Advisers pushing for more support and education on ETF product set: Cerulli

The total allocation of investment capital to exchange-traded funds exceeded that of managed funds back in 2023, and it’s forecast to do the same in advised capital in the next year according to US advice research firm Cerulli Associates.

With that growth in ETF adoption, however, comes an increased need to support and education among advisers. The Cerulli Edge – The Americas Asset and Wealth Management Edition report details says US advisers believe that by 2026 more of their clients’ collective assets (26 per cent) will be invested in ETFs than mutual (i.e. managed) funds (24 per cent). Accordingly, those advisers are increasingly in need of detailed information about the ETFs they’re purchasing to understand how they best slot into portfolios.

This advisers are now turning to providers, consultants, asset managers and research teams for product information and increased support, Cerulli explains. Almost half of advisers surveyed by Cerulli (41 per cent) consider product information from wholesalers “very valuable”, the report states, followed by access to portfolio managers and product specialists (32 per cent).

“Advisers often do not have time to independently conduct consistent and in-depth product research and wholesalers can create lasting relationships with advisors by becoming a source of product expertise,” said Daniil Shapiro, Cerulli Associates director. “As ETFs rise in popularity across new asset classes, asset managers should invest in ETF specialists to ensure they provide the product expertise advisers expect and value.”  

While the US advice market is not analogous to the Australian advice market, the ETF growth pattern is similar. For Australian advisers, the need for education and support around ETFs is becoming as pressing as it is in the US, which puts pressure on providers like Vanguard, Blackrock, State Street, Van Eck, Betashares and GlobalX to put fulsome support mechanisms in place.

According to Cerulli’s research, 37 per cent of US advisers find “client-approved educational or marketing materials” to be “highly valued”. The research firm suggests that while advisers clearly want more educational material and support, they should fully take advantage of the product information and guidance that is already available from providers.

Meanwhile, it’s up to those providers to step up and place more investment in support if they want a bigger share of the advised capital pie, Cerullie believes.

“Adviser allocations to ETFs increase as they become more comfortable with the product and its use across asset classes, which is propelled by increased product education,” Shapiro adds. “As advisers seek new and innovative ways to implement the vehicle across different asset classes and strategies, asset managers have an important role to play in advisor adoption and education of the vehicle.”