Robo-advisors won’t replace human advisors, but they can help them scale

Financial advisory is a highly competitive space with many players operating in this area. However, there are many which have made a name through their distinct product and services offerings, leveraging technology. Finnovate Financial Services is one such fintech firm that aims to make a family financially secure through its financial planning services. In a conversation with the Bizz Buzz, Nehal Mota, Co-founder of Finnovate said the company is on a mission to make Indians financially fit. Through its platform, the company offers holistic, personalised financial life planning and research-backed investment portfolios to Indian families including working professionals and high-net-worth individuals for better financial future. The company enables an individual to build a financial portfolio across various asset classes like equity, fixed income, gold and real estate. The company had earlier raised funding, which it is currently utilizing to invest in technology-led solutions apart from scaling up its operations. She also said that ChatGPT kinds of tools are great enablers in imparting financial literacy to billions of Indians. The company is actively pursuing to leverage such tools in order to make its services better

Financial advisory is likely to be disrupted by ChatGPT kind of generative AI tools. What are your thoughts on this subject?

There are many robo advisory that have come in the last 3-5 years. While people perceive that ChatGPT kind of tools will disrupt the industry, the deeper role of advisory and money management- which has a lot to do with emotions and psychology- will see human interventions for times to come. I will say up to some extent it will help the clients and participants from the industry. But when it comes to managing money, it is a lot about the psychology. It’s a lot about handling people’s emotions. We are in the business of managing fear, greed and aspirations.

We have taken steps to leverage generative AI for our services. We used to do financial life planning over excel sheets. We gathered the information and put it on excel for building up a plan. It used to be a couple of days job. Now, we have built a platform with algorithm running on the background. It takes us minutes to write the actual financial plan. Having so many years of experience in the industry really helped us to feed the data and now, the whole financial planning has been reduced to a few minutes. So, with AI and technology, it will really help a lot of wealthtech and fintech companies to scale because a lot of processes will be cut down with the help of technology. As far as ChatGPT is concerned, financial literacy is going to be the major beneficiary as companies like us will integrate ChatGPT that will help us in creating very quick content around these subjects. It will also help in generating training module in personal finance.

Fintech space is so competitive these days. Can you give us the uniqueness of Finnovate Financial Services in this crowded space?

This space is competitive and to an extent crowded. There are no entry barriers. How we are different is, most of the wealthtech and fintech players are talking about investing, returns, platform which helps you invest and things related to these areas. We go a couple of steps behind. Once you come to our platform, we ask about your family, life goals, risk-taking ability and then we start building a financial plan, which is very customised to you. So, we directly don’t jump into investing. We don’t tell you these are the five mutual funds or five stock you invest. Wealthtech is perceived a lot about investing. We don’t want to call ourselves a wealthtech as we start a couple of steps back from where steps for wealth management starts. That’s how, we differentiate ourselves. Today, Indian families go to one platform to track their investments, to other for savings. They don’t get a place where they can access the platform for financial planning, financial transactions (for investment products). Our platform enables a person to track all these things under one platform irrespective of wherever they transact. A family can import everything to Finnovate platform, which is end to end and seamless. Instead of going to multiple places, dealing with multiple people, we are solving a problem where a family gets access to everything in our platform.

Will you give us some view about your designing a financial plan for a person or family?

What we do is we look at six aspects of personal finance from a holistic perspective and then we advise based on these principles. Our platform covers all these aspects. It’s not all about investing, whether you open a joint account, nominations, and related matters, we take care of all minute details while building up a financial plan. A client can see all types of investments in one dashboard. They can see their asset allocations. We feel that what creates wealth is asset allocation. You need to invest in equity, fixed income instruments, gold and real estate for creating wealth. Regular investing with power of compounding holds the key. Our platform allows an individual to import his/her EPF, upload NSDL portfolio, mutual funds through CAMS and insurance details (after getting the details) among others to our platform. We provide reminders for insurance premium payments, maturity reminders for fixed deposits, EPF, PPF and alternate products among others for all family members. So, for a family, it is a place to come and see exactly where their financial life is right now and where it is headed.

As a corporate, we have a corporate license and distribution license for various financial products. After building the financial plan, we give client the choice whether they want to execute the financial plan with us or not. The client can enter into direct fee model. If you are beginner, you can a choose a distributor and transact. For this, we make some money per transaction. We provide a family the choice. We are very transparent on how Finnovate makes money.

Can you provide us some view about profitability aspects? How has been the journey so far?

As a company, we started operations in 2007. But we were traditional offline players. We switched to complete wealthtech company in the last two years. Then, we raised funds (around $1 million in pre-series A round). But as you can see, the whole expertise is more than 15 years old. I and other cofounder have more than two decades of experience in the financial services sector. We were bootstrapped initially. Yes, we are profitable and we raised this round for really investing in technology and to scale up.

As far as growth plans are concerned, we are looking at 50,000 to 1 lakh families to come to our platform for making their financial plans. In the first phase, we are looking at Rs 10,000 crore asset under management, which can go up to Rs 30,000 crore in 24-36 months.