Buying unit trust online is inevitable, like it or not

The move towards the self-service purchases is inevitable as customers demand ease of transactions, cheaper options

by SHAZNI ONG/ pic by TMR GRAPHIC

UNIT trust management companies (UTMCs) will eventually offer online purchase services for their products as the digital revolution reshapes the sector which has for decades relied heavily on sales agents to market their equities.

The move towards self-service unit trust purchases is inevitable as customers demand ease of transactions and cheaper options, while unit trust companies hope to net a wider market at a lower cost.

Last month, the Employees Provident Fund (EPF) announced that its members can now invest in unit trust funds through the self-service i-Invest online platform within the i-Akaun (member) portal.

The shift to the digital platforms for unit trust purchases could make thousands of unit trust agents, who bag lucrative commission, jobless. In the last decade, online share and insurance purchases have already made remisiers and insurance agents redundant.

Affin Hwang Asset Management Bhd (Affin Hwang AM) chief marketing and distribution officer Chan Ai Mei acknowledged that digital innovation is the way forward for the industry.

“For us, it is more than just jumping on the tech bandwagon and creating an app per se. We want our solutions to address clients’ needs and solve problems.

“As one of the industry players, we are in fact working closely with EPF to ensure that the online platform is ready and that the fund offerings are reflected accurately.

“Once the platform matures and more contributors sign up on the platform, this could spur more flows into the industry,” she told The Malaysian Reserve.

Chan admitted that previously the fees charged for unit trust purchases could have been a form of deterrence to some contributors to invest in unit trusts due to the sales charge of up to 3%.

“Now, they can take the opportunity to invest through the online portal at only a 0.5% sales charge.

“It would also encourage participants of the EPF-Members Investment Scheme to further increase their investments at their own comfort.

“This move further empowers contributors to take charge of their investments and evaluate for themselves the options available,” she said.

But Chan said unit trust agents remain relevant as online platforms are like “online supermarkets” with too many options.

She said it can be confusing for investors to navigate and this is where an adept client portfolio manager is still highly relevant.

“They can advise their clients on the different types of funds that suit their appetite and goals. Agents can offer a more personalised service by helping clients build a portfolio and diversify,” she said, adding that this would push agents to upskill themselves in order to satisfy clients’ needs.

“Only then can sales fees be justified, by offering more value to clients in the form of a comprehensive quarterly review, rebalancing and wealth advisory,” Chan said.

Chan said Affin Hwang AM’s digital initiatives will strengthen its value proposition to clients.

“Among the most immediate priorities is to launch a client onboarding app and a digital tool which gives our relationship managers a better summary of their clients’ investment exposure. This would allow them to provide better asset allocation advice,” she said.

FSMOne Malaysia GM Wong Weiyi said the change is definitely coming.

“Yes. We believe it is a matter of time before all UTMCs offer online options for their clients. This only makes sense because the new generation of investors are tech-savvy.

“I am not in a position to comment on why not more UTMCs are going online, but I heard that development costs are one of the main issues.

“However, running an online platform is more cost-efficient in the long run despite having a potentially heavy upfront development cost. But it also offers more convenience to investors,” he said.

FSMOne, which was previously known as fundsupermart.com, has been offering unit trusts online for do-it-yourself investors since 2008.

“As an online platform, it is efficient and we can pass cost savings to clients in the form of lower sales charge. Our maximum sales charge is only 1.75%,” he said.

(Editor’s note: The heading of the story has been changed and differs to the print edition.)