Here's Why RIAs Are Embracing ETFs in Client Portfolios

Registered investment advisors (RIAs) are dramatically expanding their ETF usage, with the average firm now holding 81 funds—up 14% in just one year—according to AdvizorPro's 2025 RIA ETF Trends report.

The analysis of nearly 5,000 advisory firms reveals a clear verdict: Exchange-traded funds are no longer just portfolio accessories but have become fundamental building blocks for client portfolios.

What's interesting isn't just how many ETFs advisors are using, but what kinds they're selecting. 

The Evolving ETF Landscape

While iShares, Vanguard and State Street remain the dominant players, the real story lies in what's growing fastest: Digital assets ETFs rose a whopping 246%, equity-hedged strategies were up 288% and specialized fixed-income solutions saw triple-digit adoption increases.

This evolving ETF landscape signals a fundamental shift in how advisors construct portfolios, with implications for both investors seeking professional management and ETF issuers competing for assets in an increasingly crowded marketplace.

For everyday investors, this advisor behavior offers valuable insight: The professionals are moving beyond simple passive index funds and toward more targeted, active and risk-managed exposures.

This suggests a maturing ETF ecosystem where value comes not just from rock-bottom fees but from specialized exposures that can't be replicated through broad market indexes alone.

Looking Beyond Low Fees

The report reveals advisors aren't just chasing rock-bottom expense ratios anymore. High-fee ETFs focusing on income generation and risk management saw remarkable growth, according to the report. The NEOS S&P 500 High Income ETF (SPYI) grew 170% among RIA adopters, while the First Trust RBA American Industrial Renaissance ETF (AIRR) increased 115%.

"RIAs are proving willing to pay higher fees for specialized, actively managed or enhanced-income ETFs, while commoditized strategies continue to face fee compression," the report noted.

Another fund, the iShares Flexible Income Active ETF (BINC), also points to this broader trend toward sophisticated solutions, with an extraordinary 508% growth in RIA adoption.

Other fixed-income strategies from Capital Group and VanEck also saw triple-digit growth, highlighting advisors' searches for specialized bond exposures amid the evolving interest rate environment.

RIAs Get Tactical

The data also show RIAs are becoming more tactical with their ETF allocations. With an average turnover ratio of 51.4%, advisors are actively rebalancing portfolios, with nearly 45% of ETFs being newly added and 19.6% being dropped over the year.

"As ETF adoption accelerates within the RIA space, issuers must focus on product innovation, liquidity and advisor education to capture market share in a rapidly evolving investment landscape," the report concluded.