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Background
iFast runs a B2C online fund supermarket for retail clients and a B2B platform for financial advisors and other small institutions in Singapore. The former, fundsupermart.com, was launched in 2001. The latter, iFast, was rolled out following the introduction of the Financial Advisory Act in 2002 to take advantage of the advent of independent financial advisors, said Moh Hon Meng, executive director. iFast has S$500 million (US$325 million) in assets under administration and has seen rapid growth. Sales ballooned from S$71 million in 2002 to S$201 million in 2003 and are expected to touch S$450 million in 2004. "The FAA went live in 2002 and so a lot of growth came from IFAs in 2003. We're signing up new financial advisor corporations at the rate of one per month," said Moh.
Products
iFast sells 250 funds from 24 fund managers. Providers include Allianz Dresdner Asset Management,Schroder Investment Management,UOB Asset Management, Templeton Asset Management,Fidelity Investments,Prudential Asset Management (Singapore) andHenderson Global Investors (Singapore).
While selection has always been product and not manager-driven, the firm is now getting choosy about the funds it takes on. "We used to take on everybody earlier but now we don't want to have too many duplicate funds. If a manger has launched yet another Singapore fund and does not have a special reason for people to buy it, we'll not take it on," said Moh. In order to be chosen, funds need to offer an interesting story, or very low expense ratios or be in an asset class iFast does not offer at present, Moh added.
Fees
Fundsupermart.com (www.fundsupermart.com) sells funds with 50% discount on the front-end load. This is because it is positioned as a self-service platform, said Moh. Management fees depend on the fund manager and in case of equity funds, average 1.5%. In case of the B2b platform, iFast charges a service fee. This can range up to 10% of the commissions the financial advisor using the platform makes, depending upon the clients and the volumes they bring in. After that, it is up to the financial advisor to offer any discounts to the load that he sees fit, as long as it is within the limits of the prospectus, noted Moh.
Marketing & Distribution
iFast's S$500 million asset base is made up a third each from online clients, IFAs and small institutions. Its client base for the B2b platform includes small banks, stocks brokers as well as former fund managers and bankers-turned IFAs that want to be into fund distribution but do not want to set up the administration, custodian, dealing and technical infrastructure. Advisors can find all customer information, including holdings, online (www.ifastnetwork.com). They can also obtain their own business information over the net, including sales figures, commissions, investments, research and data.
Competition
iFast regards OCBC Bank's finatiq to be its biggest competitor in the retail discount supermarket arena. On the B2B front, its main competitor is Aviva-owned Navigator. "Our research is a lot stronger than competitors and with six people we have largest research team [amongst platforms] in Singapore. We also do a magazine. That is the main reason why people come to us," explained Moh. "We don't care so much about being cheaper. But if you will ask people as to who is the best, they will point to us."
iFast also had the first mover advantage in Singapore. "Currently, we're by far the market leader. We were more or less the only platform for quite some time and we practically signed up everybody [IFAs]," said Moh. "Our aim is now to support this first group and our next target would be the next crop of IFAs that will come from the insurance side."
Things To Come
In order to differentiate itself, the firm has just rolled out a compliance service for its financial advisor clients. It has developed a software programme that will track and pick out excessive fund churning activity by any particular advisor within an advisor group and alert the bosses. The firm has also hired compliance people, who will visit the financial advisor groups and do auditing of their books. Also, it is introducing straight through processing and adding hedge fund managers to help IFAs service their high-net-worth clients.
Source: Global Fund News
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