Traditionally most Indian investors have either done a “Do it Yourself” (DIY) financial planning or a limited number of investors have actually used a Financial Planner to plan their financial goals. However, the Indian Financial planning eco system is now evolving to the next phase with many companies providing Robo Advisory services.
These Robo Advisory Services are provided primarily online with no human involvement in the process. After registering for one of these service providers – you are required to provide your current financial status, answer questions about your financial goals and questions which help gauge your risk profile. This information is collated and using a set of rules the Robo Advisors are able to pull a Financial Plan together. Most of these providers charge a minimal sum of money to prepare this plan.
Some of the Robo Advisory companies are taking this further to help you execute and monitor the plan for either an additional sum of money or commission that they make from investing your money.
So the question is – is this an option that you can use? I think that the cost of Robo Advisory services makes them a very attractive option to create a basic financial plan with specific goals and asset allocation. These are some pillars of any Financial plan and a good way to get started. However this is not all the pillars as you will still have to figure out taxation, insurance, estate planning etc. Robo Advisors will work for people who are comfortable not just working online but providing all their financial information online.
I believe that as we mature the Robos will gather more cognitive skills. Also we will see a hybrid model which uses the Robo advisors to take care of the number crunching behind the financial planning however the softer aspects will still be done by actual people.
Creating the plan is the start and the easy part but the key is execution and staying true to the plan.