Of the 104 respondents, 38.5 per cent believe actively managed funds has the greatest benefits for clients, this was followed by direct investments (29.8 per cent), exchange traded funds (ETFs) (19.2 per cent) and lastly index funds (12.5 per cent).
“This is traditionally a fund markets and advisers are familiar with funds, and how to access them and use them,” Robyn Laidlaw, head of product and marketing, at Vanguard Investments told ifa.
However, according to a June 2013 BetaShares ETF report, there are new options becoming available to advisers, with now 80 Exchange Trade Funds products available on the ASX.
“Within the past five years we have seen a much great awareness around ETFs, so that means more in media and more discussions and more conferences, all these sorts of things to help educated advisers,” Laidlaw explains, however, she adds ETFs “are still a very small portion of assets…in comparison to the funds market in Australia.”
Nonetheless, according to Ms Laidlaw, she has seen some interest in ETFs by the retail direct market and, especially those advisers working in the self-managed super fund (SMSF) space.
“This is somewhat different to the US where they were introduced as an institutional product to start with,” she added.
Indeed, there does seems a bit of schism developing between advisers who are using managed funds systems and those using ETFs and direct investment strategies for their clients – as a anonymous financial planner who voted in the poll tells us.
“Advisers using systems and products like managed funds as if we were still advising in the ‘80s and early ‘90s need to step up for their clients and drag themselves into the modern world.”
“The 38.5 per cent of respondents believe actively managed funds has the greatest benefits for clients.”
My advice to these advisers is to revisit and fully understand the products you are recommending to your clients, then outline in your client’s SoA the basis of your recommendation as required under law.
In 90% of all cases the client would not proceed with your recommendation, if all the facts were correctly disclosed.