ETF tool will bypass ‘unscrupulous’ advisers

Stockspot founder Chris Brycki said consumers will be able to compare 94 ASX-listed ETFs via its online pinwheel tool, which will provide them information on ETFs based on fees, distribution yield and bid/ask spread without having to pay for an adviser to do it for them.

“One of the reasons advisers and fund managers have been able to get away with charging huge fees to clients is the fact that the finance industry has been a black box, indecipherable to the average investor,” Mr Brycki said.

“Information asymmetry between the financial services industry and investors creates a moral hazard that has been rich pickings for unscrupulous financial advisors who have for too long been enriching themselves at the expense of consumers,” he said.

Mr Brycki said a study of managed funds by Stockspot found fees at about 45 per cent of returns from managed funds on bank-owned platforms over the five years to 2013.

“Many fund managers who charge these high fees have been shown to be hugging the index like passive investment funds – so they’re charging active management fees but adding precious little value,” Mr Brycki said.

“As consumers become more informed and ETF index funds become more prominent, these index hugging active managers face being squeezed out of the market,” Mr Brycki said.