I have just been observing that the payment aggregators such as Paytm, Phonepe and Mobikwik etc. have started offering wealth management services for their clients which is a very good thing as in just a few clicks an individual can start investments offered by various financial institutions.
This move will, in turn, lead to financial inclusion and would cover the majority of the crowd i.e. young generation.
Many of the Asset Management Companies (Mutual Fund Companies) are tying up with these aggregators to reach to wider audience and spread financial inclusion.
As promising as it sounds, there are few flaws while investing through these aggregators, in my opinion:
- If SIP’s could start with one touch the same could be closed/redeemed with one-touch which will, in turn, be detrimental for wealth creation. (Major Drawback)
- The threat of the existence of aggregators as they are operating in tech space which is really dynamic and fast-changing.
- It is not investor-friendly – in terms of adaptability.
- No Robo-advisory or self-advisory services for know-nothing investors.
- Lack of clarity on reporting and monitoring of investment portfolios.
Note: With the passage of time, these flaws may become irrelevant if there is any improvisation done by these aggregators in the future.
There are also few advantages of investing through these aggregators:
- Huge opportunity to tap the millennial market. With this model, they are trying to target people in the age of 20-30.
- Most of the MF schemes offered through these aggregators are direct plan i.e. no commission is being paid to any intermediary which maximises return of investors.
Disadvantages outweigh advantages of making investments through mobile wallet and thus it is advisable for investors to invest through traditional method i.e. through KYC registration agency (KRA), MF websites/offices or through the fee-based investment adviser.
There is an anecdote which I would like to share with you which is pertaining to investment performance:
Peter Lynch, Former Fund Manager of Fidelity Magellan Fund (Mutual Fund in the USA) said only two types of investors have made money in the proportion of the fund’s performance.
- Investors who have died and
- Investors who have forgotten their investment account password.
Moral of the anecdote:
If you don’t look at your investment portfolio very often, there is a very strong chance that you will perform better than most of the investors and with the advent of these aggregators we are bound to track our investments on a regular basis through their apps and this will in turn lead to impatience and impatience to under performance.
Disclaimer: This post is only for academic purpose and does constitute any recommendation to adopt any strategy for making any investments. The views expressed on this post are that of the author.