A survey conducted by wealthmanagement.com about the rise of robo advisory in US reveals that advisors are almost split about perceiving robo advisory as a competition and seeing automated online services as an opportunity to grow their business.
Nearly four in ten advisors view robo advisors as a threat. While three in ten advisors view robo advisory as an opportunity to grow their business across smaller clients the remaining view it as an opportunity to grow business across all clients.
Image source: Wealthmanagement.com
Relevance in India
The robo advisory space is still in its infancy and home grown firms are warming up to the idea of robo advisory.
But first what is robo advisory?
Robo advisory is an algorithm or program based system which gives your investors a financial plan according to their income, expenditure and goals. It reviews their progress periodically and suggests changes, if necessary.
So, should distributors in India be worried about the competition from robo advisors or think of this as an opportunity to expand their client base?
“Any technology should be viewed as an opportunity. Every advisor should adapt to it according to their use and scalability,” advises Srikanth Meenakshi, Founder-Director, FundsIndia.
Similar views are shared by Mumbai based IFA Rakesh Rathod, “Though I still get 60% of my business through traditional means, I see robo advisory as an opportunity. I believe in adding a human touch to the robo model because in India even traditional advisory is yet to reach its full potential and clients still need hand holding.”
In India, the trend is more of a solution based system than true robo advisory. They provide model portfolios based on client’s goal which are generally available for free.
Sensing an opportunity in this space, advisors are realizing the potential of robo advisory. To retain their clients, many advisors are setting up their own robo platform based on algorithm for both retail and corporate clients.
Conclusion
It is better to welcome the change with open arms. The robo advisory model is still at a nascent stage in India and advisors can use technology to scale up their business than view it as a competition.
