Robo-Advisory in India: The Upcoming Game Changer in Indian Financial Markets
https://doi.org/10.34047/MMR.2020.8108
Keywords:
Robo-advisor, Financial Planning, automated, algorithm-driven, accessibility, minimum ticket size.Abstract
A Robo-Advisor is a digital platform that provides financial planning services which is automated and algorithm-driven and it has little or no supervision of a human. Globally the robo-advisory fintech service is expected to grow at a CAGR of 53.54% from 2020 to 2025. The primary advantage of roboadvisors is that the costs are very low (0.2%-0.5%) compared to traditional advisors (around 1%-2%). Another advantage is their 24x7 accessibility since it is on a digital platform. The clients can execute the trades by pressing a few buttons rather than calling the advisor, explaining the needs and the returns. The third advantage is there is no minimum client investment needed in robo-advisors since traditional advisors require minimum ticket size of atleast Rupees 2.5 Lakhs. With increased penetration of the internet in the country, faster growing population with expected share of more than 33% of the millennials and the youth in total population, shifting perspective of Indian investors from fixed deposits to mutual funds and equities, and growing acceptance of FinTech services, Robo-advisors are the perfect game changers in the Indian investment scenario in the next 20 years.
