Amid growing regulatory challenges and emergence of new business models, the competition in the mutual fund advisory is heating up. Advisers are adopting technology to scale up their practice and reach out to a wider client base. Aakash Bansal, co-founder and chief executive officer, Mercury Financial, chats with Morningstar about how their new platform helps distributors and Registered Investment Advisers (RIAs).
What was the genesis of Mercury? Why did you feel the need to launch B2B platform?
Securities and Exchange Board of India (SEBI) came out with the idea of Unified License in stock broking in 2017. It is then Kedia Capital (erstwhile Kedia Commodities applied for the license and became the first Unified Licensed stock broker in India in 2018. It means Kedia Capital is the main stock broker with all five exchanges i.e. BSE, NSE, MCX, NCDEX, ICEX and under one account and with one margin client can trade and invest into all securities listed across all these exchanges).
Kedia Capital and Actlogica met our belief system and we decided to form Mercury Financial as a joint venture. Mercury is the first-of-its-kind platform in the country having end-to-end all modules required by an intermediary connected inside one ecosystem riding on custodian model.
Our industry is going through a transition phase where existing business models will be challenged, and new businesses will emerge. The challenges faced by intermediaries today led us to create a solution that the industry was looking for. We saw an opportunity in this space.
How many advisers/MFDs are empaneled with Mercury as of now?
We have 60+ sign ups from 10 cities with a mix of mutual fund distributors (MFDs) and RIAs.
Do you also have Business-to-Consumer (B2C) platform? If not, any plans to launch in future?
No, we don’t have any B2C platform and we have no plans to launch it in future.
What kind of products are available on your platform?
We have mutual funds (direct and regular plans), stocks, Exchange Traded Funds (ETF), bonds, commodities, currency, derivatives, PMS and we intend to add a few more products including insurance.
Besides transaction facilitation, what other value-added services do you provide?
We call ourselves financial advisers multiverse and we are the first-of-its-kind solution in India which has all the modules which are interconnected and are needed to successfully run a practice. For RIAs and MFDs, we have connected Customer Relationship Management (CRM), tools for financial planning, goal planning, cash flows, risk profiling, online demat and trading account opening, multi-assets execution transaction, Global Investment Performance Standards (GIPS) standard of reporting, fee recovery mechanism, compliance monitoring and consultancy. Besides, we incubate MFDs and help them transition to become RIAs. Also, our financial advisory company model allows large IFA firms to run multi-adviser set ups.
Advisers can initiate transactions through stock exchange platforms and MF Utility without having to share their commissions. What would attract advisers to join platforms like yours?
Things which are commoditized are usually free. We feel online transactions have commoditized and hence it is free. Our interconnected ecosystem with all modules will be an experience and transformation for users.
Is there a mechanism where RIAs can charge fee to their clients through this platform?
The platform has the capabilities to power both MFDs and RIAs. We have the capabilities to allow RIAs to charge fees and we help in calculation, invoicing, recovery and payment all seamlessly.
What challenges advisers are facing currently and how does your platform solve them?
Some of the challenges intermediaries can face over the next few years are lower margins, increase in operating costs, operational challenge in fee collection, stringent compliance, direct plans will get popular, client expectations will change, there will be a need for sophisticated portfolio management tools and business models will change.
Taking cues from Progression of Economic Value, technology has got its whole new meaning (online transactions, reporting, online login to clients is already commoditized). We don’t use Pagers, Radios & Walkman today, they are outdated and hence it’s time for evolution of new technology, tools, user experience, etc. With commissions going down and competition heating up, adviser's aim is to build assets. It’s time to redefine the way we engage with clients and create practices which will remain for generations by adopting technology and be future ready!
Do you think shrinking margins will help platforms like yours to attract new advisers for whom cost minimization is a priority?
Platform is an enabler and will help IFAs scale their practice.