Advisors now more likely to recommend ETFs for clients than mutual funds

Dave Nadig

Here’s my latest MoneySense blog, which recaps the two-day  Exchange Traded Forum 2016 in Toronto this week.

You can find the full blog by clicking on this headline: Are ETFs beating out mutual funds in popularity?

Pictured to the left is Dave Nadig, ETF director for FactSet Research Systems Inc. of Norwalk, CT,  who in his keynote address said that since the financial crisis,  net mutual fund inflows were US$61 billion, compared to a whopping US$1.2 trillion for ETFs.

Hockey stick curve

The growth rate for ETFs on both sides of the border resembles the classic hockey stick curve, and is just starting in Canada, Nadig said. “It’s the classic standard adoption model and has just ticked right along every year except 2008. It’s right on target. This tells us we will have a US$22 trillion market by 2024, surpassing the global retail mutual fund business.”

Why? The ETF industry is hitting on all major cylinders for global adoption. It’s the right product for new money, Nadig said, making it increasingly the choice of the millennial generation. “There’s not a lot of growth poaching 70-year-olds’ accounts.”

One recent US survey found that for the first time, 81% of financial advisors were recommending ETFs, surpassing mutual funds for the first time ever. “Indexing is winning and people just realize it more and more.”

FinTech disrupting asset-based advise model?

You can also find my blogs on the first day of the conference. Here at the Hub we threw to my Financial Post blog under the headline Will fin-tech disrupt the asset-based model for dispensing finance advice? Or you can go directly to the full FP blog, which ran under the headline Robo advisors and ETFs prove it’s time for a new financial advice fee structure.

Either way, we’re basically talking about the ability of Fin Tech (financial technology) to lower costs by “disintermediating,” which is another way of saying “cutting out the middlemen.”





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