The distribution landscape is undergoing a change. If you are a typical IFA, there are a host of issues that you deal with – getting clients, servicing them, maintaining records etc. More often than not, paperwork and administrative chores eat in to valuable time that could be more productively spent on business development.
In this context, a lot of advisors have chosen to partner with national distributors (NDs) or platforms. National distributors like Bajaj Capital, NJ India and Prudent have hordes of sub-brokers empanelled under them. And then there are platforms like Fundsindia and iFAST. The most recent entrant in this space is Next Advisors, though its model is model is somewhat different from iFAST and Fundsindia in that it facilitates online buying and selling portal for MF distributors for an annual fee without the IFA becoming their sub-broker.
While entrenched players like Bajaj and NJ India have built a strong distribution force of sub-brokers new players like Fundsindia and iFAST are steadily gaining acceptability among advisors. Both Fundsindia and iFAST have two verticals – B2B and B2C. Under the B2B model, they empanel advisors and through the B2C model they reach out to investors directly.
Apart from providing buying and selling mutual funds online, these NDs/platforms provide a host of value add services to its partners. We’ll explore some of them to see what they have to offer.
Bajaj Capital
If you want to tie up with one of India’s oldest and largest distributors, you have to pay a yearly fee ranging from Rs 2000 to Rs 20000 based on the kind of services you want to offer to your clients. You get to deal in multiple products like mutual funds, insurance and company fixed deposits if you empanel with Bajaj Capital. Its sub-brokers are offered a commission after deducting a certain percentage from the commissions received by AMCs. Even if you stop doing business, you continue to get trail from Bajaj until the investments are redeemed by your clients.
Fundsindia
Advisors can deal in products like company fixed deposits, bonds, NCDs, shares, ETFs, NPS & insurance through this platform. “We are also launching a product called as ‘Managed Accounts’ through which advisors will be able to deliver sophisticated advice on handpicked portfolios of mutual funds, equities & ETFs with the help of strong research support. ‘Managed Accounts’ is the new breed of products in the Indian market. Advisors will be able to charge their clients through Managed Accounts too,” said C.R. Chandrasekar of Fundsindia. Fundsindia does not deduct any fees charged by advisors to their clients through its platform. There is no fee to join this platform.
iFAST
Launched in 2009, iFAST allows advisors to transact in 42 fund houses and do inter fund house switches. Its platform allows you to charge a onetime recurring advisory fee to your clients. Advisors can get their website white labeled. IFAs get 80% of their revenues and 20% goes to iFAST; most other national distributors operate on a similar model. As of now, advisors can only transact in mutual funds through this platform. The company plansto expand its product bouquet in a phased manner depending on the demand from the market and evolving regulations. Around 1200 advisors from 45 cities have empanelled with iFAST.
IFAs have to key in a reason for executing any transaction which is cleared by the client. “In case of any difference of opinion with the client or if there is a regulatory review of the client dealings, IFAs are in better control because every transaction is recorded,” Rajesh Krishnamoorthy, Managing Director, iFAST Financial.
NJ India
With a sub-broker base of more than 14000, NJ India also allows you to deal in mutual funds, insurance, company fixed deposits, real estate and PMS. It provides office support, training, marketing, sales support among other things. Each advisor is mapped to an Relationship Manager who is in touch with you all times. It provides help in certifications, training on soft skills and technical knowledge through NJ Gurukul.
Prudent
Prudent also allows you to transact in a host of products. It has 4800 advisors selling mutual funds through its platform. Prudent’s platform offers you a functionality to charge a fee to your clients.
Advantages of national distributors/platforms
As you would have gathered, there are the following advantages:
· Ease and speedy transaction
· Transact across AMCs
· Charge fees from clients
· Expand geographical reach
· Greater focus on business development
· Less administrative work
· Brokerage reconciliation
· Financial planning and other tools
While these platforms provide a host of value added services to its partners, many advisors, especially established IFAs are not comfortable partnering with these platforms. Their main concern is losing their identity.
However, the platforms believe that such partnerships pose no threat to advisors.“It is all in the mind! It is a win-win when IFAs use platforms. A platform is an enabler - in its true sense. And so long as this is understood by the IFA, I do not think the “sub-broker” tag remains an issue. Everything that faces a client is branded / communicated with the identity of the IFA. We have white labeled web pages for the IFAs as well. I keep sharing this very often with IFAs – as a platform, we are not here to deal with your clients. We are here to deal with you and make your client interactions faster, smoother and scalable!” said Rajesh Krishnamoorthy of ifast, assuaging advisors concerns regarding platforms in an earlier interview with Cafemutual.
One advantage which these platforms have is that you may earn higher commission if you route business through them. Generally, AMCs pay higher commissions to large distributors based on volumes.
Most of these companies allow you to bring your existing assets on their platform and transfer assets to your own ARN if you do not wish to continue with them.
People who plan to become advisor or have just started off their practice can consider doing limited business with these platforms to evaluate their effectiveness.If you think you need all the guidance and support mentioned above then you can consider empanelling with them.
Let us know what you think about these platforms.
