Robo-Advisors: Brand New Way To Invest

Resorting to automation for financial advice is the latest fad among new-age investors

- Himali Patel

India is one of the fastest-growing economies in the world. However, when it comes to the country’s automation potential, it has only 85 industrial robots per 10,000 employees. According to a report published by the International Federation of Robotics, as of 2017, this figure is indeed very low robo-density figure compared to other Asian countries.

However, despite such abysmal figures, India’s wealth management industry has a different story to narrate. Of late, the industry has substantially shifted from traditional human-advisor-based firms towards software platforms that offer fully automated investment services, also known as robo-advisories.

According to Statista, currently, assets under management (AUM) within the robo-advisors segment in India amounts to US$ 42 million (as of 2019). Further, the AUM is expected to show a compound annual growth rate (CAGR 20192023) of 36.2 percent resulting in a total amount of US$ 145 million by 2023. As compared to robo-advisors globally, where companies like Wealthfront, Betterment, Nutmeg, and Vanguard have already crossed over US$30-40 billion of AUM, we are still at a nascent stage. Despite the fast-paced growth of this industry where the needs of Indian consumers are diverse, the question remains how much robo-advisory can add value and make life simple?