HNW clients want more ETF info

By John Powell | June 1, 2010 | Last updated on June 1, 2010
2 min read

According to a BlackRock / iShares study, most high-net-worth investors rely on their financial advisors to introduce them to new products but they would like more updates and more recommendations, especially when it comes to exchange traded funds (ETFs).

More than half of the HNW investors polled would like more information about ETFs from their advisors. They feel very positive about them relative to mutual funds in a number of areas, including transparency, rate of return, preservation of capital and lower management fees. Of the HNW investors who participated in the survey, 71% believe ETFs are superior to mutual funds when it comes to preserving capital and 70% say ETFs provide a significantly better rate of return than mutual funds. Despite that fact, only 27% responded saying their advisor has recommended they buy an ETF.

“The track record speaks for itself: investors are enthusiastic about ETFs and consider them a good investment. Yet it’s unfortunate that such a small number of advisors recommend these products given the positive feedback we received from investors,” said Heather Pelant, managing director, head of iShares at BlackRock Asset Management Canada Limited. “Investors look to their advisor to serve as the level-headed counsellor who provides information on investing trends and unique solutions. Advisors have the opportunity to engage in these discussions to maximize client satisfaction.”

While nearly 80% of respondents were satisfied with their advisor, that satisfaction wasn’t shared by younger respondents. 63% of HNW investors under age 35 felt it was not worth paying advisors for advice, compared to 26% of those over 35 years-old. The survey also found that 61% of HNW investors under 35 years of age felt that advisors provide no better information or advice than can be found on the Internet for free.

John Powell