In this second part of the article on online platforms, Ravi Samalad takes a look at iFAST and reviews IFA concerns about these platforms. (To read Part I of Online investment platforms wooing IFAs)
Launched in April 2009, iFAST Financial India, a wholly owned subsidiary of Singapore-based iFAST caters to 850 distributors across 45 cities in India. It has a presence in eight Indian cities.
Unlike Mywealthadvisor which offers investments in a host of asset classes, iFAST only offers mutual funds. It does not provide ETFs. However, one advantage it has over Mywealthadvisor is that it provides a lot more services to its distributors.
To begin with, iFAST imparts training and helps IFAs register with AMFI if the distributor does not hold an ARN. The platform offers tools like risk profiling, need analysis, asset allocation and product analysis. In addition, they claim to offer a robust compliance and data storage facility to their distributors.
“Client data is stored in our physical godown for eight years. A virtual copy is stored in our Indian servers and a copy of that is replicated in our Singapore office forever,” says Rajesh Krishnamoorthy, MD, iFast Financial India.
iFAST looks after the administrative, back office and compliance requirements of IFAs clients. It has implemented a system which prevents investments through third party accounts which was banned by AMFI last year. In addition, it also offers consolidated account statement and log-in access to clients on its B2B platform. It allows its distributors to track the productivity of each employee in each branch.
Besides, iFAST cross-checks the trail commission paid by fund houses for accuracy and alerts IFAs in the event of any calculation errors. “Today there is very little cross checking to ascertain what is getting paid is correct and whether the calculation is correct. It is not easy to calculate trail of thousands of clients. Revenue reconciliation is a key aspect of the solution that we offer,” adds Rajesh.
If an IFA has a static website, iFAST can also integrate that website, which will allow online investment access to his clients. It has already enabled such access to around 100 IFAs so far. Also, distributors registered with iFAST have the convenience of getting their clients’ documentation work done from 71 cities where the company’s ground support is available.
iFAST plans to break even in the next three years. It claims to have done over 5 lakh transactions from its B2C and B2B platforms.
IFAs want to retain their brand identity
Despite the convenience and ease, not all distributors are kicked about embracing these platforms. The market share of both Mywealthadvisor and iFAST is still very small. There are many reasons behind the slow growth of such platforms.
One of the major fears among IFAs is that that they would lose their clients once investors start using these platforms. Secondly, IFAs fear that they will lose their identity. Large IFAs having a substantial AUM prefer to operate on their own infrastructure and resources.
Client poaching is another concern which worries them. Chandrasekhar counters these fears saying that all investments are white labelled with IFA’s name, picture and ARN and there is no question of IFAs losing their identity. “Once the investors come through B2B channel, they cannot come through the B2C channel because the PAN number is already registered with us. We sign a seven page legal agreement with IFAs. Fund houses know that money is coming through IFAs and not through us. Customers come because of advice from IFAs,” adds Chandrasekar.
Rajesh Krishnamoorthy of iFAST also allays these fears. “What India has seen so far is broker and sub-broker model. There is a misconception with the word ‘platform’. iFAST only runs the platform. Our bread and butter come from IFAs. It is not a competition to IFAs. It is like challenging our basic business model. We are enabling the advisors,” says Rajesh.
New Entrants
Apart from these players, financial software vendor, Money Touch Retail plans to enter the league of online transaction providers for IFAs. The company is said to be scouting for investments from private equity firms. It is working out a revenue model and may charge per transaction or an upfront fee.
The platform would allow IFAs to invest from their own ARN. Currently the company sells mutual funds offline. Similar to iFAST and FundsIndia, it handles the back office work for IFAs. It works on 90-10 mode wherein it passes on 90 per cent of the trail and upfront commissions to distributors.
A group of eight Mumbai based leading IFAs known as Next Advisors are set to launch an online platform for IFAs which will allow investments in a host of asset classes. The project is not backed by any company and will be entirely funded by these eight IFAs.
