My Platform ETF Wish List Is Yet To Come True

Platforms are one of the major sticking points when it comes to the growth of exchange traded funds (ETFs) amongst the investor and adviser community, research from ETF.com has discovered.

Our survey, sponsored by Deutsche Bank and Brown Brothers Harriman, interviewed 132 financial planners and a smaller chunk of mutual fund managers, and was carried out between May and June this year. Platforms of the respondents covered the whole market, from Cofunds, Standard Life and FundsNetwork to Pershing, Novia and Transact.

In the third and final part of our findings, we outline the key challenges faced in the world of platforms. (You can also read part I and part II which were published earlier this week.)

Am I Satisfied? Only So-So

One half of our survey respondents are either very satisfied or reasonably satisfied with their platform’s selection and trading of ETFs. So what about the other half? They are either only somewhat satisfied or, even worse, they are unsatisfied – but a quarter of the respondents said the question was not applicable to them.

Obstacles For Growth Abound

To explain how satisfied the customer is on their platform, four main reasons prevail. The biggest section – 39 percent – of respondents said there is not enough ETF-specific research on platforms, while 23 percent said brokerage commission makes ETFs expensive versus holding mutual funds. When it comes to intraday liquidity on platform or education on ETF-related product features, it was an equal share of 38 percent of the votes.

The results make it clear that platforms have a lot of work to do in education and technology.

Our Wish List Continues

We asked respondents to outline specifically what they would like to see on their platform, and the answers came in thick and fast. They ranged from a wider selection of products, more alternative currency options, lower costs, risk disclosures, more research tools, portfolio analytics, quotes in real time and sales support. The dominant answer, however, was free trading and more information.

But That Doesn’t Mean I’m Going To Change…

Despite clear problems on platforms, 55 percent of the respondents are “unlikely” to change their choice of platforms within the next 12 months. The operational hassle of moving client money and possible exit fees can be a big deterrent for financial planners. Having said that, 25 percent are “likely” to make the switch over the next year.