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ETF usage among financial planners increasing

Appetite for exchange-traded funds (ETFs) among financial planners continued to increase in the 12 months to October 2015, according to Investment Trends research commissioned by BetaShares.

The 2015 BetaShares/Investment Trends ETF Report found 44 per cent of financial planners currently use ETFs, up from 40 per cent in 2014, with an additional 20 per cent considering using ETFs in their practice over the next 12 months.

The report found 90 per cent of financial planners cited low cost as the top reason for recommending investment in ETFs.

BetaShares managing director Alex Vynokur said ETFs are well on their way to becoming mainstream in Australia, just like they are in major global markets.

"Last year was a watershed year for the industry in Australia, and the report suggests that this fast growth should continue," Mr Vynokur said.

"Investors are increasingly realising the benefits that ETFs provide in terms of diversification, cost, transparency and access.

"Furthermore, exchange-traded products are becoming more sophisticated with increasing appetite for defensive and managed risk exposures in addition to the active investment strategies underpinning exchange-traded managed funds."


The report also found an ETF "knowledge gap" is presenting a growth opportunity for financial planners.

A lack of knowledge was the largest barrier to adoption among potential ETF investors, with 41 per cent saying it was a factor.

Investment Trends head of research, wealth management, Recep Peker said this presents a big opportunity for financial planners.

"If you want to maximise the growth potential in your business, then you have to remember there's 110,000 people out there saying, 'I need to invest in ETFs but I need a bit more education'," he said.

Adrian Flores

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].