Adviser shortage drives ETF growth for cost and convenience

ETFs and managed accounts have grown in favour among financial advisers over the last year, which State Street Global Advisors managing director Tim Bradbury said is partly fuelled by stagnant adviser numbers.

This calendar year has seen the profession struggle to gain any ground when it comes to growing its numbers, with just 15,495 registered advisers in the week ending 27 November, according to Padua Wealth Data’s latest analysis.

With the demand for advice majorly outstripping the supply, Bradbury told Money Management that advisers are increasingly looking to ETFs and managed account to help them boost their efficiency in a cost-effective way.

“If I can build a set of portfolios that apply to largely my whole client base, and I can implement and report through the platform, that's the way the adviser goes from, on average, 100 clients to 150 clients through time,” Bradbury said.

The strong demand for ETFs has fuelled growth in the ETF market, according to ETFGI’s October 2025 Active ETF and ETP industry landscape insights report, which saw actively managed ETFs globally hit US$75.7 billion ($115 billion) in October, with the year-to-date (YTD) net inflows hit a record-breaking US$523.51 billion and 55.2 per cent YTD increase in net flows.

The ease of access to these investment solutions is also facilitating growth on platforms, he explained, with advice platforms regularly expanding their investment menus to meet the needs of advisers, while allowing them to maintain key flexibility and control or client portfolios.

“When we think about platforms, their growth in offering managed accounts, including State Streets is growing increasingly in terms of number of managed accounts, and definitely in terms of product flow, or AUM flow.”

This year has seen a sharp focus on investment management and administration fees of ETFs as advisers and investors eye cost-saving opportunities.  

Research by EY found the average weighted expense ratio for active ETFs stands at 0.73 per cent and just 0.24 per cent for passive ones. Ative ETF vehicles priced over 120bps in Q3 were the only product segment to report annual outflows with a loss of 2.3 per cent.  

Driving this home, the report found that 50 of the 164 active ETFs available on the Australian market are now priced at 50bps or less, with these ETFs seeing the greatest yearly inflows of 6.7 per cent.

Bradbury said: “We are seeing these core building blocks coming down in cost and price, which is great for the consumer and for the adviser. Our flagship Australian equities ETF is 5bps so, for $10,000 it costs $50 to do the administration on that, which is tiny. So that's also part of the appeal.  

“These core building blocks have come down in price to make them really relevant for advisers and for and for the underlying client.”

With the expectation that this trend towards ETFs and managed accounts will continue through 2026, Bradbury said State Street offers advisers both access to its suite of ETFs that cater to a range of risk profiles, but it also provides flexibility and cost-effective solutions.

“The appealing part is, not only for the asset allocation and State Street expertise, it's the open architecture. We have some of our ETFs, but we also fill some of the gaps where we don't provide that particular need in the portfolio, and there's a few other providers in there.

“Advisers like that, because it's not simply one brand name the whole way down the portfolio. They are growing well. They're gathering AUM. They're a good, efficient story and they're very low-cost for the adviser. To be able to layer in very low-cost strategic asset allocation model portfolios works well.”