16
vritti
Technically Speaking
September 2017
Growing acceptance across all age groups and classes
1 Millennials and digital natives
Robo advisory service, with their minimal
thresholds, appeal to millennial who want to
save money but don’t have the wealth to
warrant the attention of human advisors.
Low barrier to entry is definitively encouraging
to young people looking to invest. The
millennials and the digital natives have
been raised on technology, which is
integral to their daily lives. They trust
technology enough to delegate important
things in their lives, such as financial
planning. They are also keen on self-learning
through digital tools. As a result, robo
advisors have targeted this segment as large
segment of the millennial population simply
don’t trust human advisors.
2 Baby boomer
As the millennials grow older, they will
encounter more financial complexity in
their day to day life, for example, planning
for the education of their child. Millennials
will keep their robo account, but turn to
financial advisers for more complex
financial planning.
3 Retirees
Robo advisors are watching the markets all
the time. So when the stock prices goes up, the
robo advisor sells some of the equity and
spreads the funds in other asset classes, which
is a great help for retirees who want to mitigate
risks. A hybrid wealth management system,
with a mix of robo advisory services for 24/7
services, and financial advisor for more complex
financial planning will become necessary.
What is next?
The development of cognitive computing, AI
and machine learning tools, will help robo
advisors to provide more complex services in
the future. These tools will help in gathering
information about the customer, understand
need and preferences, assess risk tolerance,
and follow up and probe based on
experiences. In the future robo advisors will be
able to reassure clients through difficult
markets, persuading clients to action,
synthesizing solutions that cater to client’s
changing needs, which will help to provide a
human touch for a more end-to-end wealth
management and financial service.
Concluding thoughts – uptake for Robo-advisors
This space is very nascent in India currently &
a good number of fintech startups are
offering robo-advisory (or evolved digital
platforms) solutions for tech-savvy investors,
with the early-adopters reacting positively to
these platforms. However, the adoption on
wide-scale can be accelerated once the
major entities like banks or traditional wealth
management companies embrace & launch
robo-advisory offerings.