‘TN, growing market in wealth management’

Tamil Nadu is a growing market for us and there is a lot of potential as the people here are relatively more educated and will understand the benefits of advisory-based wealth management compared to distribution-based service, says a top official of the company.

Erik Hon, MD, iFAST Financial India Pvt Ltd, in his 15-year journey with the company has seen progress enough to position India for its next phase of growth. From leading the development of Singapore’s first end-to-end advisory platform to directing their corporate pension services business, he has seen it all. Hon has the mandate of bringing global best practices in the wealth management industry to India and helping advisers embrace the transparent, fee-based advisory model that puts the customer’s interest first.

With SEBI’s Registered Investment Adviser (RIA) regulation coming into force, when investors choose to work with a RIA, they can be assured that all recommendations are solely intended to benefit customers – and not with the purpose of earning higher commissions, he sought to point out.

“Even though the mutual fund penetration is currently only at 12 pc of GDP as compared to 59 pc in Maharashtra and 25 pc in Karnataka, it is a fast growing economy with much scope for growth in mutual fund penetration. We expect the penetration to double in the next three to five years and are well positioned to grow with this boom as more investors use RIAs for financial advice,” Hon said.

According to Hon, financial advisory services are aimed at helping customers build their wealth. “There is a difference between selling a product and giving unbiased advice. Like how a professional lawyer and doctor operate, it is supposed to be product agnostic without conflict of interest. Having the adviser being solely remunerated by the investor/customer ensures that the adviser is on the same side as the investor. In such cases, the adviser will recommend cheaper products (as he is not remunerated by the product manufacturer) and thus reduce the overall portfolio total expense ratio (TER). By simply reducing the portfolio TER, the investor already makes more money.”

iFAST flagged its presence in India in 2008, to equip independent financial advisers with training, research, administration, technology and compliance, so that they can scale efficiently and profitably, while delivering timely advice to clients. The firm’s future investments would continue to focus on using new services and technology such as robo-advisory services, enabling advisory services for global investments to help RIAs capture more wallet share of theirclients.