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Beverly Chandler

Source finds IFAs want better and wider access to ETFs

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ETP provider Source has published new research which shows that 82 per cent of IFAs believe ETFs need to be more widely available on the investment platforms they use.  

Some 28 per cent say there should be a significant increase in the number of these products available on platforms to help the growth of the sector, the survey finds.
 
The findings reveal that 42 per cent of IFAs believe their clients have no exposure to ETFs, and around 49 per cent estimate between 1 per cent and 10 per cent is invested here.   However, 34 per cent of IFAs expect their clients to increase their exposure to ETFs over the next year, compared to just 4 per cent who expects it to decline.
 
Of those IFAs who have recommended ETFs to their clients, 33 per cent have promoted pure trackers, compared to 15 per cent who have suggested active ETFs.    Some 6 per cent have recommended smart beta ETFs, and 5 per cent have recommended ETFs that have alternative benchmarks.
 
When it comes to what makes ETFs more attractive when compared to other investment products, the Source survey found that the overriding reason according to IFAs is their low charges, and this is followed by the innovation they offer and the range of products available. 
 
Source writes: “The growing demand for ETFs amongst IFAs for their clients has also been fuelled by the implementation of the Retail Distribution Review (RDR).  Since then, 9 per cent of IFAs say they have significantly increased their clients’ exposure to passive investments, and 35 per cent said they have done this slightly.”
 
David Lake, Managing Director, UK coverage at Source, commented: “This year, we have seen our assets under management grow by 20 per cent – USD3.4 billion – and we expect strong growth in the ETF sector to continue.  The bulk of investment into ETFs in Europe so far has come from institutional investors, but we expect IFAs to significantly increase their clients’ exposure to these products.
 
“We are well positioned to capitalise as we have just launched a multi-million pound advertising campaign to help raise our profile amongst IFAs and investors, and we have recently appointed a five-strong team to service the UK financial advisory market.”

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