. Fund returns may not match the return of the respective indexes. The Funds are subject to the following principal risks: asset class; commodity; concentration; counterparty; currency; derivatives; dividend; emerging markets; equity securities; fluctuation of yield; foreign securities; geographic; income; industry concentration; inflation-protected securities; infrastructure-related companies; interest rate / maturity risk; issuer; large cap; management; market; market trading; mid cap stock; MLP; momentum; natural resources; new funds; non-diversification; passive investment; privatization; small cap stock; tracking error; value investing; and volatility risk. A full description of risks is in the prospectus.

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SOURCE: FlexShares

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PUB: 09/06/2018 10:00 AM/DISC: 09/06/2018 10:01 AM