Urgent advisers get abreast of ETFs

Investment Trends head of research for wealth management Recep Peker.

07-Apr-2016

By Kristen Crawford

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Exchange-traded funds (ETF) offered strong opportunities for advisers to enhance their value proposition, but an education barrier and a lack of awareness of the investment vehicle were still holding them back, according to the latest industry research.

The rapid growth in the ETF market in Australia over the past few years, coupled with the overwhelming number of investors who intended to use them within the next 12 months, represented an immense opportunity for financial planners, BetaShares and Investment Trends revealed in their joint “ETF Report” released yesterday.

BetaShares managing director Alex Vynokur said the number of ETF investors increased by 37 per cent to 202,000 in the past 12 months, vastly exceeding the company’s expectations.

Investment Trends head of research for wealth management Recep Peker added to Vynokur’s comments, explaining that what was holding the Australian ETF market back from even more rapid growth was a lack of knowledge or awareness of what ETFs were and how they were used in client portfolios.

“The ETF market is current, so if you want to be relevant as a financial planner, you need to know a bit about exchange-traded funds, but also if you want to maximise your current opportunity and growth potential in your business, then you’ve got to remember there are 110,000 people out there that have said they wanted to invest in ETFs, but they also needed more direction or information,” Peker said.

“Financial planners are recognising this and a lot more of them now recommend ETFs to their clients than in the past. There are about 7600 financial planners who currently do advise [on] ETFs, meaning 44 per cent of all financial planners are apparently [using] ETFs.”

That was in stark contrast to just eight years ago, where only 15 per cent of advisers were using ETFs, he said.

“Another thing driving interest in ETFs is the fact that aligned dealer groups are getting behind [them] now also. Traditionally, the adopters of ETFs were likely to be independent financial planners, but now aligned planners are also showing interest,” he said.

Moving forward, advisers from all avenues would be looking to their dealer groups and product providers to educate them more on ETFs, he said.

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