ETF providers need to make their education efforts less technical and focus on the real issues that matter to advisers to boost uptake, say a panel of experts.
ETF providers need to look more at their education efforts in order for ETF uptake to increase, says Frank Spiteri, head of retail distribution strategy at ETF Securities, speaking at a panel discussion on the future of ETFs.
So far ETF providers have focused too much on the technical details of ETFs, such as the ability to do intraday trading, but they need to make it more accessible, says Bill Vasilieff, chief executive at Novia.
“What the ETF providers do is they overcomplicate it, they talk about liquidity and timing but in fact it’s just the same as a unit trust except it’s daily trading,” he says. “Forget about the fancy stuff, no-one cares about that, it just confuses IFAs.”
“Passives are very cheap now, that’s the competition. But ETFs have a lot more choice and that’s what I think ETF providers should focus on,” says Vasilieff.
While more work is needed to provide the technology to trade on platforms, advisers need to be more engaged with the ETF space to drive that change, says Alex Kerry, head of Winterflood Business Services.
For its part, ETF Securities is now offering due diligence information to advisers as well as “offering a very shortened product list that is more retail friendly and making advisers feel comfortable in accessing these products and how the vehicle works”, says Liz Wright, sales director at ETF Securities.
“We need to talk about ETFs and how they actually work. We have to make it simple and digestible,” she says.
The DFM market is the ideal starting point for any education effort, says Vassilef, as they already use ETFs the most and have been the first “to really work it out”.
“I think a lot of providers are looking at this. Rather than dealing with 20,000 financial advisers and educating them, they are working more with DFMs as they are building the portfolios for financial advisers,” says Spiteri.