Speaking to InvestorDaily, BetaShares managing director Alex Vynokur said that as a result of the regulatory changes, ETFs would be viewed by advisers as an equal asset class to traditional funds.
“What we’re seeing from a FOFA perspective is that more and more advisers are starting to look at ETFs on a level playing field,” Mr Vynokur said.
“Before FOFA there were managed funds that traditionally would pay commissions and other sorts of remuneration arrangements with advisers.
“Post-FOFA of course, those practices would not be allowed and essentially for the first time, ETFs are able to play on a level playing field with traditional funds.”
While ETFs are currently at a low base, they have been experiencing consistent growth over the last few years and Mr Vynokur said that the Australian ETF universe is expected to grow from 7.4 billion to closer to 9 billion by the end of this year.
With the regulations changing remuneration arrangements to a fee for service, he said ETFs will become a more significant part of an adviser’s toolkit.
“With the arrangement of switching to fee for service, [advisers] are starting to get more and more focused on building streamlined solutions to give advice to their clients,” Mr Vynokur said.
“What that means is that people are building things like model portfolios and other similar solutions for the clients, and ETFs are more often used as the building blocks for these.”
