ARTICLES:
The Factors Fueling the Rise of Indexing in Wealth Management
By Brandon Hass | Head of Direct Indexing and Model Portfolios, S&P Dow Jones Indices
May 7, 2025
Recent activities indicate that indexing is on the rise in wealth management.
A previous blog introduced Cerulli Associates’ new whitepaper, which explores how index-based strategies are reshaping U.S. wealth management.1 Financial advisors with at least 10% of client assets invested in exchange-traded funds (ETFs) are allocating 46% of client assets to index-based strategies today, with expectations that this figure could hit 49% by 2026.2
But what’s driving this shift? In this blog, we examine the strategic factors behind indexing’s rise—including changes in advisors’ value propositions, the growth of asset allocation models and the rising use of direct indexing.
A New Advisor Playbook: From Performance to Planning
The wealth management landscape is evolving. Research from Cerulli Associates shows advisors are pivoting away from investment management as their core differentiator, with financial planning now taking center stage.
Why have advisors’ value propositions shifted? The research shows that clients have turned their focus to goals—such as funding retirement or college—than beating benchmarks. For example, 57% of affluent investors prioritized advisors who understand their needs, while 45% aimed to outperform the market.3
This shift aligns with a rise in index-based strategies, which have lower fees—an attractive feature for advisors focusing on holistic planning over outperforming benchmarks.
Footnotes:
[1] The Cerulli Associates whitepaper “Redefining the Role of Index Providers” was sponsored by S&P Dow Jones Indices.
[2]Please see Executive Summary of Cerulli Associates’ “Redefining the Role of Index Providers.”
[3] Please see page 4 of Cerulli Associates’ “Redefining the Role of Index Providers.”
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