As they say, ‘New Generation, New Ways’, the millennials and Gen Z investors today have developed and resorted to a new way of doing several things. Right from routine monotonous activities to extremely complicated activities like medical procedures and personalized financial planning, these innovative AI-Based Robo-Advisory are capable of performing all kinds of tasks with utmost precision.
Along with the constant improvements and increasing effectiveness, the acceptance of AI-Based Robo Advisory services for comprehensive financial planning, investment planning, tax planning, and retirement planning is constantly increasing in the Indian market. Especially between the tech-savvy Millennials and Gen Z investors.
Unlike the traditional firms that offer specific financial services, the technologically advanced and AI-based Robo advisors are extremely equipped to offer 360 degrees financial solutions that are exclusively personalized as per the investor’s current financial position, financial goals, and risk appetite.
Furthermore, as the Robo Advisors gather the user information and prepare an extensively researched financial plan based on algorithms and probability, the young investors believe that the probability of success is more in Robo Advisor than the traditional advisory.
Types Of Robo Advisors?
The most common types of Robo Advisors available in the Indian finance market are;
1. Fund-Based Robo Advisory
2. Equity-based Robo Advisory
3. Comprehensive Wealth Advisory
Fund-Based Robo Advisors:
The fund-based Robo advisors give goal-based suggestions to their customers based on their risk appetite. The investment suggestions majorly belong to the single asset class—funds—that can be managed or exchange-traded.
The fund-based Robo advisors are a good choice for new as well as experienced investors with a low-risk appetite.
Equity-Based Robo Advisors:
As the name suggests, the equity-based Robo advisors primarily focus on equity-based investments. Such equity-based investments are suitable for experienced investors who have an in-depth knowledge of the equity market and have a moderate to aggressive risk appetite.
Comprehensive Wealth Advisory:
The comprehensive wealth advisory or comprehensive Robo advisor majorly focuses on delivering 360 degrees financial solutions that aim to increase the financial net worth of the investor. The comprehensive Robo advisor pays great attention to the current financial standing, future financial goals, and risk appetite of the investor to develop a complete personalized financial plan that aims to achieve the investor’s financial goals.
Young And Budding Robo Market
Considering the number of traditional investors Vs the millennials and Gen Z investors in the market, though the value of Assets Under Management or AUM for the Indian Robo advisory segment may be below, it is undoubtedly increasing at a steady pace.
The Robo Advisory in India is also considered to be young because its introduction in the Indian market also happened approx. 9-10 years later than the US market.
Moreover, the psychological and systemic barriers in India are also one of the reasons for the slow growth rate of Robo advisors in India. On the contrary, as the young investors have a comparatively lower investment budget than the tenured investors, the advantage of having a maximum number of millennials and Gen Z investors is also one of the biggest disadvantages for the Robo advisor.
Above all, the amount of passive funds, which has majorly contributed to the growth of the global robo-advisors, is also comparatively low in India. As per the data from AMFI, the AUM of passive funds in India consists of only approx. 6.5% of the overall AUM of funds.
Growth And Future Outlook
Along with the increasing number of millennials, Gen Z investors, and even the tech-savvy traditional investors, the contribution of Robo Advisors in the Indian finance market is constantly increasing and giving a boost to the overall FinTech or the WealthTech industry in India.
Based on research, there were approx. 500+ FinTech startups in India in June 2020, but today as of 2022 there are more than 2000 FinTech companies which make India one of the countries with the highest number of FinTech or WealthTech companies.
Growing per capita income, favorable demographics, increasing smartphone and internet penetration, and an expected shift in investment behavior are some of the prime reasons that make India one of the most promising markets for the FinTech and WealthTech industry.
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Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Adviser before making any investment using the app. Making an investment using the app is the sole decision of the investor and the company or any of its communication cannot be held responsible for it.