Financial services industry should look to other sectors for clues on the coming disruption

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With investing behemoths rolling out zero-fee ETFs, one has to wonder if the industry model is sustainable

There is a lot of talk about the rapid growth of ETFs and how it is changing the wealth management industry. Clearly passive investing has taken hold as ETFs in the U.S. have stolen over half of the total market share away from actively managed mutual funds.

However, there was a bit of disappointing news recently when its subscriber growth slipped, clocking in at only 2.7 million in the second quarter of 2019, just over half of the 5 million analysts were expecting. The company’s share price fell by more than 13 per cent on the news and concerns over competitive threats by companies such as Disney, Apple, NBC and AT&T WarnerMedia, which are all set to launch their own streaming services over the next year and most likely at a lower cost.

Netflix has also shown that investing in quality can go a long way, generating multi-million dollar content tied to influential stars. For example, they recently partnered with Dwayne “The Rock” Johnson to create its biggest film to-date, with an estimated US$130 million production budget.

 

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