Ban on MF entry loads spawns bigger online play

The use of internet by mutual fund distributors and financial advisors for back-office and related jobs has increased as they struggle to cope with the lower-revenue regime following the ban on entry loads. 

The Securities and Exchange Board of India had in August barred mutual fund companies from deducting marketing and distribution charges from investments made by subscribers.

Now, these platforms are looking to add to the range of services on offer. While some are diversifying their product basket to include more asset classes, others are reaching out to more customers.

Himanshu Srivastava, vice-president, strategy, TechProcess Solutions, a provider of online platforms for MF distributors, said his company is working on an online framework for insurance products. “Some of the features are common and we hope to have it ready by the end of the financial year.”

The TechProcess platform currently allows MF distributors to carry out resource-intensive activities such as collecting and filling up of forms. Last month, it added a facility that allows for systematic investment plans.

“We are targeting retail investors who have a regular savings pattern,” said Srivastava.
NJ Fundz Network, another provider of online platform services that include back-office support and an online mutual fund portfolio desk, has launched ‘NJ Wealth Account’, which offers a solution that extends beyond mutual funds to company shares, government securities, deposits, small savings schemes, physical assets and insurance schemes.

“With this offering, we are empowering our advisors to offer their customers complete portfolio management solutions and also earn from them,” said Abhishek Dubey, DGM, business strategy, NJ India Invest, the parent company.

Some other players are looking at diversifying across customer segments. iFast Financial India, a joint venture between Singapore based iFast and Deutsche Bank, offers a business-to-business online platform for distributors. In September, it also branched out into the business-to-consumer model.

“Our services would be available for accounts with a smaller ticket size as compared to the earlier PMS (portfolio management services) model, which had Rs 5 lakh as its minimum threshold,” said Rajesh Krishnamoorthy, managing director, iFast Financial.
Financial advisors and MF distributors are optimistic about the new online platforms.

“So long as the platform is cost-effective and viable, distributors will continue to benefit. I am also waiting for the Amfi (Association of Mutual Funds of India) platform,” Raunak Roongta, a personal financial planner, said. Amfi expects to come out with a common online platform for mutual funds by March.