Even as brokerage firms undercut each other in the race to get the most clients, they are diversifying into other financial services or innovating to boost revenue.
SAS Online, a Delhi-based deep discount broker, is creating a robo-advisory service it calls Wealthforce. Simply put, a robo-advisory is an automated financial planner, an algorithm that combines your savings capacity and investment goals to create possible investment options that you can choose from.
The most common advice will be a choice of mutual funds, split between equity and fixed income. It can also include suggestions on investing directly in stocks, fixed deposits, insurance, pension plans and gold. As a distributor of these products, it earns a commission on every sale it makes.
Shrey Jain, CEO, SAS Online, said, “We’re planning to enable more SIPs (systematic investment plans) through Wealthforce and advise clients on target-based investing, so they can tailor their investments to meet a particular goal. We will also use the IFA network (independent financial advisors) to gain more clients for the main brokerage business. IFAs who refer their clients to us will get a share of the brokerage we earn when these clients trade through SAS.”
TradeSmartOnline is also working on setting up a mutual fund distribution platform, according to Vikas Singhania, Executive Director of the Mumbai-based discount broker. “There are more investors in India buying mutual funds than direct equity; so we’re keen on capturing that investor segment. Mutual funds is a slow game but sustainable. Once the amount is invested, a distributor keeps earning commissions through the lifetime of the investment. Also, with the compounding effect, the brokerage also goes up proportionately.”