RDR Won’t Change IFA Opinions on ETFs According to Feifa Head

The head of FEIFA has claimed that the upcoming Retail Distribution Review (RDR) will do little to alter the trepidation that IFA's experience when it comes to Exchange Traded Funds (ETFs). He believes that the advisers will still not have a full grasp of how both the RDR and ETFs work and will thus be less willing to use ETFs as a result. Paul Stanfield chief executive of the Federation of European Independent Financial Advisers (FEIFA), commented "I think there are two issues for most IFAs with using ETFs. The first one is that most IFAs work on a commission basis and ETFs are not structured to pay commission to advisers. "Secondly there is far greater complexity to ETFs -particularly synthetic ETFs - than perhaps was originally realised. I think a lot of IFAs have realised that and I'm not sure how comfortable they are with the true workings of the structure." When RDR is implemented, advisers will have to be able to provide advice on all aspects of the financial market, including the various financial instruments available to clients. This means that they will need to have a detailed knowledge of ETFs if they wish to maintain their status as IFAs.
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