Financial advisory services: Robo Advisory startups offering algorithm based solutions now

Robo-advisory leverages the power of artificial intelligence to give automated, unbiased, personalised investment plans, sel ect the right funds to build your portfolio and monitor your investments, all at a fraction of the cost of a human advisor.

Financial advisory services, Robo Advisory, Robo Advisory startups, artificial intelligence, fintech, clearfunds, Kunal Bajaj, Ishaan Gupta, Wixifi

At a time when the stock markets are at an all-time high, who would not like to bet on a few stocks or mutual funds and make some good money? But knowing which scrip to bet on isn’t easy. You could take help of a mutual fund distibutor or an investment advisor, but then you are never too sure whether they are pushing a particular fund because of the commissions they are getting.

Enter robo-advisory services. Robo-advisory leverages the power of artificial intelligence to give automated, unbiased, personalised investment plans, sel ect the right funds to build your portfolio and monitor your investments, all at a fraction of the cost of a human advisor. The segment has seen the entry of a number of fintech start-ups—more than 40 according to various reports—all looking to reach out to millions of middle-income Indians who want professional help to realise their wealth creation dream.

“At Clearfunds, we recommend funds and built our algorithm with one objective—to optimise the 2-year returns with minimal volatility (not just beat Nifty),” says Kunal Bajaj, founder, Clearfunds, an online investment firm. Started in 2016, the start-up uses advanced technology to harness powerful data analytics to advise customers on which mutual fund schemes to invest in. Bajaj has over 18 years of experience at some of the world’s largest financial institutions. His last role was managing director and head of India equity sales at Jefferies.

Gurugram-based Wixifi is another start-up that advises the customer on how to build a well-diversified, periodically rebalanced tax-optimised low-cost portfolio through a web platform. The product starts with a detailed risk profiling exercise. The algorithm analyses thousands of securities to come up with a suitable portfolio for each risk level. “Our USP is algorithms with artificial intelligence on stocks and MFs with published back test results including historical portfolios,” says Ishaan Gupta, founder, Wixifi. It seeks to deliver better risk-return characteristics than the Nifty.


Most robo-advisors offer mutual funds as the solution to meet financial goals. Some offer products like insurance, deposits and direct stocks. Wixifi, for instance, offers investment advice on mutual funds as well as stocks. Some such as Scripbox give low-cost advice to do-it-yourself investors who need only occasional guidance and focus on direct plans. Others such as MintWalk sell regular plans which results in heftier commissions. FundsIndia, a free investment platform, offers an array of financial products like mutual funds, equities, and deposits besides value-added services like free financial advisory services, flexible SIPs, trigger-based investing and access to its automated advisory service Money Mitr. As of now, the mutual fund market is dominated by regular plans, but as the online market matures direct plans will be the preferred option.

While these fintech start-ups are pushing for their algorithms, they also offer the human touch by making themselves available on phone, email, SMS and chat, given that the Indian customer is still new to the game. As Clearfunds’ Bajaj says, it seems easier to trust a human being rather than a machine to handle your life savings. “We find that customers call in for assistance on their first transaction, or to understand how the pricing works, and then find the experience so seamless that they don’t need to do so again,” he says.

The biggest attraction for customers is the low fees these fintech start-ups charge for the convenience of online investing, with or without the advice. Wixifi charges 0.5% of the assets managed through its system. This works out to Rs 125 per Rs 1 lakh of capital per quarter. “This fee is significantly lower than a regular plan MF distributor (which ranges fr om 1% to 1.5%) and personal wealth managers (which is between 1% to 2%),” points out Gupta. “The issue is how fast can we scale to a level wh ere we are a profitable business. My sense is that we will break even at about Rs 100 crore of assets under management (AUM) which we hope to achieve in 12 months from now.”

FundsIndia, on the other hand, which does not charge any fees from customers for advisory services, gets trail fees fr om mutual fund houses, typically 0.10% to 1.0% a year depending on the fund house and the type of scheme (equity or debt or liquid). They are paid every year as long as the investor stays invested in the funds.

Some startups have already pivoted to a B2B2C model, pitching their services to banks and financial institutions. While it is too early to say how this will pan out, Wixifi’s Gupta says that those who will actually do deals with start-ups and let the start-ups innovate will be better off. Experts agree that the Indian market offers a huge opportunity for online services, especially robo-advisory services. Remember, there are 10,000 active distributors and 2,500 certified financial planners in India for the 62 million households with annual incomes above Rs 5,00,000 that could use one. So, robo-advisory services are relevant for the Indian customer, it is only that she needs to be convinced about their abilities.

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With the markets on a roll, it is easy to convince the retail customer. The real test will come when the stock market falls and it will be difficult to hold on to the customer’s trust. Wixifi’s Gupta says so far its clients have been rational and realise that there is risk associated. “Fortunately or unfortunately, we have not seen a market downcycle to see if clients will pull out money when the markets fall but it is to be expected,” he says.

When that happens, it will seperate the men fr om the boys.





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