Dealing with Mutual Funds paper work has always been a painful issue both for advisor as well as the investor. Right from getting a KYC done to making investments to finally getting back the money in clients account requires paperwork at all stages. Its surprising to see that the online transactions in buying / selling of shares happened 22 years back (introduction of NSE in 1994) while paperless transactions in mutual funds started just a year back.

Today we have 3 platforms which have emerged as serious contenders. Lets review each of them.

MFU is a “Transaction Aggregating Portal” that connects with key stakeholders including RTAs, Distributors, RIAs, Banks, AMCs, etc., thereby mitigating the risk relative to the current paper based transactions.

MF Utilities India Pvt Ltd (MFUI) is the Mutual Fund Industry’s “Shared Services” initiative formed by the Asset Management Companies (AMCs) of SEBI registered Mutual Funds under the aegis of AMFI, with an objective of investor empowerment, distributor / RIA convenience, consolidation of information to various agencies, operational efficiency for RTAs and benefits to AMCs, thereby benefitting all stakeholders in the industry. The prime objective of MFUI is to consolidate all “Transaction Requests” received by the industry from multiple sources and transmit it to the “Fulfiller” of the request (Transfer Agent), thereby bringing in operational efficiency by reducing multiplicity and duplication of activities. Towards achieving this objective, MFUI has developed the Portal, MF Utility (MFU), which operates as a “Transaction Aggregating System” for transactions in Mutual Funds.

One of the biggest advantage for distributors is that even if they don’t want to sign with MFU, they can still use the Common Transaction forms for making purchase, switch, redemptions etc and can submit these forms to any registrars. In a single form, one can do upto 5 purchases of 5 different mutual funds. That’s a lot of saving of time and efforts. This means that you don’t have to keep any AMC forms at your office. Imagine the de-cluttering as a result of this.

Also a biggest misconception which many distributors have is that MFU promotes direct plans which is not true. It is just an aggregator platform for both distributors as well as investors and hence they have no option but to provide this facility to investors if they wish to. However, the investor will need to approach MFU and ask for the login id and password and only then he can invest online directly.

The Direct Plan feature of MFU may be great for Registered Investment Advisors (RIAs) who may want to execute for their clients under the said plan. All they need to do is sign with MFU under the RIA category and start using it for their clients under the Direct Plan.

Another feature of MFU which can be both good and bad is CAN No created once is valid across all distributors. The data given in the CAN for supersedes the data in the existing folio (like nomination details, bank accounts, email id, mobile no etc)

One thing which perplexes me is if the platform is owned by all the AMC then why not a single AMC is promoting the same. It will help them reduce paperwork, achieve faster turnaround time, reduce errors etc. I have never seen a communication from any AMC to this regard. They are still busy promoting their own online portals which is very short sightedness. Its time each AMC owns the responsibility and push the use of it for their own long term interest.

E-mail for getting Demo: vikram@mfuindia.com

National Stock Exchange has also launched its Mutual Fund platform for distributors in Jan 2015. Presently they are providing these services free of cost but I guess because NSE is for profit organization they would like to monetise in some way going forward. They may levy an annual membership fee or may charge per transaction. Alternatively, they may charge AMCs per transaction since distributors may be sensitive to paying charges. A lot of small & large IFAs have been using NSE platform for a while now.

BSE Star MF has been also one of the formidable player in the Online MF platforms, however they were earlier mainly known in the demat category. They have many large National Distributors who have been using their platform like NJ India, IIFL etc. Recently, they have been also trying to aggressively woo IFAs to start using their platform.

E-mail for getting Demo: omkeshwar.singh@bseindia.com

I would strongly think that platforms are the future and recommend all financial advisors to try out one of these platforms. It makes life so simple for us and for our clients. Many advisors ask us which is the best amongst all the three platforms. Our experience is no one platform is 360 degree comprehensive. Each platform has its pros and cons. One cannot rely on a single platform. Each platform keeps coming out with unique features and enhancements every month. We don’t want to rely on a particular platform and hence we have been using all the three platforms interchangeably.

Depending on which platform is suitable for a particular kind of investor we process the transaction accordingly. The best utility of the platforms is that we are now completely done away with AMC forms (imagine so much of freeing up of office space). Basically, we are one step closer to the complete paperless office.

I would recommend signing your clients on two platforms atleast so that you have a backup as far as the transactions are concerned. With regard to the service levels and response time, again I have got a mixed feedback from different regions for each of the 3. You need to try and see for yourself which one suits your requirement.

All I can say is GET STARTED.