International studies have revealed that IFAs prefer platforms which increase their productivity and help investors take a consolidated view of their investments across different asset classes.
With the technological advancements, more so in last five years, many advisors have relied on software (either developed in-house or outsourced) to service their clients. Platforms have also emerged as an alternative option for over 25,000 IFAs in India. It is estimated that approximately Rs. 1 lakh crore AUM, mainly from retail segment, has been contributed by select platforms.
Do it yourself (DIY) investors, as they are popularly known, have started taking charge of their own money, by transacting either on AMC/ distributors websites, apps or on platforms.
SEBI’s discussion paper on Registered Investment Advisors (RIA) places immense responsibility and accountability for right advice on Investment Advisors. Without adoption of technology, it can be virtually impossible for an advisor to meet and service client expectations and at the same time, maintain appropriate documentation/investor communication/compliance/etc. In such situation, platforms can be a viable and effective option to meet client expectations and comply with regulatory aspects.
The obvious question for an IFA is how to select the right platform. International studies have revealed that IFAs prefer platforms which increase their productivity and help investors take a consolidated view of their investments across different asset classes.
Let’s take a look at the features which investors look for in any software:
- Ease of transaction: Buying/selling/switching/etc. with a single click, easy manoeuvrability and speed of the system. Query resolution through a toll free number or through email communication.
- Range of assets: Ability of the platform to support all asset classes is a must. Investment valuation report in a single page with breakup and performance figures are basic expectations.
- Tools and research: Access to research, financial calculators, financial planners with goal based achievement status, are primary need of any investor. Special tools like creation of WRAPS or model portfolios subscription with a single click are added attractions.
- Investment statements: With performance monitoring becoming crucial, investors like to view the performance of their investments across asset classes at one place, compare the returns with benchmarks and see how much alpha the portfolio has generated.
- On the other hand, IFAs would like a platform to facilitate investor communication -alerts/research/tactical investment options/invites for events based on investor preferences, etc. Valuations of various equity/debt products (small savings, listed debt securities etc.), insurance portfolio, loans (short term and long term) with outstanding amounts, mortgage, net worth, etc. This empowers the IFA to provide comprehensive investment solutions based on financial planning. Flexibility to switch from distribution to RIA module, using the same platform, can be an added benefit. In addition to this, IFAs will look at these aspects while choosing a platform:
- Financial standing/reputation of platform provider: Long vision organizations with a strong financial backing, promoter’s reputation, ensure continuity of services with improvisations in the platform features.
- Meeting regulatory requirements: RIA guidelines which warrant adherences to compliance needs, record keeping, client communication, etc. should be basic aspects of any platform. This assists the IFA to be client facing to serve client needs and also scale up their business.
- Cost effective: Compromise on features will not only make the platform cheaper, but will impact the client interests significantly. While IFAs look at reasonable pricing cheapest is not always the best choice.
To sum up, platforms can become a compelling need for IFAs to serve their clients and to scale up their business going ahead.
Chandur Bhaya is Sr. Vice President - Business Development, IFAN Finserv
The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.