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Business News/ Money / Personal-finance/  Can robo-advisors edge out humans?

Can robo-advisors edge out humans?

With fintechs expected to drive consumption of financial products in the future, to what extent can advice from humans be replaced by robo-advisories

(Clockwise from top left) Naveen Kukreja, Prakash Praharaj, Dinesh Rohira, Amar PanditPremium
(Clockwise from top left) Naveen Kukreja, Prakash Praharaj, Dinesh Rohira, Amar Pandit

Naveen Kukreja

CEO and co-founder, 

Fintechs are simplifying financial jargon to bring in transparency, instant anytime anywhere access to products, customized and relevant financial solutions, end-to-end paperless and presence-less processes and digital assistance at each step. 

In addition you also get the ease to compare all products available in the market. Since financial products like loans and insurance usually have long-term implications, comparing all available options helps make better decisions. Today, fintechs are...focusing largely on offering customers convenience through technology. One key aspect to this is providing assistance, at each step, through humans or—what is commonly called—‘robo-advisories’. The term robo-advisory often gets misused. It is just a platform that uses customer data to advise on products. This is being done by most fintechs at different levels of granularity. What has started to happen is that machine learning and artificial intelligence are coming into the picture and are self-improving their recommendations basis past data and consumer behaviour. This self-learning advisory is in infancy in India and we are also experimenting with it to help consumers make smarter decisions. The digital assistance through chat is also beginning to transit from human to robo chats but it’s still early days for the entire industry. 

Amar Pandit


Robo-advisors use automated processes to offer personalized financial planning, which is their standout feature. However, a hi-tech model, relying solely on technology, isn’t enough to help people make prudent money decisions or help manage investors’ behaviour in hard times. There is a need for some human touch. For a fintech platform, an integral aspect of helping people make prudent financial decisions is managing individuals’ expectations and reactions to the changing market scenarios. For the most part, they focus on the product—the schemes and their returns. While investors may view this approach as simple, eventually it may end up doing more harm than good. 

It is imperative to understand the goal and time-frame of investment and the risk profile before recommending any scheme. Currently, very few robo-advisors following this process. Evaluating and comparing products before making any investments is imperative. (But) investors may not have the expertise to analyse them. Most investors, however, end up focusing on returns and invest without understanding if the product is suitable for them. Thus, utilizing a financial adviser or a fintech platform is the way to go. However, decisions about which product to choose cannot and should not be made in isolation and must be in the context of financial goals. 

Prakash Praharaj

founder, Max Secure Financial Planners 

Fintech platforms cannot provide solutions for all types of consumers. It cannot be personalised for the varying needs of every consumer. Older generations may find it inconvenient to use fintech platforms. Fintech platforms cannot hand hold and provide face-to-face interactions and assuage the fears of investors. Consumers need physical advisers along with fintech solutions. 

Robo-advisory can help in execution and delivery of financial services. In investment, it can help in risk appetite analysis, asset allocation, review of portfolios and rebalancing. It can help in the execution of SIPs, STPs, SWPs and switches. In insurance, it is useful in selling online term plans. 

But robo-advisors use complex algorithms, assumptions and past market data. But assumptions may not hold good in fast-changing market scenarios. Experienced advisers can provide better insights in case of market downturns. 

In insurance, the comparison can be made on premiums but there are other factors like charges and return on investment (RoI) to decide on products. Life Insurance is sold more as an investment product. There are various charges in endowment and annuity products that are not transparent.

Mutual funds are better on transparency but sold mostly on past RoI. The risk parameters are equally important to decide on mutual fund products. 

Dinesh Rohira

founder and CEO,

Technology is influencing the decision making of consumers. Managing personal finance is no exception. Fintech is providing cutting edge technology and is helping manage financial aspects better. 

Traditional models of personal financial management miss providing a holistic approach. The financial decisions are taken on standalone basis where the impact study on other milestones gets missed. Smart algorithms-laden platforms help in diagnosing the problems and provide unbiased solutions. 

Use of technology has triggered a paradigm shift of investors relying on robo-advisory platforms that help in budgeting, goal planning, choosing the best suited products and monitoring the performance of investments. The real power of such platforms surfaces with the use of artificial intelligence, which helps in proactively identifying needs of the consumers. 

Fintech is increasingly narrowing down the gap of a journey from identifying the requirements till the achievement of the financial objectives. It is financial prudence to not just look beyond buying a product that gives a superior return but to identify the appropriate strategy that goes right with the objectives. Moreover, smart analytics and unbiased selection of products will soon shift the orbit of consumers to new world robo-advisory platforms.

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Published: 20 Nov 2017, 12:12 AM IST
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