Bottom Line

During these volatile market swings and stay at home orders for investors, Advisors remain very active. Investing activity last week was still 2 times average transaction volume as compared to the past 18 months. While the equity markets showed strong performance last week, Advisors remained in a neutral risk stance. Cash as a percentage of portfolio dropped to 5% from 6.2%, a nearly 20% drop in cash allocations.


Advisors are very slowly reducing cash levels. Advisors are slightly favoring non-risky assets over risky assets, which is more in line with historical views on risk. Clients, when viewed as a group, continue to withdraw twice as much as they contribute to their investment accounts, a trend that has been consistent for the past 18 months. Both equity and fixed income mutual funds and ETFs were net flow flat last week. The data suggests that advisors are not yet putting excess cash to work, but rather letting the increase in the equity portion of the portfolio reduce the allocation to cash through market movement.

Key Insights

  • Advisors were slightly bearish last week, with slight outflows from more risky assets and net flow flat in less risky assets.
  • Intermediate Bond was the top style for net inflows last week, after being the worst flow performer year to date. Emerging Markets and REITs returned to the bottom performers in terms of net flows, after being in the best performers for a couple of weeks.
  • When buying equities last week, advisors showed a strong preference for growth styles over core and value.
  • We look at the number of client risk tolerance changes as a proxy for how advisor and clients are engaging around risk conversations. The number of changes this week was flat compared to the previous week but still 80% higher than the normal number of changes. Advisors are actively modifying client’s expectations around risk and return, although the rate of changes is slowing from the high three weeks ago.
  • Cash in advised portfolios is running at about 5% down from 6.3%. We believe this was due to a strong upward movement of the equity portion of portfolios last week. Cash is roughly 50% higher than the 18 month average of 3.4%.
  • Transaction volume was flat week over week but is still running at 200% above weekly average since January. Selling transaction counts outpaces buying 2 to 1, while net flows are nearly zero, which suggests what is being sold is going into a consolidated holding. This is largely due to selling of individual securities and buying of mutual funds and ETFs. This fits tax-loss selling scenarios.
  • Clients continue to seem unfazed by the market downturn. Client contributions and withdrawals in their investment accounts is running about average when compared to the past 18 months. We see no change in the hiring and firing of advisors, suggesting clients are satisfied with the way their advisors are working through the crisis.

Data Description

Our goal with this weekly compendium of industry metrics and indices is to inform the report’s consumer about the investment, risk and business activities executed by RIAs across the nation. We believe this information will provide advisors with near real time insights that may help them improve their business and client outcomes.

The data included in the RIA Pulse metrics comes from our wealth management solutions databases, which include
Envestnet and Tamarac data. We filter the data those firms and advisors who we have segmented as Registered
Investment Advisors (RIAs). The data is de-identified and aggregated to create a representative set of metrics and indices.

We curate the data to eliminate data which we deem to be incomplete, having insufficient history, or have minimal
contribution to the metrics. We reevaluate the components and qualifiers of the metrics and indices on at least an annual basis in an effort to keep our RIA index representative of advisors’ inferred attitudes and actual behaviors.
Risk On includes all individual equities (stocks).

We define risky assets as equity focused mutual fund and ETF styles. This includes, but is not limited to US Large Cap, Mid Cap, Small Cap, International, Emerging Markets Equities, Emerging Market Bonds, and High Yield Bonds.

We define non-risky assets as all individual fixed income instruments. Risk Off also includes fixed income focused mutual fund and ETF styles. This includes Taxable, Muni, Bank Loan, and International Fixed Income.

We define risk neutral assets as Cash/Money Markets, Balanced/Asset Allocated, and Alternative styles.


The information, analysis, and opinions expressed herein are for general information only. Nothing contained in this document is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Investing carries certain risks and there is no assurance that investing in accordance with the portfolios mentioned will provide positive performance over any period of time. Investors could lose money if they invest in accordance with the portfolios discussed herein. Past performance is not indicative of future results.

Index performance is presented for illustrative purposes only and does not represent the performance of any specific investment product or portfolio. Fees and expenses are not included in the performance of an index. Fees and expenses will reduce performance. An investment cannot be made directly into an index. The information contained herein has been obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. News feeds, data feeds, market quotes, and other links on this Envestnet Enterprise Portal are provided by independent third parties and are not guaranteed to be accurate, complete, or timely (including any information or data sources provided by Advisor or provided by third parties at the direction of Advisor). The news, market quotes, and links provided are shown for your convenience only. Linked web-sites are independent and are not owned or operated by Envestnet Financial Technologies. Envestnet Financial Technologies does not endorse any linked web-sites, nor does Envestnet Financial Technologies guarantee the timeliness, accuracy, completeness or adequacy of any information posted on the linked web-sites. Envestnet Financial Technologies does not necessarily agree with any opinion, outlook, or forecast stated on any linked web-site. Envestnet Financial Technologies reserves the right to terminate, modify, or change the links, news sources, and market quote sources at any time without notice.

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