With mutual funds
there are two inter-related issues - trust in mutual funds as an optimal
investment option and trust in the advisor. We have to work on both, says Sanjiv
Singhal, Co-Founder and CEO, scripbox.com.
How did the idea of starting scripbox
come about?
The objective behind scripbox was to help people move from indecision to action in a critical area of their life - investments. The problem investors face is that there is too much information, too many choices and too much ambiguous advice.
scripbox is an actionable product that cuts through the jargon and simplifies decision making. Instead of thinking about it, even non-finance people can start using a best practice investing process unpolluted by bias.
What is your differentiating factor?
scripbox is the straight path to long-term wealth creation for everyone, including beginners and non-finance people. All of the best practices recommended for prudent investing have been automated by our platform - bias-free performance based selection, diversification, annual fund review, rebalancing, and tax considerations. All the investor needs to do is accept the recommendations made by our algorithms and they are done. With scripbox, anyone can become the prudent long-term wealth builder for his family that they want to.
Mutual fund is a push product. Being an online platform, how do you convince investors to invest in mutual funds?
No one wants to retire poor, so the need is there for a product that beats inflation. It is just that mutual funds are not yet accessible enough to create a pull. With scripbox we are making mutual funds easier. If you read some of the testimonials shared by our clients on our website, you will see that we are succeeding in our endeavor.
There is no human interaction while buying funds online. Do you think Indian consumers are ready to buy mutual funds online?
Yes they are. Let me explain - to buy online, there has to be trust. Over the last few years, online retail has demonstrated much higher growth than physical retail because online retailers have been able to establish trust with clear return policies and excellent customer support. With mutual funds there are two inter-related issues - trust in mutual funds as an optimal investment option and trust in the advisor/distributor. We have to work on both.
How is your scheme recommendation methodology different from others?
Our methodology is completely scientific and rule based. This makes it unbiased. Behavioural scientists have proven that all human beings are prone to bias – and I am not even talking about the overt commission bias. So making it rule based eliminates all that and aligns the recommendations to what is right for the investor.
Most mutual funds are recommended based on looking at the past performance. There is no certainty that a fund will sustain its performance in the future. How does your scheme selection process takes care of this?
Our methodology looks at consistency of performance rather than absolute performance over a reasonably long period and we use multiple variables. Having done that, there is also a periodic review mechanism built in which helps correct aberrations. This is best practice investing and with scripbox it gets automated.
Your platform recommends only four schemes. Do you wish to expand this universe of recommended funds?
The number of funds is based on a lot of analysis. We evaluated various options and 4 were chosen because it strikes a balance between the incremental benefits of diversification, minimum investment amount requirement and ease of management.
Have direct plans impacted your business?
Our target customer base understands the value we bring with unbiased selection, automated annual review and tax-efficient rebalancing. They understand that we are a professional service provider similar to your lawyer, CA or doctor and no one sees those as costs to be avoided because the benefit is clearly understood and valued.
How many investors are using your platform currently?
We are growing rapidly both in terms of our customer base and total AUM. We measure our success on the basis of customer portfolio performance and satisfaction. And we are seeing customers increase their monthly SIP commitments as well as switching of existing portfolios. Most importantly, we are seeing a very encouraging number of customer referrals.
How do you see the growth of online platforms like yours in the next 3-5 years?
We are convinced that both the mutual fund industry and the online distribution space will see a lot of excitement and growth. We expect the industry AUM to more than double in the next 4-5 years and we also expect more online players who will come in and help establish increased trust. This would not happen overnight and just as we recommend to our customers to invest for the long term, we are investing in our platform for the long haul as well.
Yours is a B2C platform. Are you look at introducing a B2B (sub-broker) model as well?
Not as of now. The direct to customer model keeps costs low and lets us deliver high quality service at even the minimum income rates. We recognize that IFAs provide a valuable channel and are keenly watching the development of the advisor model, which separates financial planning from fund selection and transactions.
