Rajesh Krishnamoorthy, Managing Director, iFAST Financial gives an insight into the company’s journey from Singapore to India and the role of mutual fund platforms in overseas markets in the second part of his interview with Cafemutual.
What is the role of platforms such as yours in more evolved markets?
Let us take UK for example. There are about 19 platforms that power the IFA space. Skandia, Cofunds and Fundsnetwork would be the leaders. A recent report reads as follows “The advised platform market now stands on the verge of £200bn, having been at £155bn this time last year (an increase of 25%), and 14 players now have assets under administration greater than £1bn compared to 12 this time last year,” Platforum said in a statement.
Australia boasts of one of the largest fund management pool available in the Asian region. About 13 platforms compete with each other and almost 70% of the assets are held by the top 5 players. BT Financial Group is the most prominent.
Come to Singapore and we have predominantly two platforms- Navigator and iFAST.
Across these countries, which I believe are more evolved than the Indian market, the role of the platforms is pretty similar. The platforms take care of all aspects of an Advisor’s business except the client facing part – one to one engagement, developing new clients, building relationships that remain for long – these are the focus areas for an advisor. Whereas, they leave all their administrative worries, research support requirements, technology enhancements and even significant areas of compliance management with the platforms.
Financial Advisors do what they do best – client management, platforms do what they do best - administration. Both have a win-win proposition.
For India, I see a bigger role for us to play – we have been taking batches of IFAs to Singapore for them to have a direct feel of how the IFA business is run. We invite many international practitioners to share insights with our Indian IFAs. We also have our annual Global Wealth Advisors Symposium – a marquee event from our side – where the best of advisors from all the four countries that we operate gather together and get to discuss contemporary issues, share best practices and talk about strategies to manage client portfolios. There is a lot of learning and sharing that we can catalyse by virtue of our international presence.
Tell us about the origins of your company? How did the company see an opportunity in creating an advisors platform in Singapore?
Started 12 years ago, iFAST has become Singapore's largest online distributor of unit trusts (mutual fund), administering around SGD $4 billion of assets so far. Starting with its business-to consumer (B2C) unit Fundsupermart.com in 2000, which sells unit trusts online to investors, iFAST has also been growing its business to cover the business-to-business (B2B) segment via the iFAST Integrated Wealth Management Platform since 2001.
Back in 2001, when the Singapore government liberalised the financial advisory sector by relaxing regulations to provide people with more financial planning options, Singapore saw a surge in the number of IFAs. This was the moment iFAST saw the opportunity to empower and support financial advisers. It sought to establish infrastructure to support back-end functions, freeing IFAs to concentrate on their clients.
Awarded a Capital Markets Services license by the Monetary Authority of Singapore (MAS), iFAST was the first firm to offer consolidated dealing and settlement and custodian services in Singapore. In addition, it has developed Verve Technology (Adviser Matrix software), integrated solutions software that offers customer relationship management (CRM) and financial planning capabilities aimed at helping IFAs manage their clients more effectively.
How much investment have your promoters made in this business in India?
Before I answer that question, let me share some background. It was not all smooth-sailing when the company started in 2000 (in Singapore). Back then, established financial institutions and banks dominated unit trust distribution channels. Also, the dot-com bubble had just collapsed and there were doubts about iFAST's online business model. Still, the founders persevered in the belief that technology would be a competitive edge and their customer-centric approach would eventually succeed. iFAST launched its Hong Kong business in 2007 by setting up a 100% subsidiary. Subsequently, it launched its platforms in Malaysia in 2008 through a joint venture with OSK Investment Bank. India was launched in 2009 through a joint venture with Deutsche Bank Group.
We had shared with the media at the time of our launch that the commitment to the India JV is SGD $25 million. We started our India operations in 2009 when the markets were reeling under the global slowdown. To add to that, we were smack in the middle of all regulatory changes starting from August 2009. In such trying times, I haven’t come across any other entity, be it domestic or international, that has committed itself to a long term business like ours in the Indian mutual fund distribution space.
How successful is your B2B model in Singapore and Hong Kong and what has been the recognition in these markets?
iFAST is a dominant player in Singapore. Pretty much the bulk of the Financial Advisory Companies use the iFAST platform in Singapore. As times have progressed, so have the demands of both the clients and the advisors. This paved way for the creation of a unique platform only for HNWIs – iFAST Global Prestige. This platform allows IFAs to service very high end clients with a wide range of products including stocks, bonds, ETFs, hedge funds and mutual funds.
In Hong Kong, the platform has been well received. In fact, during the peak of the global financial crisis in March 2009, iFAST bought the ING Platform Services in Hong Kong post which it has become the number one platform player in the Hong Kong market.
If we look at recognitions from independent observers, they sweeten the success. We moved up to 2nd position in the Enterprise 50 Awards 2008, up from 9th position in 2007. A report compiled by DP Information Group showed that iFAST Corporation was among the 50 fastest growing company in Singapore. We received SME Growth Excellence Award also. In Singapore, we were given the Business Superbrands status in 2010.
In Hong Kong we were awarded the Best-In-Class Award for Fund Platform and Online Usability in The Best Practice Financial Services Award in 2009. We had also won the ‘Outstanding achiever for “Best Investment Platform” in the Wealth Management Awards in 2010 in Hong Kong. We were chosen as the “Advisors’ Choice of the Year”.