Executive Summary- A financial advisor helps the client to develop a comprehensive financial plan and manage his financial goals. With technology entering every aspect of our life, we can get advisors that are automated as well. Many companies have launched Robo Advisors who provide personal financial services. We have compared some Robo Advisors here – Arthayantra, FundsIndia, Scripbox, AdityaBirla My Universe and Advisesure. Software advisory tools are good for beginners but when it comes to complex financial problems or tailored solutions or unfavourable market conditions, they may not be the best bet.
Who are Robo Advisors?
Financial planning is an important aspect in everyone’s lives. Today technology is entering every aspect of our life. This is where Robo Advisors come into the picture. They are automated software or technological tools or platforms that offer financial advice. They take care of your investments with minimum human intervention. Financial portfolio is managed using algorithms. There is a huge population of young people who are new to investing and they are tech savvy too. Technological companies are trying to cater to this market by marrying technology and financial advice using Robo Advisors.
Financial planning is an important aspect in everyone’s lives. Today technology is entering every aspect of our life. This is where Robo Advisors come into the picture. They are automated software or technological tools or platforms that offer financial advice. They take care of your investments with minimum human intervention. Financial portfolio is managed using algorithms. There is a huge population of young people who are new to investing and they are tech savvy too. Technological companies are trying to cater to this market by marrying technology and financial advice using Robo Advisors.
What do the Robo Advisors do?
There are different types of Robo Advisors who offer different services in India. They can be classified as –
There are different types of Robo Advisors who offer different services in India. They can be classified as –
- Automated Advisors – These software applications provide the entire gamut of services. A customer can set up an account and give inputs related to his personal and financial information. The financial profile and risk profile will be mapped. The application based on logic written will provide advice regarding investment options. Some of them suggest corrections if required. Some will make a comprehensive financial plan. Some advisors make direct investments in MFs and some offer advice and offer a platform for financial transactions.
- Goal Based Advisors – Such advisors get the goals of the customer and provide a financial plan to meet the goals. They have goal trackers that assess performance against goals. If required, the portfolio is rebalanced to match market conditions so that goals are not affected.
- Hybrid Planners – These robo advisors use the services of human advisors too. Many customers are not comfortable with fully automated solutions.These advisors provide recommendations or even readymade portfolios to customers. Customers have the option of going for the recommended course of action or talk to human advisors for more information and clarity,
What services do the Robo Advisors in the market offer?
Here is a comparison of some Robo Advisors in India –
Here is a comparison of some Robo Advisors in India –
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Name
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Arthayantra
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FundsIndia
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Scripbox
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AdityaBirla MyUniverse
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Advisesure
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Description
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An online personal finance management tool.
It provides a financial plan, risk profile and recommendations from all aspects of finance. |
One of the first robo advisors. It started primarily as a tool for MF investments. It now caters to different aspects of personal finance.
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A tool that helps to manage MF investments. It is more for the first time investors and not so useful for seasoned investors.
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A personal finance management tool that gives reports on financial health and net worth etc.
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Comprehensive personal finance management tool focusing on financial status, risk appetite Provides financial advice.
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Services Offered
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It recommends MF products.
Buys MF units on the customer’s behalf Boasts of 60+ portfolios. Reviews and rebalances portfolio. Uses a Personal Finance Quotient to rank investors on their financial status. |
It supports investments in MFs, Equities and Corporate FDs.
Platform for buying & selling investments It deals with regular plans and not with direct plans of MFs. Customers have different options depending on the services they want. |
Provides algorithms to offer a MF portfolio to clients.
The user can select the type of MFs to invest in. It offers SIP and lump sum investment options. Alerts for rebalance of customer portfolios and also rebalance the MF portfolio is done.. |
Link all financial details.
Provide analytical reports. Transaction support for MFs using the ZIPSIP platform where users can select the type of portfolio they want. Manage bills and budget. |
It makes a detailed financial plan based on your inputs.
Provides investment solutions in terms of equities, debt and MFs. Provides review and rebalance of portfolio. |
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Fees
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Fees – Rs. 1000. Commission earned on MF transactions.
A basic financial plan is offered free of charge. |
No transaction fees. They earn commission when you make transactions.
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No transaction fees. They earn commission when you make transactions.
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No transaction fees. They earn commission when you make transactions.
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Rs. 1999 per annum for customised advice and transaction fees on equities. There is no brokerage.
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Human Advisor Interaction
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There are human advisors who will support the clientele along with the Robo Advisor.
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There is some chat support and human advisors. There are reviews of these services not being very user friendly.
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No financial advise provided by human advisors.
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No financial advise provided by human advisors.
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There are human advisors with whom customers can interact.
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Can Robots take over your financial planning tasks?
What is our take on Robo Advisors?
Robo Advisors that provide a platform to buy and sell investments are useful as people can invest sitting in the comfort of their homes. These are good for first time investors. People who have no investment plan can try out Robo Advisors.
But seasoned investors will want better recommendations, direct plans (for MFs) etc. The more sophisticated the algorithms are, the better the portfolio performance will be. Ultimately it is a software, the human elements of instinct, personal touch, trust and guidance are missing. So people who have a big financial portfolio and complex financial issues might be better off with human advisors.
It is also difficult to fathom every financial situation and automate a response to it. It is not possible to give a tailored solution for every customer’s financial profile and risk profile. It has to be seen how these tools handle volatility and unfavourable market conditions. In such cases, human intervention is necessary. Of course, if Robo Advisors give high returns to the customers, they will not shy away from trying out these products.
Robo Advisors that provide a platform to buy and sell investments are useful as people can invest sitting in the comfort of their homes. These are good for first time investors. People who have no investment plan can try out Robo Advisors.
But seasoned investors will want better recommendations, direct plans (for MFs) etc. The more sophisticated the algorithms are, the better the portfolio performance will be. Ultimately it is a software, the human elements of instinct, personal touch, trust and guidance are missing. So people who have a big financial portfolio and complex financial issues might be better off with human advisors.
It is also difficult to fathom every financial situation and automate a response to it. It is not possible to give a tailored solution for every customer’s financial profile and risk profile. It has to be seen how these tools handle volatility and unfavourable market conditions. In such cases, human intervention is necessary. Of course, if Robo Advisors give high returns to the customers, they will not shy away from trying out these products.
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