After the entry load ban, a group of eight Mumbai-based IFAs came together to form a company called Next Financial Advisors in March 2010. Since distributors were not able to find a quick-fix solution to recover their client-acquisition costs, the group came up with an idea of an online mutual fund investing platform called Next Advisors. Launched in May 2011, 52 IFAs across 13 locations subscribe to this platform now.
The idea behind the birth of this platform was to ensure that distributors’ brand identity remained intact. Unlike a sub-broker model, the Next Advisors platform allows distributors to get commissions directly from the fund house. Commissions are not shared with Next Advisors.
Paperwork
To enable transactions, distributors have to sign a service level agreement (SLA) with the AMCs they wish to do business with. IFAs have to initially sign an agreement with their clients and complete the necessary paperwork like collecting PAN card number, KYC status and update the same with R&TAs. All subsequent transactions are paperless. Transactions like purchase, redemption, switch and SIPs are available. Clients can buy into the existing folios as well. For this, distributors have to convert the existing offline folios into online mode by informing R&TAs.
How does this platform work?
A link is provided on the distributor’s website which takes clients seamlessly to the Next Advisors platform. The distributor’s identity is maintained throughout the transaction.
Next Advisors has tied up with an RBI-approved payment gateway through which all transactions are facilitated. As of now, only clients can carry out transactions and not distributors. Advisors have to recommend funds to their clients and the clients can then transact through the platform.
Next Advisors is soon planning to introduce a feature wherein distributors can log in and recommend which funds their clients can buy. The execution of the deal can be done by clients later so that they do not have to disclose their net banking passwords to distributors.
The software also provides fund research, client reports and customer relationship management (CRM) modules.
The platform allows clients to reduce cost and time taken for investing. Clients can get the same day’s NAV if they buy funds before the cut-off period. Next Advisors helps in setting up SLAs with AMCs. They have facilitated around 1,000 SLAs so far.
The platform also provides a ‘wrap’ functionality in which distributors can create customised model portfolios as per a client’s risk profile (an aggressive or conservative wrap). Once clients log in, the software automatically channelizes money into different schemes as per the asset allocation.
In future, Next Advisors is planning expand the capabilities of the platform to allow transactions in products like company fixed deposits and bonds in the near future.
Next Advisors is planning to offer a debit card and SMS facility for executing transactions for clients who are not comfortable with net banking.
Charges
There’s an annual subscription fee of Rs 10,000 for the software. For joining this platform, IFAs have to shell out an extra Rs 5,000 initially for establishing an SLA and to cover other costs. That means the initial annual cost works out to Rs 15,000 (first year) and Rs 10,000 for the subsequent years.
Distributors have to pay a transaction fee which varies from Rs 5 to Rs 20 depending on the type of transaction. The platform has also built a functionality where distributors can recover the transaction cost from their clients if they so desire after reaching an agreement with their clients. .
