The list of financial technology (fintech) companies that help you make investments through an app, in as much a paperless way as possible, keeps growing by the day. Let’s look at two of the latest kids on the block, Fisdom and WealthTrust.
Typically, you invest through your adviser or distributor who fills up your mutual fund application forms and then, along with your cheque, deposits them with the respective fund houses, which then open your mutual fund investment account.
Fintech companies allow you to invest using an app on your smartphone. So, you can invest from wherever you are: within or outside India.
Both Fisdom and WealthTrust are mobile apps that can be downloaded.
Once you complete the know your customer (KYC) process, in a paperless manner, you also need to upload an image of a cancelled cheque from one of your bank accounts.
Both apps allow you to buy, sell and switch schemes. They also allow investments in systematic investment plans (SIPs) and as lump sums.
In Fisdom, there are four broad goals from which you can choose one or more. Investments are based on your choices. The app also tries to make your withdrawals tax efficient.
When you enter an amount that you wish to withdraw from your mutual fund investment, assuming you have no scheme preference, the app optimises your withdrawals by suggesting a name from your portfolio where you pay the least amount of exit load and capital gains tax, wherever possible.
Only time will tell whether these recommendations work out but the apps’ basics are right: no new-fund offers and no sector funds or closed-end funds. Fisdom is also available from a website.
The WealthTrust app doubles up as a financial planning app, as it scans the text messages in your phone to give you an idea of your personal financial life.
The app’s co-founder said that a user’s data does not get stored on its server, so the app has no access to your private data.
Apart from showing you your net worth, WealthTrust also provides a breakup of your expenses, including utility bill payments, to give you a better idea of your money box.
Both these apps piggyback on other transaction platforms to handle their back-end processes. Thus, they can offer only what those platforms offer. WealthTrust uses the Mutual Funds Utility, which has 25 fund houses. Fisdom uses BSE Star MF platform, which offers 39 fund houses.
When the Fisdom app recommends schemes to you, it also gives you the option to run the list past your friends, family or any contact on your phone.
Dependance on advice from non-experts goes against the basic principles of investing and could hurt your portfolio in the long run.
Fisdom is does not charge users, as it relies on distribution commissions. Hence, it offers regular plans only. WealthTrust offers direct plans as it charges a fee of Rs99 a month (no charge for first 6 months).
Additionally, WealthTrust allows you to transfer your existing regular plan investments into direct plans, in a paperless and quick way. If you are a do-it-yourself investor, WealthTrust has the edge.
These are not the first fintech firms to offer a platform to buy and sell mutual funds. While all fintech firms offer such conveniences on the back of technology and value-added features (your income-expense account, for instance), it is the quality of recommendations differentiate one from the other, especially if you are looking for a robo-advisor.