Former iShares Australia co-head Tim Bradbury has launched a specialised education business to help advisers build their knowledge about exchange-traded funds (ETF).
Called ETF Consulting, the firm provides specialist ETF services and training to advice channels, issuers and institutions and was formed to tackle the lack of expertise in the industry and cover a need that was severely lacking in the Australian market.
As the number of ETF products in Australia grows rapidly, “a lot of potential users are struggling to understand how to take all that theory and then put it into practice in their own business model”, Bradbury said.
He said advisers should regard ETFs as a vehicle to sell value to clients.
“Trying to pick all the good active managers all the time is an impossible task for any adviser or advice group,” he said.
“There’s a way for them to think about ETFs to differentiate their business model because they need to sit in front of a client and position their business as different [to] who’s next door and across the road.
“One of the biggest hindrances to using ETFs more or for the first time is a lack of comfort and knowledge – there’s a gap in what the issuers are saying, what some of the research houses are saying and what’s publicly available in the media and the marketplace.”
The ability to offer ETFs can be a key differentiator for financial advisers however advisers were struggling to pool the information to make it meaningful and then apply it to their businesses, he said.
“People can use ETFs to complement what they’re doing at the moment so it doesn’t need to replace what they’re doing currently,” he said.
The early adopters of ETFs have been self-managed superannuation fund (SMSF) investors, closely followed by boutique advice practices, although Bradbury observed that interest was now moving into the bigger and more mainstream dealer groups.
“They can understand how to use them efficiently and effectively in their business. [ETF Consulting] is a way to help them broadly get their business up to speed on using ETFs and do it in a safe, compliant way,” he said.
As fixed interest ETF products were set to enter the Australian market in 2012, Bradbury said the addition would round out the major asset classes for advisers and investors.
“Is everybody prepared in terms of knowledge? No. That will be a ‘catch up quick’ [reaction] once people come to market,” he said.
