Platform Point
Robo vs IFA: a reality check
Shri Harsha K, Head – Digital Platforms, Axis MF

imgbd It’s useful for IFAs to take stock on how technology is changing the landscape of financial advisory / wealth management business. Are Robo-advisors making a difference to customer’s life in Personal Finance space? How has been the Robo-Advisors business growing in last 5 years? In this article, I have made an attempt to compile few relevant data points and draw insights for IFAs.



In 2010, Betterment started its online financial advisor / Robo-advisory business in US. In 2018, Betterment is the largest “independent” robo-adviser in the world, with $101 billion under management. On the contrary, if one were to track Vanguard’s Personal Advisor Services, it has crossed the $1002 billion in assets under management milestone, making it the first digital advice platform to do so. Vanguard Personal Advisor Services is an advisory service launched by Vangaurd in 20133 that provides both onetime advice services and an ongoing managed account service. Clients with a preference for a digital experience can also interact with Vanguard Personal Advisor Services electronically. I was intrigued how can Vanguard’s Robo-Advisory business grow so rapidly? If we were to study Vanguard’s proposition - they offered customised service to their investors. It’s very important for IFAs to take note that the success of Vangaurd business is because they chose hybrid model. hybrid=”robo” + “human”. It's very interesting to observe that Betterment started emulating Vanguard’s hybrid “hybrid” model. Recently Betterment launched - Licensed Financial Experts—at Your Fingertips 4

Switching my discussion to research reports published by large consultancy firms’ on Robo-Advisory business. Capgemini's report5 on Top 10 trends in Wealth Management 2018 mentions about “Advent of Hybrid Advice solutions to Set Wealth Management of new course”. Firms are just beginning to experiment with hybrid models to strike the right human-and automated-advisory mix.

The Indian context

In India too, from past 3 years we have observed over 100 start-ups have ventured into personal finance / Robo-advisory. Except few start-ups most of them are yet to see a huge growth. This may be attributed to several reasons. For instance, on boarding of non-KYC investors isn’t easy one in India. My focus is not to dwell on the reasons but on Fintech adoption. Recently EY published a report on Fintech “The battle for the Indian consumer6” Insight from this report is FinTech adoption rate exceeds the global averages. India is 52% and Global is 33%. Even though the level of awareness increases, consumers are demanding greater access and control (DIY). EY report says the winning formula will be a combination of digital access and human advice, both face-to-face and over electronic channels.

What are the key insights for IFAs from the above data points?

The jugalbandi between robo-advisors and IFAs to offer a superior customer proposition. Each focuses on its core competencies to deliver together a great customer experience. Time for IFAs to think of robo-advisors not as competition but as collaborators.

I would wrap my article quoting a story from Financial Adviser7 ( a premier weekly newspaper for the UK based financial intermediary 
community.) The corollary between Uber and financial services would be the rise of robo-advice. Investing life savings is different from a cab ride, swearing aside, which is an experience you would normally forget quickly.


The content of the article is generic in nature and does not represents views of Axis Asset Management Company Ltd. (Axis AMC) & its associates. Reference to platforms or applications are just to explain the concepts of systems and are for illustration purpose only. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein.

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