Index providers have long played an important role in financial markets by developing and maintaining transparent, rules-based benchmarks, but, beyond supplying index data, they can also potentially offer brand awareness and educational resources for use in asset managers and wealth managers’ product positioning.

Amid the plethora of investment products available to investors and the within wealth manager channels, it has become harder for asset management firms to differentiate and distribute their offerings, according to Cerulli Associates’ new whitepaper.¹ In an effort to address this challenge, wealth and asset managers could look to supplement their product marketing capabilities by leveraging index providers’ established brand and content strength.

Why Index Brand Matters

According to recent research from Cerulli Associates, financial advisors pay attention to the brand of the index underlying passively managed products and separately managed accounts (SMAs).

For exchange-traded funds (ETFs), over half of advisors surveyed (56%)² by Cerulli Associates chose an index provider’s brand as one of the most important factors they consider when reviewing the fund’s underlying index (see Exhibit 1).

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The survey uncovered similar results for advisors exploring direct indexing capabilities through SMAs, as 49%³ ranked index provider brand as one of their top considerations (see Exhibit 2).

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While some advisors are well versed in the details of index construction, others focus more on the index’s brand recognition when selecting an underlying index for their product. One wealth management executive summarized it this way: “Our advisors and clients … just trust the name brand of the index, and they don’t really get into significant details.”⁴ This underscores the emphasis on an index provider’s brand during an advisor’s product selection process. This feedback also suggests that wealth and asset managers may consider collaborations with index providers to help strengthen their product marketing capabilities.

For managers that are not yet household names, licensing a brand from a known index provider may lend recognition to their products—particularly in competitive or emerging categories where advisors may primarily seek products with underlying prominent benchmarks. For well-established entities, an index provider’s brand can be additive and complement the manager’s brand in the overall positioning of the product.

The Importance of Educational Content

In addition to brand recognition and methodology, index providers may contribute educational content, which may be overlooked by managers. The educational resources published by index providers may facilitate advisor understanding of the underlying index of a product, support product and help articulate the rationale behind an index-based strategy.

Index providers’ solutions are built upon a foundation of intellectual property from which they can produce high-quality thought leadership that can be incorporated into educational content. These materials may be useful to advisors as they navigate client inquiries.⁵ A majority of advisors surveyed by Cerulli Associates deemed index performance data, attribution, design and macroeconomic thought leadership as valuable in supplementing their own knowledge and aiding in client conversations (see Exhibit 3).

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The popularity of this content among most of the advisors surveyed speaks to the various ways it can help to inform conversations with clients, including:

• Explaining methodology updates or rebalancing schedules
• Demonstrating how index construction aligns with a product’s stated goals
• Offering historical and contextual data to aid in discussions around risk and exposures

Advisors may not need to become index experts—but they do need to be confident when explaining the basics of the passive strategies they use. Index provider content may assist these efforts.

For asset and wealth managers that offer more complex investment strategies, such as derivative income or buffered ETFs, an index provider’s educational materials can be a helpful resource to explain unique concepts.

Beyond education and answering client questions, 85% of advisors surveyed by Cerulli Associates noted they used index provider content to make investment decisions.⁶

¹ The Cerulli Associates whitepaper “Redefining the Role of Index Providers” was sponsored by S&P Dow Jones Indices.

² Please see page 11 of Cerulli Associates’ “Redefining the Role of Index Providers.”

³ Please see page 21 of Cerulli Associates’ “Redefining the Role of Index Providers.”

⁴ Please see page 14 of Cerulli Associates’ “Redefining the Role of Index Providers.”

⁵ Please see page 15 of Cerulli Associates’ “Redefining the Role of Index Providers.”

⁶ Please see page 20 of Cerulli Associates’ “Redefining the Role of Index Providers.”

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