Education of modern products points way forward for IFAs: experts
Adviser education of “more modern” financial products will be a crucial part of getting through the onslaught of RDR demands, experts have said.
Assetfirst, which offers a fee-based model portfolio service for advisers, said it will host an IFA seminar on 2 May to discuss the potential benefits of using exchange-traded funds.
The event, to be held at the London Stock Exchange, will be presented by Assetfirst partners Philip Bailey and Andrew Whiteley.
Mr Bailey said: “It is great to be part of this educational seminar and the first of its kind for the London Stock Exchange, which only serves to highlight the growing interest in ETFs among IFAs.
“ETFs can undoubtedly fill many roles in a client’s portfolio and it is crucial that advisers understand the benefits associated with incorporating those into a client portfolio.”
According to Mr Bailey, cost-effective propositions and transparency are hugely important under RDR reform, and education on alternatives such as ETFs needed to be established.
Mr Bailey will discuss the impact of the RDR, saving client money and ETFs at the seminar, while Mr Whiteley will look at its impact on ETFs, and the active versus passive debate.
Mr Whiteley said: “The growing popularity of ETFs has prompted much debate on the subject, but this seminar will seek to look at the cost benefits as well as the ability of ETFs to fulfil client asset allocation requirements.”
Christopher Aldous, chief executive of London-based Evercore Pan Asset, a specialist allocation advice firm, said advisers needed to embrace these more modern products in order to progress to the next level.
He said: “Advisers will be able to carry on without looking into ETFs and these more modern alternatives but they have to realise that they need a wider range of offerings to develop beyond RDR.
“There is no shortage of educational seminars available on these different products, and advisers really need to be familiar with them.”
Recalling the “hysterical commentary” about synthetic ETFs last summer as an example, he said advisers really needed to educate themselves on what exactly they were recommending.
Chris Bryans, managing director of London-based IFA Ariun Financial Consulting, said: “It is my experience of going through London Business School and engaging with academic research that has built an awareness of these products. To be a professional financial adviser you must be well educated and very aware of these developing products.
“Risk truly needs to be understood more than ever, and the underlying elements of these products need to be established.”
He added products such as ETFs and Ucis needed to be part of adviser offering, because there were opportunities that should not be dismissed, especially for those with wealthy clients.
The industry is currently awaiting FSA guidance to clarify whether firms will need to advise on unregulated collective investment schemes to qualify as independent.