Nasdaq Survey: How Financial Advisors are Approaching Income

Financial advisors are on the front lines for their clients, adjusting portfolios to optimize for stubborn inflation, a dynamic interest rate environment, and much more. Nowhere is that challenge clearer than in the income generation part of a portfolio.

Now, a recent survey from Nasdaq Global Indexes reveals just how income allocations are changing to meet the needs of the moment. The poll — the 2025 Nasdaq Income Allocation Survey — shows that, while allocation to income-oriented investments has remained unchanged, the makeup of these investments and the strategies behind them are shifting in meaningful ways.

“There has been a general shift in the sophisticated nature of portfolio construction and what advisors are looking to achieve with every dollar they're putting to work,” said Jillian DelSignore, Global Head of Investor Distribution Strategy at Nasdaq Global Indexes.

Shifting Approaches

According to the survey’s more than 400 qualified financial professional respondents, the primary role of income allocations is shifting: while 42% of advisors still pursue a total return approach, a notable 32% now prioritize paycheck replacement, reflecting the aging client base and rising demand for retirement income.

Overall allocation to income-generating assets remained steady at 29% compared to a similar survey conducted by Nasdaq in 2023, and this consistently large portion demonstrates the importance in current portfolio construction.

“There’s an insatiable appetite for yield – whether it's from the aging population or just investors generally looking for a stable core for their portfolios,” said DelSignore. “We're not talking about a satellite allocation anymore. We're talking about a ballast in a portfolio.”

The survey found that usage of cash and cash alternatives rose 12%, passive ETFs increased 11%, and active mutual funds climbed 9% compared to 2023. This diversification signals a strategic pivot toward liquidity, flexibility, and tactical allocation.

“That shift of 11% in passive ETFs is massive because it shows that you have this continued evolution of new users of income ETFs, which, while they've been around for a long time, is a significant new migration, which for me is very encouraging,” said DelSignore. “But then, at the same time, you also have this meaningful increase in active mutual funds, which is interesting because that says advisors are simultaneously really seeking active strategies in fixed income.”

For DelSignore, the main takeaway from the survey is a “huge opportunity gap” for ETF issuers: While advisors are preferring ETFs, there is also clear demand for active approaches in this space, so she sees an opportunity for active ETFs.

“There’s a narrative that mutual funds are dead, but that’s  not the case for the people that we surveyed,” she said. “Of course, the flows don’t lie showing that ETFs are beating mutual funds, but there remains a consistent undercurrent of appreciation for active from advisors that is waiting for issuers to capitalize on.”

Nasdaq’s survey found that 37% of advisors are relying on wholesaler recommendations — an 11% increase since 2023, which highlights the enduring influence of distribution channels and the importance of relationship-driven product selection.

Looking Ahead

According to the survey respondents, inflation (44%), market volatility (34%), and interest rate changes (33%) are perceived as the top risks to income portfolios over the next 12 months.

For Edward Ware, Nasdaq’s Head of Index Specialists Americas, a notable result from this year’s survey is that advisors’ risk outlook did not result in more significant allocation changes.

“For me, the biggest surprise within the survey was the lack of change and advisor preferences for different assets used in their income allocations,” said Ware. “Compared to 2023, we saw a parallel shift across categories, so everything went up at the same time together. Therefore, financial advisors have generally not had any real changes to the asset mix in their income portfolios since 2023. And if you think about all the changes macroeconomically and beyond in the two years we've seen, that's a big shock to me.”

According to Ware, that raises the question of why advisors are not allocating more relative weighting to options-based strategies. The answer, he suggested, may be attributable in part to the complexity of explaining to clients what an options-based strategy entails compared to the relative simplicity of discussing how bonds can generate income.

“Advisors are telling us they are concerned about inflation, market volatility, and interest rate changes, and an options-based strategy benefits from all three of those,” Ware said. “The environment that advisors see themselves in should dictate their planning, and their planning should dictate what solutions they're using — but it doesn't seem like they're adopting these new tools as quickly as one would expect.”

For both Ware and DelSignore, a major takeaway from the income allocation survey is that education and consultation remain a key factor for financial advisors.

“Our team at Nasdaq Global Indexes was excited by this survey and found that it fully aligned with our approach to supporting our customers,” DelSignore said. “It underscores the immense value of relationships and how we approach them from a consultative perspective, whether it be with the end advisor directly or through our ETF issuer clients’ sales teams.”

Information is provided for educational purposes only. Nasdaq does not recommend or endorse any investment strategy, type of an investment, index, industry or sector. Nothing contained herein should be construed as investment advice; you are urged to undertake your own due diligence and carefully evaluate any company, industry or sector before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

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