Robo Financial Advisors or simply known as Robo Advisors in India are going to be a dynamic part of the next big revolution in the finance world i.e.” The Fintech revolution in India “.
There is a buzz all around regarding these upcoming technology driven platforms contributing towards simplifying the way of investing your money.
So,we thought of covering some expert comments on this hot and emerging topic : Robo Advisors in India, their scope and future in India.
We are sharing some exclusive reviews in the said field of Robo Advisory services so as to give you important insights on the advent of these Robo Advisory services in India.
Ques. 1.What do you think is the scope of Robo Advisors in India ?
Ques. 2. Do you think that Indian consumer market is ripe enough to adopt fee based Robo Advisory ?
Ques. 3. How does it effect offline financial advisors in India ?
What we found in our survey?
Scope of Robo Advisors : ” We think that Robo Advisors are here to stay and grow. With finance being the most mathematics oriented job in the world, there is no role of emotions while making decisions. And that is what the algorithms are particularly good at. A Robo advisor can crunch huge amount of mathematical data much more efficiently than a human being and hence can make a much wiser investment decision.Also, Robo-Advisor platforms can reduce the cost of financial advice to a fraction of the offline advisor cost. That way as well the partnership of technology and finance can help the investors greatly. ”
Robo Advisory Fee : ” It is a well researched fact that it is difficult to get Indian customers to pay for only service. The value of Robo Advisory service has to be brought forward with the partnership with the regulator, SEBI who is also promoting the commission less model aggressively. Its just a matter of time that people will need to switch to Commission less models in the equity instruments. After all, its a win-win situation for the investor and the platform alike since investor is anyways paying the fees hidden in the form of commissions in the Regular Plans. ”
Scope of Robo Advisors : ” I believe the advent of robo-advisory in India is inevitable. This is because robo-advisory just represents the introduction of technology into the financial planning process. And just like technology has revolutionised other industries it will also revolutionise this one. In fact the scope for automation is greater in financial planning because almost all steps are numbers/calculators based.
Even if you look at the good human advisors out of there then most of them are running processes and models out of spreadsheets.Online technology just enables us to put these spreadsheets in the hands of investors in an easy to understand format. And once you take the human element who was running the spreadsheet out, then you can provide the same quality at much lower cost. And who does not like that. ”
Robo Advisory Fee : ” Whether the Indian consumer will pay fees or not, I think there are two factors here. First, the thing is, even today when some customers think they are getting free service from their advisor, they are actually paying quite a lot in the form of commissions every year.
Instead when investors go for fee-only advisors who invest in 0-commission,direct plans. The fees works out to be much lower than commissions so the value is there. It is just a matter of educating the customer that they are always paying for advice whether through indirect but high commissions or through direct but low fees.
The second important thing is the role that is being played by the regulator in making this education process easier. Already actions like revealing commissions in the CAS statement is making the cost of “free” advice apparent to customers. Further SEBI is mulling a proposal to bar commission-earning distributors from providing advice.If that goes through then fee only advice will be the only way to go. ”
Effect on Offline Financial Advisors : ” As I mentioned before, for most retail investors whose finances are relatively straightforward, automation of advice is the future. And as such financial advisors who only value-add to suggest a handful of funds to start SIPs in may face difficulties going ahead. However where advisors will remain relevant where individual finances are more spread out in different places which is mainly true for HNI investors with complex portfolio.
However even in these case offline advisors will have embrace technology and adopt a human + tech approach to become more efficient and match customer expectation with regards to convenience. ”
Disclaimer : These answers are purely the views of the founders, we have no direct association with them. Please follow due diligence on your part before investing.
Do you have any investing experience with any of the robo advisors ? What are your views on the advent of Robo Advisors in India ?
Feel free to share your valuable feedback in our comment section below, to help the potential investors move in the right direction.