Watch out Schwab OneSource, MutualFunds.com is getting ready to go live this fall with a mutual funds investing and informational portal that will allow individuals to invest directly with various mutual fund companies.
The site, which has its roots in Nvest Funds, was spun out earlier this year as a stand-alone company that will provide investors with a one-stop shop for mutual funds education, planning and investing. The Boston-based company is focusing on reintermediating clients with mutual fund companies, which have seen their client relationships shifting to brokerages like Schwab and Fidelity, and on providing financial advisors with tools to better serve their clients.
Currently, when investors go to a brokerage to invest in a fund, the investor becomes a client of the brokerage, rather than the mutual fund company. Further, if investors choose to invest directly, they need to travel to various sites, with various log-ins and passwords, to check their account balances.
"What we're building is a front end so that you'll be able to go into multiple mutual-fund companies and complete transactions, look up your account balance and change your address," explains Bruce Speca, CEO of the new company, and former CEO of Nvest Funds. "Today, if you're holding a number of mutual funds directly and you want to look up your account balance or do a transaction, you need to go to those separate sites."
Speca explains that the benefit to the mutual fund companies is two-fold. First, investors will remain clients of the mutual fund companies, not of a brokerage. Secondly, the fee structure, he believes, will prove less egregious than the one imposed by the brokerages, which can run upwards of 35 basis points on assets. MutualFunds.com will not charge investors for using the service and plans to charge mutual fund companies that opt for a base monthly fee plus a "small" transaction fee.
Aside from mutual funds transactions, MutualFunds.com has entered into a co-branded arrangement with an undisclosed brokerage firm to offer its clients access to securities trading. When the site launches in the fall, it will also offer an array of analytical tools and educational services. "There will be a number of analytical tools and ways to build portfolios," Speca points out. "There will be a couple that we believe don't exist in the marketplace, and we'll be introducing them to the retail audience and the advisor audience."
MutualFunds.com will also include an online university that is geared more to financial advisors and employees of the mutual fund companies. "There's a tremendous need for both initial training and ongoing training in the funds industry to meet NASD regulations, as well as professional development requirements," Speca details. The company is planning to partner with companies that already provide face-to-face education, and will repurpose that material online. "Distance learning is just a huge growth area, and we see there's this tremendous opportunity for us to offer this in the mutual fund industry," Speca adds. Speca declines to name the partners.
Nvest decided to roll out MutualFunds.com after researching how it could better leverage the URL. Speca met with Bob Gold, president of TIS Wordwide, and the two thought the URL would be better served as a portal, rather than a site for one mutual fund company. TIS has invested in the company and will help build out some of the technology. Other investors include Bill Hambrecht, chairman and CEO of online investment bank WR Hambrecht, and Donald Rumsfeld, former secretary of defense for President Gerald Ford. In total, the company has raised $3.3 million in cash.
Speca anticipates that when the site goes live, it will represent more than 20 mutual fund companies. "We're trying to work with larger companies initially so we have more funds and more shareholders represented," he adds.