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Advisers can cash in on ETF boom

Advisers can participate in the exchange traded fund (ETF) market boom by including the asset class in their value proposition, according to ETF Consulting.

ETF Consulting managing director Tim Bradbury told ifa that too many financial services firms think they need to be an issuer to take advantage of the boom in ETFs, but stressed there are opportunities for financial services firms to participate.

“Most people think about profiting from ETF growth as an issuer but there are many other ways for participants to make money or to benefit and the most obvious one is through using them as part of the advice proposition,” Bradbury said.

“So for advisers or brokers or accountants or people building portfolios, to include them as part of their offering to their clients is certainly a way to benefit from being in the ETF space.”

Bradbury said that ETFs in Australia have started at a low base which has influenced their take-up as an asset for some years.

He said the ‘semmelweis reflex’ i.e. the tendency to reject new knowledge because it contradicts established norms, has impacted the industry. However, the Australian ETF market has begun to catch up with its global peers.

“I think people initially look at ETFs and say, ‘maybe they’re kind of interesting but in other markets they are mainstream, standard additions to portfolios’,” Bradbury said.


“But Australia is catching up and this misconceived notion of how to apply ETFs to a business is being challenged.”

Recent ETF Consulting data found the domestic ETF market will hit $9 billion by the end of the year and surpass $17 billion by 2015.

“There are huge opportunities,” Bradbury said, “so taking on some of the newer ideas and putting ETFs in front of clients to improve portfolio and investment return, that’s making sense to an increasing number of advisers.”