The wealth management industry is at a cusp of a major transformation led by increasing wealth and a clear shift towards financial assets. To capitalize on this trend, many new-age start-ups with deep pockets are entering the fray. While the market potential is still huge, Independent Financial Advisers need to be equipped with smart technology and tools to retain their clients and scale up their practice.
George Mitra, CEO & Co-founder, Fintso, talks about what their platform has to offer to advisers.
What was the idea behind launching Fintso platform?
The Indian market is highly fragmented with different kinds of customers and products. Financial awareness is still low. Thus, even do it yourself (DIY) investors, especially first-time investors need handholding. Investors require a ‘bridge of trust’ – someone who they trust to help plan and invest beyond traditional avenues. Independent financial advisers are able to bridge this gap as they have built deeper connections with their clients. They are building their business based on accessibility, trust and most importantly continuity.
The organized wealth players suffer from a ‘churn’ of relationship managers, and high-cost structures make them ‘sellers’ rather than advisers. As a result, 70% of the Indian market is being taken care of by the independent players.
IFAs constantly endeavor to keep up with technology to upgrade their services. However, they are constrained by financial challenges to build in their in-house tools.
Fintso aims to empower independent players to remain in businesses with a sharper proposition to serve their clients better, without taking over their identity.
How is it different from other platforms like FundsIndia Advisor and iFAST?
The key premise of Fintso is Domain + Tech.
We are not an infrastructure company, but an enabling fintech, providing solutions to independent advisers, based on understanding their needs – and that of their investors. This need includes their ability to adapt to changes, to stay relevant in a changing market environment, and to compete against organized players, who have access to a wider product suite. Having a digital engagement platform, the use of artificial intelligence and machine learning to give advice, create portfolios, and monitor their investor portfolios are all tools that Fintso is providing them. All these, while they continue to retain their brand, is what Fintso is focussing on.
Part of our key initiative is to help IFAs stay abreast of the latest development – our tie-up with NSE Knowledge Hub, is just such a focus area.
Execution of plain vanilla products on a digital basis is a very small part of what we do.
Is it a sub-broking model, where IFAs have to share a portion of their commissions with Fintso?
No, Fintso is NOT a sub-broker model.
It takes years for advisers to build relationships and trust with their clients. We do not think it is right to take away this identity – including between IFAs and a product manufacturer.
We enable IFAs to adapt, to do more, to do better – we believe that this would help them increase their share of wallet with their clients. On a longer-term basis, we do also feel that a lot of people would pivot to become advisers, and such sub-broking models would actually become redundant.
What kind of products/services are available on Finsto?
The platform provides research and advisory, product sourcing and curation, execution and client engagement and monitoring.
Each of the above is important in the lifecycle of a client, and helps IFAs forge a seamless, strong relationship, and helps them not only acquire clients but also increase wallet share by servicing more needs. Fintso oversees all activities for IFAs while they focus on their key activity of client engagement.
You are launching the Liberalised Remittance Scheme (LRS) on your platform. How can IFAs use this?
We feel that a proper asset allocation is necessary for any investor. Having assets in a different currency, and a different market, is a key component of this. The inclusion of LRS is due to this reason.
We are collaborating with one of the existing players, who has both the experience and knowledge, to offer this solution. The choice of what to do (which currency, theme, markets), needs to be determined by the IFA – in keeping with clients asset allocation and goals. Through this, we are enabling them to incorporate these in a consolidated way, and execute seamlessly.
Why is LRS still an unexplored area for Indian Investors? What are the challenges to invest outside India and how Fintso is bridging that gap?
The LRS has been used by ultra-high net worth individuals (UHNI) extensively, especially for funding children’s education, travel abroad, and investment purpose. The vast majority of investors were simply not aware, or even if they were, their ability to execute was limited.
Enabling IFAs to showcase how these could be beneficial to their portfolios, and allowing them to execute seamlessly, would go a long way towards this end.
This is another example of what Fintso is doing – democratizing wealth management.
With financial fraud in recent times, what preventive measures are you taking in cybersecurity?
Data security and privacy are at the core of the platform design of Fintso and is one of the cornerstones on which we are building out our pillars of trust between us and our subscribers - safekeeping of all the data related to their business. This essentially means that who can access data, how they can access, and what the data can be used for has been considered at the design phase itself by isolating data at the database level using roles and security policies.
Fintso is cloud-native, and we are using infrastructure by Amazon Web Series to host the platform which allows us to utilize a lot of the cutting-edge native security features including cryptography and built-in web application firewalls that allow us to create layer 7 rules for our web application traffic.
The data itself is stored after compartmentalizing and encrypting it. For instance, we store personal and transactional data in separate buckets with a unique encrypted key linking the two, unlike some tech platforms that use sensitive information like PAN to maintain the linkages.
It is also built on a clear data entitlement principal - only data that is supposed to be accessible to any user of Fintso is accessible to him/her, be it a subscriber, a subscriber’s client, or our internal users. It is a matrix that is overlaid on the basic database fabric.
Any transaction initiated by an adviser, is sent to the respective client’s mobile app for validation. The app login for clients itself is secured with biometric authentication, which ensures a maker-checker mechanism for each transaction.