Charles Schwab and Fidelity have both recently drawn attention for offering commission-free ETFs (exchange-traded funds) to investors on their discount brokerage platforms (for some Schwab ETFs and iShares ETFs, respectively). Yet is this really what ETF investors want, particularly affluent ETF investors? New research from Phoenix Marketing International suggests that such discounts may be wasted efforts. The study also gives fundsters a glimpse of how widespread ETFs are among affluent investors and of how successful advertising and branding are for fund firms.

"Almost 64 percent of affluent investors who currently intend to invest in ETFs place the highest importance and relevance on funds that complement their strategic versus technical investing style, that track large market indices, are offered through a full-service brokerage, and can be traded online," stated Kristina Terzieva, director of syndicated financial services at the Rhinebeck, New York-based marketing research firm. "Waiving commissions for a limited number of ETFs, for only branded ETFs, or ETFs offered by a specialist broker have minimal impact insofar as reaching additional investors."

In February Phoenix surveyed 924 brokerage and mutual fund investors, all at least 21 years old and all with at least $100,000 of investable assets. Of those, 20 percent already own ETFs (29 percent of those plan to up their ETF holdings in the next month, and two percent plan to decrease those holdings) and another seven percent are likely to start buying ETFs this month.

Meanwhile, Phoenix also studied the advertising for various mutual fund brands.

Company Press Release

Rhinebeck, NY � March 2, 2010 � Phoenix Marketing International, one of the fastest growing research companies in the U.S., announced today findings from its latest monthly survey among 924 brokerage and fund investors age 21+ with investable assets (excluding employer-sponsored plans) of at least $100K.

Conducted this past February, the Phoenix study shows that 20% of affluent investors currently own ETFs and that 7% are most likely to start investing in ETFs this month. Topping the list of firms under consideration by investors planning to add ETFs to their portfolio are Charles Schwab, E*Trade, Fidelity, Scottrade, TD Ameritrade, Vanguard, and Wells Fargo/Wachovia.

Over the next month 29% of current ETF investors plan to increase their portfolio allocation in these funds, 69% anticipate no allocation change, and 2% expect to unwind ETF positions. "Our research suggests that affluent investors' desire to access ETFs through multiple firms, with one-in-four planning to open additional brokerage accounts for investing in ETFs," reports Kristina Terzieva, Phoenix Director of Syndicated Financial Services. In addition to the above-mentioned brokerage companies, ETF investors are also considering Bank of America, Citibank, Edward Jones, ING/Sharebuilder, Merrill Lynch, T.Rowe Price, and UBS for new account relationships.

The Phoenix study evaluated thirteen statements included in the online promotional materials of full-service and specialist brokerage companies as reasons to invest in ETFs. Each reason was evaluated based on how important and relevant it is to investors, given their financial and investing goals. Brokerage firms may be surprised to learn that qualified ETF commission discounts are unnecessary promotions for reaching a majority of investors. "Almost 64% of affluent investors who currently or intend to invest in ETFs place the highest importance and relevance on funds that complement their strategic versus technical investing style, that track large market indices, are offered through a full-service brokerage, and can be traded online," summarized Terzieva. "Waiving commissions for a limited number of ETFs, for only branded ETFs, or ETFs offered by a specialist broker have minimal impact insofar as reaching additional investors," noted Terzieva.

Also reported by the Phoenix study are detailed evaluations of Online, Print, and TV advertisements for 18 leading brands that include previously mentioned firms plus Ameriprise, Barclays, Janus, John Hancock, Oppenheimer, Putnam, and TIAA-Cref. A summary of study findings is available for purchase from Phoenix and a custom report can be produced for financial services firms seeking to measure their multi-media advertising effectiveness and its relative impact on brand health.

Phoenix Contact: 
Kristina Terzieva 
Director, Syndicated Financial Services 
508-647-0151 
kristina.terzieva@phoenixmi.com

Edited by: Neil Anderson, Managing Editor

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