FinTech cos ease the pain of investing. But should you trust them?

Investing across asset classes comes with some pain. First, identifying a wealth manager to guide an investor on the right product, then doing the lengthy documentation and KYC process and finally, once invested, tracking each investment’s performance.

FinTech to the rescue

With the advent of Fintech players in the wealth management space, the ease of investing and monitoring investments is available at the touch of a few tabs. Easily downloadable on a smart phone or accessible on the web, these tools link up an individual or family’s complete financial portfolio in an easy-to-comprehend dashboard. Additionally, such apps also draw up an investor’s financial persona that gives a gist of what kind of investments she has made – equity / debt / balanced etc as well as suggest other financial products to buy on the same platform.

However, unlike traditional Asset Management Companies, these FinTech wealth advisories are not directly regulated by SEBI. So should you trust them?

Aditya Agarwal, founder of Wealthy.in, an app-based advisory, says “In Mutual Fund distribution, we are regulated by AMFI, and because we are capital market players also, so indirectly SEBI regulates us. On the insurance front, IRDA regulates us.”

Tech Vs Human Advisors

Apps like Wealthy.in deploy technology to suggest mutual funds to investors basis their age, goals and risk appetite, replacing a human wealth manager in the first place. Once an investor needs more inputs on a suggested product, a real wealth manager comes to the assistance. “Human interface is to explain an investor ‘why’ an investment is right for an investor rather than identifying the investment in the first place,” he adds.

Granting permissions to the app: Should you worry?

FinTech apps, upon download, seek permission to access certain details on one’s phone, including emails. That’s where the security concern comes in. “You should be very worried and you should ask why we seek permission to access your email. We follow a 20-point Google audit process on which we spend $25,000 every year to get us re-verified by Google-appointed security agencies…Data is encrypted end to end.”

Tracking or transacting?

It is noteworthy that while transacting through such platforms, money doesn’t come to the app platform, but travels directly to the final destination where the product is being bought from – a fund house in the case of  mutual funds. The app serves as an interface to enable such transactions. “We are doing ₹50,000 crore worth of transactions every month…60% of our clients end up buying the second or third financial product on our platform,” Aditya said.

Financialising India, Financialising Bharat

“We are trying to promote asset allocation… So if you are investing for the short term, we suggest debt products,” Aditya said. “We have investors coming from all cities. We also have transactions coming from Andaman & Nicobar. 70% of our clients who transact with us are in the bracket of 30-45 years, but even the retired 60+ are trusting us with their money,” he concludes.