One of the specialized aspects of BNY Mellon Intermediary Analytics data is the ability to explore trends by advisor “program” type. When looking at the market disruptions through this lens two things stand out: first, the continued trend of mutual fund assets moving away from commission-based programs, and second, the continued volatility of Rep-as-PM advisors.
One of the most significant trends over the last 10 years has been the migration from commission-based programs to fee-based programs. The only growth evident through commission-based programs has been in ETFs, which we saw in Q1 2020. In fact, ETFs saw the largest inflows in comparison to fee-based programs.
In both Q4 2018 and Q1 2020, mutual fund outflows on commission-based programs were staggering. It is important to note there was also a great deal of mutual fund outflows on Rep-as-PM programs, especially given the tendency for these advisors to participate in the practice of tax-loss harvesting as mentioned earlier.
However, unlike commission-based programs, Rep-as-PM advisors have also seen periods of sizable growth. In five out of the last eight quarters, these fully discretionary advisor-driven programs saw the highest net sales, the exceptions being in Q4 2018 and Q1 2019. In comparison, over the last 15 months, commission-based programs have seen a steady rate of mutual fund outflows and a significant increase in money market assets/flows.
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