The restrictive nature of dealer group approved product lists (APL) is the major reason more financial planners are not recommending the use of exchange-traded funds (ETF) for their clients, according to an industry forum.
A delegates’ poll conducted at the 2018 S&P Dow Jones Indices Annual Australian ETF Masterclass in Sydney yesterday showed roughly 22 per cent of the audience were not using ETFs in their clients’ portfolios.
In response to the above result, Sentinel Stockbroking chief executive Norman Robinson said: “For me it was quite surprising to see the results of that survey and to see there is not that great a take-up of ETFs, so what’s holding you back?”
The answer Robinson received from the audience was advisers having to grapple with the problem of dealer group APLs blocking them from recommending ETFs.
“It’s something that inside our business we’re grappling with all the time,” he confirmed.
However, he pointed out there is reason for optimism with regard to this phenomenon.
“They are improving, but it depends on the nature of your dealer group and how institutionalised they are and how much of a conflict there might be to using their own products, but that’s changing,” he noted.
He suggested the current banking royal commission may improve the process, but believed financial planners themselves had to take more initiative if the situation was to change.
“It’s a case of you making a case to your dealer group and saying to them I want to use [these products]. It’s getting a lot harder for them to push back and say no we won’t [allow you to do so],” he said.
“Certainly businesses like us are consulting directly to the dealer groups and trying to get [the APLs] opened up.”
Fellow presenter Cooee Wealth Partners chief executive Daniel White concurred with the audience’s experience.
“I think it’s very clear that’s the main reason that’s blocking people from using them,” White said