By Kiran Nambiar, Co-Founder & CEO, MyFi
This is a time for financial transformation in India. An expanding middle class, coupled with technology advancements, a surge of mutual fund folios by 32 million and demat accounts by 36.9 million, marks a new era of investor participation (Economic Survey 2024).
However, despite the vast potential for wealth creation with the rise of the affluent class in India, it is accompanied by a concerning trend: a disproportionate number of investors, ranging from young professionals to blue-collar workers, are engaging in high-risk, speculative investments without fully comprehending the associated dangers.
A shortage of financial advisors compounds the problem. With limited access to expert advice, investors often rely on information from friends, family, “tipsters”, etc. Most of them are likely not qualified to make such recommendations. This gap between investors and advisors creates opportunities for misinformation and risky bets. While there are over 120,000 Mutual Fund Distributors (MFDs), they are often incentivised by commissions. In contrast, Registered Investment Advisors (RIAs), who offer fee-based, client-
centric advice, are limited in number due to stringent entry requirements. This imbalance, coupled with the sheer number of investors, creates a significant gap in the financial advisory landscape. Even assuming every financial advisor is adequately equipped, the current ratio of advisors to investors—over 1:1200— necessitates a radical reimagining of financial services to
provide personalised guidance to every investor.
This is where AI-powered platforms emerge as a catalyst for change, offering personalised financial guidance at scale. By leveraging advanced algorithms and vast datasets, AI can make financial knowledge more accessible. It can provide investors with timely, relevant information, from basic financial planning to complex investment strategies. Imagine a world where an app can guide you through all major financial decisions; from buying a house to starting a business, or even tell you how you should allocate your monthly salary. With India’s robust Digital Public Infrastructure, and the advent of GenAI, this vision is no longer a distant dream; it’s within reach. Traditionally, financial planning has been a privilege, accessible to a few. AI disrupts this paradigm by democratising access to sophisticated financial tools. This technology isn't a magic bullet, but it levels the playing field and empowers people to make informed decisions about their financial future. Think of it as a compass in a complex financial landscape, guiding you towards future wealth creation by aligning you to your investment goals with purpose and clarity.
The integration of AI in wealth creation is heralding a new era of opportunity and innovation. As AI continues to evolve, they are fundamentally reshaping traditional paradigms of financial planning and investment strategies. From personalised portfolio management to predictive analytics, AI is helping investors and financial institutions to navigate complexities with precision and foresight. AI, armed with a user's financial data, can make personalised recommendations that are true to who you are and where you want to be. It can analyse the entire NISM syllabus, alongside other relevant and reliable sources, combined with current market data and your personal financial accounts, to give you the best set of options. But AI’s capabilities extend beyond just generating recommendations. You can request detailed explanations for specific investment decisions, ensuring you make informed choices. Often, AI can access and process data points that even human advisors might not have immediate access to.
This is not to say that AI will replace humans, it’s quite the contrary, AI will enable advisors, MFDs, and other professionals to handle more clients, armed with more accurate information. While most customers could start with an entirely digital journey, this could become a 90/10 or 80/20 solution where you access human guidance when it gets complex, savings grow and you encounter intricate financial challenges.
Having said that, people often ask me about the boundaries of possibility with AI. My answer has always been that everything is possible. It boils down to time, resources and imagination. It’s truer today than ever before. We have a collective responsibility to harness this technology into something that truly transforms the lives of millions, if not billions of people both in India and across the globe. As the choices we make today determine the financial well-being of generations to come, our goal should remain constant – building an ecosystem where every individual has the power to build and secure their financial future.