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Robo advisory services are the example that proves everything can and will be replaced by technology.

A digital wealth manager also called -Robo advisor, makes use of an algorithm and software to manage the portfolios of its users in order to maximise gains. They generally have little to no human interference in the investing decisions. The Robo advisor first asks a series of questions to determine its user’s financial goals, time period of the investments and the risk appetite. It then analyses the answers and designs a suitable and personalised portfolio. The decisions made are based on the global economic conditions and statistics. Robo-advisors are now expanding their business into tax loss harvesting (booking of losses in order to reduce tax liability), planning for retirement funds suggesting retailers on how much to save and use. It is extremely popular among the younger generations.

The Robo advisors are of two types: – Fully Digital Robo Advisors and Hybrid Robo Advisors. Fully digital Robo advisors are dependent on the algorithm completely and have no human interference. Hybrid advisors on the other hand, gives the algorithm and software a human touch. It enables its customers to get guidance and advice over calls with human advisors. This results in a cost effective yet personalised service offering.


The digitalization of advisory services had started in the beginning of the 2000s. Betterment was the first Robo advisor app which introduced the concept to the general public. The app was first launched in 2008 by Jon Stein and Eli Broverman and it started dealing with customers only in 2010. This was a revolutionary concept and was much needed after the 2008 financial crisis. It was seen to make financial services accessible as the Robo advisors charged fairly low when compared to the traditional advisory services. It was an instant success as it gathered 400+ customers on the first day itself. 8 securities, launched in 2015 was the first Asia based digital wealth manager.

Market capitalization

The pandemic helped the services to get the much-needed attention as the need for wealth management and growth rose. The ability of the algorithm to eliminate careless decisions has proved to attract a lot of investors. The sector is expected to grow at a CAGR of 40.3% by the year 2025 and the penetration rate is expected to increase to 6.1 %. The rapid automation and internet spread has been acting in the favour of the industry.

North America is expected to be the dominant player even in the coming years because of the presence of global leaders like Betterment and Wealthfront corporation. Asia Pacific is expected to have a very high growth CAGR in the coming years.

In India, the assets under management with Robo advisory is expected to grow at the CAGR of 43% and reach around 53.9 billion by the end of 2025. It is expected to serve 33 crore Indians as per the reports of Statista. Some of the key players are Kuvera and Small case.

Difference between Traditional, Fully Digital Robo advisors and Hybrid Robo Advisors


  • Traditional advisors have a personal connection to the users and the services can be highly personalised. They are generally preferred by HNIs (High Net Worth Individuals).

  • Hybrid advisors have a lower fee when compared to traditional advisors and can have a personal connection with the users while benefiting from the algorithm made strategy. Less prone to human biases and more personalized when compared to fully digital advisors.

  • Robo advisors have the least cost and are completely free from human biases. The algorithm can scan through more investment opportunities when compared to humans. It has a lower minimum balance. The cost of Robo advisory services is around 1% to 0.5%.


  • The traditional advisors charge a very high fee. It relies only on humans and hence can scan through limited investment options and have preconceived notions which can hamper the portfolio.

  • The human advisor of the hybrid advisory may make a careless decision. During the times of a financial crisis, the demand for human advisors would increase leading to inefficient service.

  • Fully digital Robo advisors have no human support which may be a negative for a country like India where face-to-face interaction is considered vital in case of monetary matters. The software may not be able to understand the complexity of certain unprecedented events like the pandemic. The services are not fully personalized currently.

SEBI and Robo advisors

SEBI (Investment Advisors) Regulations, 2013 governs Robo advisors. Currently there are no definite regulations for Digital advisors. The rules and regulations applied to Traditional Advisors, Fully Digital Robo advisors and Hybrid Robo Advisors are the same.

Sebi doesn’t consider a digital agreement to be valid and hence demands a physical agreement. This has posed a threat to the revenue of digital advisory firms as all of the agreements were signed digitally in case of digital wealth managers.

The Digi advisory services are here to stay and gain larger market share. Due to the requirements of a low minimum balance and lower fees, they have a raging success with Millennials and Gen Z. Hybrid Robo Advisors services appeal to older generations since they provide the human touch and assurance that many elderly investors require. The digi adviser, with its regularly updated algorithms, will assist investors in maximising their returns on a large scale.

By Khushi Karira


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