In this fast-paced world in which we live, where productivity and ‘being busy’ are a constant focus I find that there is increasingly less time in the day to finish all the tasks and activities I need to do. So, I am always on the lookout for tips and tricks that can make my life more efficient.
For example, being a regular traveller interstate for work, I always find the act of boarding a plane very inefficient. Let me explain. The cabin crew call out for people who are seated up to say row 15 to board the aircraft first. Makes sense, get the passengers on the front of the plane on first. However, what inevitably occurs is that you are the unlucky person sitting in an aisle seat who has dutifully boarded the plan based on the crew member’s instruction only to find you have done so before your fellow passenger in the middle, and window seat. What inevitably follows is the game of getting up, moving into the aisle so that your passenger neighbour can sit down, slowing things down immensely.
So I wonder: why doesn’t the airline call people who are sitting in the window seats to board first, and then the middle etc?
One guess may be that it’s because the airline’s priority is not to ensure the comfort of the passengers, but to ensure that the plane boarding process is as quick as possible. And herein lies the reality (and the lesson in my post today): the service provider and the customer can have different end objectives. The world of investing is just the same.
As an investor, generally speaking, if you’re investing in ETFs you value simplicity, transparency and low-cost investment strategies and you may prefer not to use an investment platform which can incur additional fees. Your adviser, generally speaking, also understands that the aforementioned factors are important to you. However, the adviser is dealing with a number of other areas of consideration. Using ETFs may be simpler for the end investor, however some advisers may initially think that using ETFs in their practice may be more difficult from an admin perspective.
What I’m seeing more and more in my conversations with advisers is the transition to a business model where ETF usage in client portfolios is the norm. After looking into it more carefully, they have come to realise that while there are undoubtedly differences in managing ETFs, practically this can now be done relatively simply and without much additional effort from the admin side. Advisers can see that ETFs are the way forward and for reasons that are different from that of the investor. Advisers now use ETFs to access asset classes that were not previously available to retail investors, whether that be as a passive core allocation in portfolios, or to be more ‘active’ in investment decisions and take advantage of certain investment thematics that they view as being undervalued or mispriced.
What is happening therefore, at least in the investment world, is a slow alignment in the investment universe to the benefit of all parties involved, so who knows – maybe a more efficient way of boarding planes is not too far away…give me a call Mr Branson!