By JANE XIE

PLUMMETING share prices around the world, massive redemptions from equity funds, pessimistic investors and economies heading into recession point to gloomy days ahead. But Lim Chung Chun, CEO of iFast Financial, sees the silver lining in the thunderous clouds.

'From a long-term view, we feel that sometimes it's good to have a downturn once in a while because it makes us stronger over time,' says Mr Lim, chairman and CEO of the iFast group, a platform provider for independent financial advisers and distributor of funds. iFast stands for Integrated Financial Advisors Services and Transactions. iFast Financial is the Singapore subsidiary of iFast Corporation.

The strength Mr Lim refers to is both progress relative to other companies and the solidity of its internal operations. In major downturns, many sizeable companies face an uncertain future. Often, they will be bogged down by interruptions such as retrenchments and hence, tend to be clumsy in moving ahead of the pack.

In contrast, small and medium-sized enterprises like iFast - which has a workforce of 250 employees - are agile enough to identify and tackle problems quickly.

'During such times, we'll be able to move ahead faster than our competitors. Eventually, we'll end up progressing more than them,' Mr Lim says.

But it is not just about edging ahead of the competition. The 40-year-old bespectacled leader of iFast says that if it were just 'boom, boom and boom' times, employees may get complacent and lose sight of lurking dangers in the business.

When the economy is upbeat, the company that grows rapidly year by year may be preoccupied with the outward progress of meeting the service standards set by customers. This is often done at the expense of internal efficiency such as the company's operational flow.

'You don't really have time to step back (in good times) to look at what kind of changes you need. It's only when things start to slow down that you do that better,' he adds.

Describing himself as a 'big picture' person, Mr Lim says that it is difficult to succeed in a business like iFast's if one takes only a short-term perspective. iFast's business model, which is like that of a 'toll road' - where substantial capital has to be invested in building the infrastructure before the company experiences exponential growth - requires businessmen to be prepared to break even only in about three to four years' time.

When iFast was launched at the end of 2000, S$4 million was already invested and it broke even only in 2004, when a total of S$8 million was invested.

Bringing the company to profitability was the first challenge Mr Lim faced.

The sour market conditions then tested his and executive director Moh Hon Meng's conviction in the long-term viability of the business model they had devised. But they stuck to it and that has served them well.

Two changes catalysed the start-up of the company, which first began as fundsupermart.com Pte Ltd. First, it was the Internet that gave fundsupermart.com a cost-effective business-to-consumer (B2C) platform to provide information about and distribute various funds to investors. Unlike the brick-and-mortar way of selling funds through institutions, by going online, the company could distribute funds without engaging sales people, which is one cost contributor.

Second, it was the passing of the Financial Advisers Act in 2001 that opened up a then non-existent independent financial advisers industry. This opened the doors for the company to develop its business-to-business (B2B) platform that helps financial advisers aggregate the research of more than 600 funds across Singapore, Hong Kong and Malaysia. The platform also provides investment, administrative and transactional support. The company was renamed iFast in 2003.

There are two main components to how the company churns its revenue. When investors purchase funds through fundsupermart.com, they pay the company a sales charge. Currently, it is about 1.5-2 per cent for equity funds and 1.5 per cent for bond funds. On top of this, fund managers will also pay iFast a portion of their management fee for brokering the deal.

For the B2B part of the business, iFast enters a revenue-sharing model with the companies that subscribe to the platform. Hong Leong Finance, Bank of China and IPP Financial Advisors are some customers of this IFA platform service.

The first nine months of this year has seen the net income of the company surpass last year's, at S$12.6 million, on revenues of S$160 million. As at September, the value of funds under iFast's administration totalled S$3.3 billion, a drop from last year's S$4 billion due to worsening market conditions.

Nonetheless, Mr Lim says that the final three months will be tougher.

Following the company's success in Singapore, Hong Kong and Malaysia in the last three years, iFast will be breaking into the India market in a joint venture with Deutsche Bank's asset management division. The JV is 51 per cent owned by iFast with Deutsche Bank bringing its knowledge of the Indian market, where it has a presence in various parts of the country.

In India, the retail segment accounts for about 35 per cent of the US$110 billion market. By next year, iFast will have invested S$25 million in its subsidiary in India.

When asked if the company is looking into staging its presence in more than these four markets, Mr Lim says that his focus in the short term will be to build up the business momentum in these countries.

One of the obstacles he has to tackle, especially in Hong Kong, is stiffer competition as the players there tend to be more aggressive. This resembles some of the price-cutting pressure the company faces in Singapore as well. But this, says Mr Lim, gives the company the impetus to constantly improve on the range of services it provides. He believes that the key is to provide a value that matches up to every additional fee the customer pays.

A value investor who swears by Warren Buffett's investment maxim of buying undervalued stocks, Mr Lim describes his management style as one that aims for long-term growth of the company.

As such, he believes that the hire and fire practice that many companies adopt to protect their bottom lines is more costly in the long run. When there is a high turnover rate, it is difficult to ensure that employees know where the company is heading and impedes their ability to 'push through the good and the bad times', he says.

'How can I expect them to help the company think for the long term if I don't believe in the long term for them?' he remarks.

This article was first published in The Business Times on 24 November, 2008.