<font color=red>At Morningstar</font> Advisers in need of some ETF schooling: Panel

<font color=red>At Morningstar</font> Advisers in need of some ETF schooling: Panel
Financial advisers a bit lost as exchange-traded funds evolve; more changes to come, too
SEP 21, 2011
The need for more and better education remains the primary theme in the exchange-traded-funds market, particularly as packaged ETFs gain in popularity. “Financial advisers are looking for help in the area of best practices and trading of ETFs,” said Rick Genoni, head of product management and development at The Vanguard Group Inc. Mr. Genoni spoke during a panel discussion today at the second annual Morningstar ETF Invest Conference in Chicago. The ETF market is evolving in stride with a growing appetite for the kinds of strategies ETFs can introduce for clients. “The business model has changed toward more fee-based and fee-only models, and ETFs have been beneficiaries of that change,” said Anthony Rochte, senior managing director at State Street Global Advisors. “A few years ago, ETFs were nothing more than beta, but today it's a much more colorful conversation, and that has helped develop a market for packaging ETFs,” he added. The move toward packaged ETFs is a trend emerging across the financial intermediary industry, according to Sue Thompson, head of BlackRock Inc.'s registered investment adviser group. But she added it is a mistake to lump all advisers together as needing the same things from ETF providers. “I always say, once you've met one RIA, you've met one RIA,” she said. “We're seeing advisers looking for somebody to put ETF packages together, and I think there's still a ton of education needed on fixed-income ETFs.” As if the industry hasn't gotten complicated enough, the panel agreed that actively managed ETFs are coming and will add a new level of wrinkles, opportunities and challenges for advisers. “It's not if, but when, active ETFs will be a part of the industry,” Mr. Rochte said. “There are over 800 active ETF filings with the SEC, and a number of those firms are not managing ETFs today.”

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