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August 29, 2017 at 01:43 AM
Two-thirds of advisors surveyed indicate that their clients are unfamiliar with ETFs, and more than half of respondents admit they themselves do not fully understand ETF structures and have at least some difficulty evaluating similar offerings.
These and other findings were revealed in an online poll conducted by ThinkAdvisor.com and sponsored by OppenheimerFunds.
About 35% of advisors polled have concerns about liquidity mismatches, and 34% believe there is not enough objective research available on ETFs. Over a quarter prefer index mutual funds, while 22% worry about regulatory uncertainty in the ETF space.
Many wealth managers interviewed say clients, when they do ask about ETFs, just want to know what the acronym represents. Once advisors explain the products to them, the investors let them take the reins in creating and managing the portfolios.
As one manager states, “It never fails to amaze me how many clients have no interest in wading into the weeds.”
Discussions with clients are “tied to tax efficiency, transparency and the clarity of ETFs, and knowing what you own,” according to Mark Butterworth, president of Butterworth Financial in Tulsa, Oklahoma.
