mFund is 'the NBN' of finance: ASX
Engaging more brokers and distributors on the mFund Settlement Service are key priorities for the Australian Securities Exchange (ASX) as it looks to build on the growing momentum of its flagship solution for investing in managed funds.
ASX Wealth Services product development executive and formerly the mFund Settlement Service manager, Chan Arambewela, said that one of the key reasons why mFund was initially brought to the market was because the ASX saw a need for client folio diversification as well as a more efficient and cost-effective process for settling ASX share transactions.
"I saw this as the last bastion of paper-based processing that we were just in the best position to fix as an exchange [and] that's what we did with mFund. It was about trying to revolutionise how things could work at a retail level," he said.
Despite having to negotiate regulatory challenges surrounding the implementation of mFund, Arambewela said the settlement service represented an opportunity for financial advisers to offer a "better solution" to clients in terms of their structure, portfolio strategy and asset allocation.
"I look at mFund as the people's platform. What we're trying to do is provide the NBN for this segment of the market. We are not dictating who uses the network or how [clients] use it, we are just trying to connect people and let competition [and] natural market forces play out," he said.
Investblue managing director, David Stephen, said one key benefit in adopting mFund was to create a more seamless client experience by allowing Investblue to be more active in rebalancing and managing portfolios of wholesale managed funds.
"From a client's point of view, we were able to create more active portfolios and administer more robustly. The lower [wholesale] minimums mean we're providing clients with access to a lot of funds that they previously couldn't access before in a SMSF," Stephen said.
"It basically allows using your broker platforms to create client reporting so for us it is really powerful in the SMSF stakes."
Stephen said that getting more brokers on board will be "a big part of the picture" for the ASX as it looks to raise awareness about mFund and consolidate its prominence across key channels in the financial planning landscape.
Currently, mFund only deals with simple managed investment schemes. Although it is in "its infancy stages", Arambewela said the ASX is working to expand the features of mFund with regular payment and reinvestment plans, greater emphasis on driving innovation through stockbrokers as well as negotiating common reporting standards for ETFs, LICs and Real Estate Investment Trusts all mooted ideas for the ASX moving forward.
"From an investment supermarket perspective, the shelves are being stocked every week. Getting products on is not our problem, we need to get the people who are going to take the cart through each of the aisles and that, to us, is the brokers," Arambewela said.
"We are working hard on that and we'll have something to announce very shortly."
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