I’ve attended a training session by iFast Capital Sdn. Bhd last week. Frankly speaking, I would say that it is the future of unit trust investing in Malaysia.

Who is iFast Capital Sdn. Bhd

iFAST Financial Pte Ltd is Singapore’s leading online distributor of unit trusts as well as the leading operator of an investment platform for financial advisers and financial institutions. They are operating the successful platform of Fundsupermart.com in Singapore.

Now, they had come to Malaysia and launched the Fundsupermart.com.my which distributes about 70 unit trust funds from eight different unit trust companies.

Find out more about them here.

After the training session, I’ve taken a picture with the CEO and Chairman of iFast Capital, Mr. Lim Chung Chun. He stays in Singapore but in fact he is a Malaysian, a very successful entrepreneur.

The old way of investing in unit trust

If you have invested in unit trust locally, you’ll probably familiar with the charges and process here. Let me remind you about some details

  • You will be charged an upfront service fee before your fund is invested. That’s to pay for the agent’s sales commission and administration fees. Normally it is within 5.0% to 6.5% for equity funds.
  • When you need to do switching, you will have to sign a switching form to instruct the company to do so. Some unit trust companies provide you a pin number to be used for transaction via telephone. That will be more convenient.

Somehow, I don’t see this as a win-win situation. As an investor, you have to pay for the service charge regardless of the performance of the fund. As a unit trust agent, I earn the commission from new sales, which is the new money I brought in from my customer to invest.

With the new iFast platform, I think it is going to revolutionize the unit trust industry. We need a win-win business model and I think we got it now. I win, only if you win.

How iFast platform will revolutionize the unit trust industry?

With the introduction of the iFast platform, unit trust agent will be able to change the business model. For instant, I would opt not to charge any upfront service fees for my client who invest in unit trust via my service. You heard it right, ZERO CHARGES!

This means if you are going to fork out RM10,000 initial capital for investment, it is going to be invested in full. But what do I get if I do this? Instead of charging an upfront service fee, I can opt to charge a “wrap fee” which is recurring every year. In Singapore, the “wrap fee” is normally within the range of 0.75% to 1.00%.

A win-win situation is created via this business model. The planner depends on the asset under his administration to earn a living. His main priority would be to grow his clients’ investment funds. While the fund grows, he earns more.

As for the investor, it is good for you because there is no more service fees, and you won’t mind to pay the 1% “wrap fee” to your planner if he can consistently help you to gain an absolute return. Overall, that’s lower charges involved.

What’s in it for you as a unit trust investor?

Through the platform of iFAST Financial Pte Ltd, customers will be able to do a free switching of funds from different fund houses. With the introduction of iPASS, you will be able to do all these paperless via Straight Through Processing (STP). Unit trusts transaction orders can be carried out via secured log-in over in the internet.

1. You win, I win.

The Wrap Account investment service provides an important way that aligns the interests of the unit trust investors, the CUTAs, advisors, the iFAST platform and the fund management companies. The common interest is to grow the investment portfolio value of the client by proper investment advisory and investing.

2. Convenient “Wrap Account”

The Wrap Account enables the adviser to charge their client a lower front end load, ranging between 0% to 5% and an annual advisory or wrap fee, of up to 1.5% p.a. on the investment value of the portfolio. This  Account “wrap” all the customers’ unit trust investments in one account and customers are not charged a fee for switching of unit trusts within and among fund houses. This makes portfolio rebalancing very cost efficient.

3. Online Transaction Features – iPASS

iPASS allows advisors to create transactions online and upon completion, customers can login to review and authorize the transaction orders. It allows transaction to be completed online using passwords. iPASS removes the need for the physical presence of either their adviser or client for verification and authorizations. This enables transactions to be processed even when advisors and customers are at different
locations.

iPASS is a very useful module for rebalancing exercises, reaching overseas customers and executing urgent transactions.

I am glad to inform you that I will be involved in the iFast platform to bring you this exciting features, via Lion Wealth Advisors Sdn. Bhd.

Lion Wealth Advisors Sdn. Bhd. – Company Background

Lion
Wealth Advisors Sdn Bhd (LWA) is a company holding the Capital Market Service License (CMSL) for financial planning and the registered CUTA license status represent this “one-stop shop” that meets consumers’ demands for holistic financial planning and investing in wide range of unit trust products by Securities Commission (SC) and Federation of Malaysian Unit Trust Managers (FMUTM) respectively. Thus far, there are only two licensed financial planning companies in Malaysia being awarded by the FMUTM with CUTA license; LWA being the only one of the companies and the sole representative in the northern region Malaysia.

What is CUTA?

CUTA stands for Corporate Unit Trust Adviser. The financial planning industry in Malaysia has been long dominated by banks, insurance companies and tied-UTMCs (Unit Trust Manufacturing Company). Since the recent regulatory enactment of the Capital Market Services Act (CMSA), it signifies a dawn of a new era for financial planning practitioners. The recent enactment relates to the introduction of the CUTA scheme by
FMUTM, in the nutshell, it allows for CUTA to represent various UTMCs and sell their unit trust products. This provides for unprecedented chances for many financial planning practitioners to go independent and
not restricted to a single UTMC representation.

In various countries, where the independent financial advisory business model is available, many who decided to turn independent were drawn to the clear advantages that the CUTA model offers.

There advantages are:

  • The ability to provide holistic financial planning
  • The freedom to place clients’ interest first

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KCLau
KCLau

Personal finance author and trainer

    17 replies to "How Fundsupermart will Revolutionize the Unit Trust Industry in Malaysia"

    • Lun

      Hi Mr. KcLau,

      I am a newbie and interested to buy some fund via online platform. However, I’ve some confusion ..
      1. When we talk about invest in funds, we talk about diversification or “dollar cost averaging” practice. Is that mean, for example, i buy Kenanga Balanced Fund is considered as diversification? (assuming Kenanga Balanced fund will invest diversify)
      or I have to buy Kenanga Balanced Fund + CIMB + MayBank + Pacific Asia Equity Fund, only then can so called as “dollar cost averaging” practice?

      Kindly please advice. Thank you,
      Looking forward.

      • KCLau

        One fund will consist of many different stocks. So even buying one fund is a diversified investment already.

    • Peter Lim

      I have to disagree that this business model is “I win, only if you win” when the annual advisory fee REGARDLESS of the performance.

      I believe the term “I win, only if you win”” should only be used when:
      1) No Service Charge.
      2) No Annual advisory fee (or wrap fee).
      3) Only Performance fee is charged when the investment earns a compounded annualised return above a certain hurdle rate (to compensate for opportunity loss of the client’s investments).

      Impossible? Buffett did that early in his career with Buffett Partnership.

    • CT Teoh

      Dear Mr KC Lau

      I notice Ifast Capital SB do not have an offcie in Johor Bahru?
      I have invested some UT before but the return dont seem to be that great.

      If I go with Ifast, will other Ut companies offer the same(iFAST FOC switching fee,etc)

      Regards
      Teoh JB

      • KCLau

        They are now selling funds directly to investor through fundsupermart.com
        You can give it a try.

    • vic

      Sorry, i mean on the right

    • vic

      Which one are you in the photo Mr KC Lau?
      The one on the left looks like Jay Chou….

    • […] presents How Fundsupermart will Revolutionize the Unit Trust Industry in Malaysia posted at KCLau#8217;s Money […]

    • Jojo

      How do you manage the portfolio for investors in making it worth for investors to pay the annual wrap fee?

    • […] presents How Fundsupermart will Revolutionize the Unit Trust Industry in Malaysia posted at KCLau’s Money Tips, saying, “About iFast Capital, the future of unit trust […]

    • […] need a personalized agent service, investing online is certainly a viable option. Example: iFast and Philip Capital. Some financial planning firms also use these platforms to manage their […]

    • […] presents How Fundsupermart will Revolutionize the Unit Trust Industry in Malaysia posted at KCLau’s Money Tips, saying, “About iFast Capital, the future of unit trust […]

    • […] tells us how fundsupermart will revolutionize the unit trust industry in […]

    • investlah.com

      How Fundsupermart will Revolutionize the Unit Trust Industry in Malaysia | Personal Finance Money Tips…

      About iFast Capital Sdn Bhd. How this company will revolutionize the unit trust invesments in future in Malaysia. As well as what unit trust investing is all about….

    • KCLau

      of course you can think like this
      normally unit trust is passively managed by investor .. it is like buy and
      forget
      but with the wrap account, where switching is free, you can do as much
      switching and balancing as possible
      And your advisor should help you to do that or advise you to.. that's more
      pro-active

    • mtsen.com

      this is cool, can I also think like this ?

      if I plan to keep my fund for more than 5 years, I buy the traditional fund … 5%/10 years = 0.05%

      If I plan to keep the fund for only 3 years, then I should buy this wrap fund ?

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