ETF users are heavy hitters: Investment Trends

Advisers who offer ETFs are the ‘heavy hitters’ of the industry with a more sophisticated clientele and larger client inflows, according to research house Investment Trends.

The average planner does not offer ETFs; however, the tables are turning as ETFs gain momentum with mainstream investors, according to new research from Investment Trends.

“There are 4,800 financial planners – or 33 per cent of all advisers – who provide advice on ETFs at the moment,” Investment Trends senior analyst Recep Peker said.

“Where planners use direct shares, two thirds also use ETFs,” Mr Peker said.

“It is a fairly substantial portion of the planner pie.”

Mr Peker’s comments refer to the BetaShares/Investment Trends November 2013 Exchange Traded Funds Report, which shows a substantial increase in ETF investment in the 12 months to November 2013.

“In 2011, many financial advisers said they would be using ETFs, but in 2012 they were putting record amounts into cash and term deposits (TDs) because confidence was so low,” Mr Peker said.

“In 2012, 31 per cent of new client money was being channelled into cash and TDs,” he said, adding that advisers were also struggling with adapting their business to FOFA.

“They were making big business changes and it was a difficult time for them to adopt new products into their business.”

However, in 2013, the growth in planner ETF usage resumed and conditions are now better for planners to adopt ETFs into their businesses, Mr Peker said.

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