His boss learnt about Raghav’s struggle. Since Raghav was an efficient and smart employee, his boss decided to help him. Raghav’s boss was very astute with his personal finance; he initially had worked in financial planning company and therefore knew the importance of prudent investing.

Raghav’s boss introduced him to a certified financial planner/investment advisor, to help him sort his personal finances.

The financial planner tried to know Raghav’s risk appetite, his investment objectives, financial goals, and time horizon before his financial goals befall. Based on this, the financial planner introduced him to mutual funds and the type of funds he could invest in to secure his financial future.

He even proposed a financial plan to Raghav, but Raghav was not able to give in enough time for the execution and wanted something online-on-the-go---which could help him manage his investments efficiently. Thus, recognising this, the planner offered Raghav a robust robo-advisory platform backed by solid research, does his asset allocation, and offers only Direct Plans to invest in mutual funds.

[Read: Penny Wise & Pound Foolish? Here’s Why Direct Plans and Trustworthy Advice Must Go Hand-in-Hand]

The sun of the digital world is at its peak with automation, i.e. artificial intelligence and robo-advisory service platform are buzzing even in the financial space.

What is a robo-advisory platform?

A Robo-advisor is a virtual assistant that provides automated investment solutions with minimum human intervention at a cost-effective price.

[Read: All You Need To Know About Robo-Investing]

Raghav researched online to understand in detail about the benefits of Robo-advisory platform. He learnt:

1. Robo-advisor is accessible 24x7, unlike human advisors;

2. Eliminates personal bias element, contrary to human advisors;

3. Robo-advisor platforms are very convenient and easy to use, and time-savers;

4. Can be accessed from any place where internet network is available;

5. Service is universal for people of all income groups;

6. Perform complex algorithms quickly to provide suitable investment solutions;

7. Some even assess your risk profile (through a questionnaire) and recommend a suitable asset allocation strategy;

8. Recommend a portfolio/s of suitable mutual funds;

9. Offers a reasonable level of customisation in portfolio construction; and

10. Highly cost-efficient

In short, Robo-advisory platforms compensates for all the shortcomings of a human investment advisor. Some of the robo-advisory platforms even help you with charting an optimal asset allocation. 

[Read: This is How a Smart Robo-Advisor can Help You Chart Your Asset Allocation…]

However, on further research, Raghav realised that choosing the right advisory-platform is critical; because with more Robo-advisory mushrooming every day, the quality of the advice offered should be of value-addition to the investment decisions.

Often the emphasis is on the aesthetics–––the look and feel–––instead of offering unbiased advice backed by thorough independent research.

Remember that, if recommendations aren’t backed by sound research processes, they are unlikely to live up to your expectations.

[Read: Looking For A Robo-advisor? Here's How To Go About…]

So, while selecting a robo-advisory platform, here are a few aspects to evaluate:

1. Who are the founders/promoters behind the robo-advisory platform and their experience in the field of personal finance – their investment ideologies?

2. What are the services they offer – whether only mutual fund related or a full-line viz. financial planning and investment planning among others?

3. What is the technical competence of the team?

4. What are the processes and systems the robo-advisory platform follows to recommend mutual fund schemes?

5. What are the qualitative parameters used, if any?

6. Are they unbiased and independent, or working for commissions?

7. How transparent are they while charging you?

8. What is their track record?

[Read: 5 Simple Steps To Select A Good Robo-Advisor]

Raghav even learnt that a good Robo- advisory platform proposes only direct investment plans and recommends the SIP (Systematic Investment Plan) route in the journey of wealth creation and accomplishing financial goals.

By choosing direct plans you avoid paying more commissions in form expense ratio to make a positive difference to your investments every year.

These plans generate roughly 0.5% to 1.0% additional returns every year because of lower costs which would otherwise be missing in regular plans.

It may seem irrelevant initially, but, if you sow seeds of these small savings, you may harvest rich rewards over 15- 20 years — thanks to the power of compounding.

Graph: Even 1% difference in expense ratio makes a HUGE difference

(Source: PersonalFN Research)

As can be seen in the chart above, a small difference in costs can result in savings of anywhere between Rs 8-17 lakh over 20 years, on a Rs 10 lakh investment.

Yes, you can earn an additional amount of as much as Rs 17 lakh, if the difference in costs is as much as 1% point.

The final portfolio value varies with the magnitude difference in expenses.

Every 0.25%-point difference in the expense ratio works out to an additional earning of Rs 4.50 lakh in 20 years’ time, for Rs 10 lakh of the initial investment.

Hence, always choose a robo-advisory platform that offers only Direct Plan over a Regular Plan while investing in mutual funds.

After doing extensive research, Raghav opted for PersonalFN Direct a robo-advisory platform from PersonalFN. Here’s why Raghav took this decision:

1. Backed by a company with 15+years of research experience

2. Offers customisable solutions as per his risk-taking ability

3. Offers only DIRECT PLANS – enabling to him to Save and grow money

4. Minimal paperwork and brings in ease while transacting

5. Comes at a pocket-friendly price

Raghav has started using PersonalFN’s efficient Robo-advisory platform to accomplish his envisioned financial goals. Have you?

Editor’s note:

If like Raghav, you do not have the time to handle your finances, you should choose PersonalFN Direct.

PersonalFN Direct will help you;

• Save for your wedding expenses

• Save for your international vacation

• Save for your child’s future expenses ––higher education and wedding expenses

• Become financially independent

What are you waiting for?

Become a paid subscriber of PersonalFN Direct today and embark your journey to financial freedom today!

Happy Investing!

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