Bank-aligned groups hold back on ETFs
Bank-aligned dealer groups remain reluctant to use exchange traded funds (ETFs) as they have their own products to sell despite growing awareness of and willingness to use ETFs by financial planners, according to BetaShares.
Speaking at a media briefing yesterday, BetaShares managing director, Alex Vynokur said despite a concerted effort to increase awareness and education around ETFs by the industry, bank-aligned dealer groups still held back on the option.
“[It’s] because they have their own products to sell so most of the big banks have an affiliated platform which they control and that platform has a strong preference for selling affiliated products,” he said.
“Awareness is reasonable because obviously our education effort and industry’s education effort is certainly applicable across both independents and aligned, but the dealer groups, which are bank aligned and conflicted in many instances are continuing to hold back the option of ETFs.”
He added that despite the introduction of the best interests’ duty that stemmed Future of Financial Advice (FOFA) reforms, dealer groups remained conflicted and compelled planners to use bank-owned platforms and prohibited the use of ETFs.
“[This] stops their adviser from being able to recommend ETFs to the clients even though the adviser, him or herself, might feel that it’s actually in the client’s best interest,” Vynokur said.
“We’re seeing a lot of the individual advisers are getting of the set up and they’re leaving,” he said, adding that larger financial institutions were attempting to moderate the outflow of advisers by making the environment more conducive to looking after their clients.
Investment Trends research director, Recep Peker said planners were driving dealer groups to change their mindset and were attempting to convince them to allow planners to access ETF products.
AUTHOR
Malavika Santhebennur
Recommended for you
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
