The surging popularity of exchange-traded funds (ETFs) is creating an investment culture in which both large and small investors are focusing more on asset allocation than the quality of individual securities, according to two ETF experts who delivered a keynote speech at the 2015 Exchange Traded Forum in Toronto on Wednesday.

“When large investors hit the panic button, either up or down, they focus on asset classes and not on individual stocks,” Matt Hougan, CEO of San Francisco-based education and research firm ETF.com told the conference in a joint keynote address with David Nadig, director, ETFs, with Norwalk, Conn.-based financial data provider FactSet Research Systems Inc.

“When something big happens and it’s time to buy, they focus on asset classes, and it’s the same when something goes wrong and it’s time to sell,” Hougan added. “As a result, the correlation of individual stock movements has been rising for years.”

At the same time, the advent of commissions-free or low-commissions trades in ETFs has made retail a massive market for ETFs in the U.S. as investors appreciate their low management fees, transparency and liquidity. In fact, ETFs account for as much as 25% of trading on the New York Stock Exchange on some days, Hougan said.

Correlation in stock movements on an exchange can be as high as 80%-90% in panic times, Nadig added, and the trend is being aggravated by high-volume, high-frequency traders focusing on short-term trades.

“When things get hairy, everyone moves in one direction and individual stock-picking is getting harder,” he said. “In addition, high-frequency traders are now playing the ETF game. It’s like robbing banks. They go where the money is.”

ETFs have “flattened the investment landscape,” giving ordinary retail investors access to globally diversified portfolios with rock-bottom management fees that would have been accessible to only a few privileged institutional investors a decade ago, Hougan said. As well, more than half of institutional managers are using ETFs for both core and satellite strategies.

“The core benefits of ETFs are easily understood, but there is more disruption coming,” Nadig said. “This is only the pointy end of the hockey stick right now.”

Specifically, automated asset-allocation programs and robo-advisors are providing investors with simple tools that help them assemble customized and diversified asset mixes, essentially creating mass access to portfolio building techniques. Thus, investors don’t have to be particularly smart to assemble massively diversified global investment portfolios using ETFs, Nadig said, with the easy accessibility and liquidity the product offers.

“You can fire and forget with these automated programs and simply rebalance your portfolio once a year,” Nadig said. “Investors get a stellar experience for almost no money. The allocation process has become so simple a robot could do it — and robots are in fact doing it.”

Robo-advisors are on the rise, and the inexpensive allocation services they provide threaten the value of asset-allocation advice that individual financial advisors offer, said Hougan.

“We see big challenges ahead for advisors, and yelling at the cloud isn’t going to make it go away,” he said.

As a result, advisors may have a hard time providing value and charging fees for advice in securities selection and asset allocation as a result of these innovations, Hougan said.

However, you can add value by becoming a “network advisor” in which you offer clients access to professional advice in the areas of estate planning, legal or taxes. In some cases, it may make sense to bring qualified experts into your practice.

Another option is to incorporate robo-advisors or automated investment services into your practice, increasing the size of your client base to make up for the fact that you may have to become more competitive on fees.

“It’s difficult to import a lot of high net-worth clients, but the robo-advisor approach allows you to bring clients onboard you wouldn’t normally touch and simply offer them model portfolios,” Nadig said. “You need more clients at low fees to succeed in the automated world, but some of these low net-worth clients will eventually become high net-worth.”

If you are particularly skilled at asset allocation and securities selection, you can also differentiate yourself as a portfolio manager or ETF strategist, and clients will pay for your services, Hougan said.

Nevertheless, Hougan wouldn’t be surprised to see U.S. technology giants such as Google Inc. or Amazon.com Inc. enter the financial services business as it becomes more automated — and that would be “transformational” for the investment industry.

These firms are experts at gathering specific information on the tastes and purchases of individual clients and they would be able to provide services targeting their needs, he said. The huge scale of their business reach could drive fees down even further for financial services.