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FlexShares Survey Finds Financial Advisors Highly Satisfied with External Investment Solutions

RIA channel expanded investment outsourcing at a higher rate than IBDs

One-third of advisors outsourced investment management for the first time during the pandemic

CHICAGO, September 21, 2022--(BUSINESS WIRE)--Northern Trust Asset Management’s FlexShares® Exchange Traded Funds announced today findings from its latest biennial study on financial advisors’ adoption of external investment management services. This year’s version of the survey, which was first conducted in 2010, revealed that the use of outside investment managers has continued to gain traction in the advisory industry over the past two years. Firms already using external managers increased their allocations, while many firms that had not previously outsourced decided to start during the pandemic.

The survey of over 500 advisors found that firms using external managers have been highly satisfied with their experience, often choosing to increase their level of outsourcing over time. In the past two years, nearly all firms already using external managers either increased their outsourcing activities (50%) or kept them consistent (49%). Ninety-five percent of firms reported being ‘satisfied’ or ‘very satisfied’ with their outsourced solutions, and a majority (53%) directly correlated their outsourcing activities with allowing them to generate more revenue.

RIAs Report Greater Outsourcing Growth

While a smaller proportion of registered investment advisors (RIAs) choose to outsource as compared to independent broker-dealers (IBDs), the RIA subset is beginning to rely on third-party providers at a rapidly increasing rate. In 2022, 32% of RIAs now outsource as compared to 27% in 2020. This figure has remained largely unchanged for IBDs at around 50%.

RIAs also reported higher levels of outsourcing as a percentage of assets under management (AUM). On average, RIAs outsource approximately 50% of AUM while IBDs outsource 39%. This increased adoption may be a function of business size. As RIAs tend to be smaller enterprises, many need greater external support amid recent market disruptions.

Within each advisor channel, there are also differences in what the firms are choosing to outsource. RIAs are more likely than IBDs to outsource back-office operations (25% vs. 15%). By contrast, IBDs put more of their outsourcing efforts into investment manager research (38% vs. 22%) and due diligence/monitoring (27% vs. 17%).

Outsourcing Increased Amid Covid-19

The 2020 iteration of this survey asked firms who handle investment management in-house whether their opinion of outsourcing had changed as a result of the pandemic - 15% of respondents said they plan to increase their usage of outside managers and 85% would reconsider doing so. Two years later, a significant number of firms have been shown to have ultimately chosen to start outsourcing investment management.

In this year’s survey, about one-third (34%) of advisors said their firm outsourced investment management for the first time during the pandemic. These firms likely turned to external managers to cope with the high turnover and instability of this period, even if they hadn’t outsourced before. Furthermore, firms that were already outsourcing before Covid-19 knew they could rely on external services – almost a quarter (23%) reported that they increased outsourcing during the pandemic.

"While the trend towards investment outsourcing had already been gaining momentum as advisors shifted towards more holistic financial planning activities, outsourcing is also proving to be a source of stability in more turbulent market conditions," said Laura Hanichak Gregg, Director of Practice Management and Advisor Research at FlexShares. "As the investment landscape has become increasingly volatile over the past few years, many firms have utilized external resources for the first time or expanded their existing activities, perhaps as a way to cope with recent disruptions."

The Future of Outsourcing Adoption

While the overall share of advisors choosing to outsource has remained highly consistent over time, attitudes towards outside managers continue to shift favorably and may suggest further adoption in the future. Firms that don’t outsource today are becoming more open to it – the number of firms ruling out investment management outsourcing has consistently declined over the past five years.

When advisors were asked what would change their opinion, affordability remained the top factor. However, the focus on cost appeared to be receding in favor of the quality of options available. This year, the importance of a "broader range of solutions" was favored by almost a quarter of respondents, as compared to 17% in 2020.

About the FlexShares Race to Scalability Survey

To conduct this year’s survey, the seventh in a series examining advisor views on external investment management, FlexShares worked with Informa Engage, which fielded the survey to advisors and closely related professionals between January 10 and February 1, 2022. More than 550 responses are included in the final report. The sponsor was not identified in the survey.

To download a full summary of results and receive more information, 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. Please visit our website or connect with us on our LinkedIn page.

About Northern Trust Asset Management

Northern Trust Asset Management is a global investment manager that helps investors navigate changing market environments, so they can confidently realize their long-term objectives. Entrusted with US$1 trillion of investor assets as of June 30, 2022, we understand that investing ultimately serves a greater purpose and believe investors should be compensated for the risks they take — in all market environments and any investment strategy. That’s why we combine robust capital markets research, expert portfolio construction and comprehensive risk management to craft innovative and efficient solutions that deliver targeted investment outcomes. As engaged contributors to our communities, we consider it a great privilege to serve our investors and our communities with integrity, respect, and transparency.

Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Belvedere Advisors LLC, Northern Trust Asset Management Australia Pty Ltd and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.

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 a global presence with offices in 23 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2022, Northern Trust had assets under custody/administration of US$13.7 trillion, and assets under management of US$1.3 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on Follow us on Twitter @NorthernTrust or Northern Trust Corporation on LinkedIn.

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.

Investing involves risk. Principal loss is possible.

Foreside Fund Services, LLC, distributor.

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