Fintech companies want to manage your wealth

Money management is ignored by majority of the working population. In order to fill the gap, fintech companies have ventured into wealth management, a segment that will cater to the mass, especially first time investors. Wealth management was earlier considered only for the super-rich — ultra high net worth and high net worth individuals.

However, it is now coming to the masses with the help of technology. Fintech companies such as Mobikwik and Phonepe are entering into wealth management, where the companies will offer investment instruments like gold, mutual funds and insurance. You will be able to do the transactions online.

“We have launched digital gold and mutual funds in 2018. We also provide insurance cover. There are three other products in the pipeline — direct stocks, non-convertible debentures (NCDS) and government securities (G-sec),” said Kunal Bajaj, head of wealth management, Mobikwik.

Phonepe too is looking to provide wealth management though a separate unit. If you are wondering whether you should opt for it or not, here are three things that you should look for:

Beginner’s guide

If you have just entered the work force and looking to save and invest, for instance ₹ 1,000 per month, these online platforms can help you to start investing. However, once you get over the initial investment process, you may need a financial planner to help you manage your money. In fact, most fintech companies are not targeting the investor category that has an investment surplus of more that ₹ 10,000 per month.

Investment instruments

When you are investing your money, you should first look at your financial goals.

This also means you will need multiple instruments such as insurance, mutual funds, direct stocks, gold, bonds, deposits and small savings instruments to fulfil your financial goals. Opt for a wealth management not based on isolated investment instrument, but as a whole. Hence, just investing in one fund will not be enough in the long run.

Fee and advice

Ideally you should opt for fee-based advice and not on commission. Usually when a company sells you product on which it earns commission, it may not be in your best interest. Hence, don’t opt for free advice either.

However, if you still want to opt for free advisory option, it would be prudent to read and understand the financial instruments you plan to invest. There are multiple fintech companies that offer advisory based on algorithm too.

What should you do?

Just focusing on earning money is not enough. You also need to spend time on managing money as well. If you have never invested in mutual funds or bought an insurance product and are looking to do it using apps, you can try out the fintech platform with small amount. You should also remember that most of the companies have access to your data.

Hence, when you invest in financial instrument you should cross check the advice before investing. You don’t want to get your money locked in a bad investment product.