Covid-19 impact | People willing to pay for expert investment advice
On digital channels as many as 40-45% of the investors seek advice on asset allocation and investment tools for goal planning such as child’s education and retirement
Investors are showing a higher preference for online channels for investment and post-Covid, as much as 60-70% are considering digital channels in India, said global consultancy major McKinsey & Co in a report.
McKinsey conducted a survey on the mutual fund industry in India and spoke to 500 respondents for the study.
61% for only digital
It found that 61% of the respondents preferred only digital channels while 16% go for both online and offline routes.
Only 23% of the investors prefer only offline avenues for investment.
Listing out the trends in the market, the consultancy major said there was a growing demand of “personalised digital advisory”. McKinsey also noticed an increasing need for advisory across different segments with “much higher need in emerging wealth segments.” The clients also don’t want advice for free and are willing to pay for the service, the study noted.
Aggregator firms
McKinsey also predicted that aggregator firms are likely to disrupt the distribution market by with their huge digital reach. Over the next three to five years, these aggregators will add more clients thereby expanding their reach even further.
Disaggregating the market share of channels in FY19, the report stated that 3.5% of the assets under management at the retail level were invested through websites of the fund houses, 1.9% were through online channels of distributors and 94.6% were attributable to other channels and offline avenues. In FY20, the shares were 5.8%, 3.9% and 90.3% respectively. In Q1 of FY21, the shares stood at 6.1%, 4.7% and 89.1%.
In February 2020, SEBI allowed investor to directly buy and sell mutual funds through stock exchanges without necessarily going through brokers and distributors.
Advice sought online
On digital channels as many as 40-45% of the investors seek advice on asset allocation and investment tools for goal planning such as child’s education and retirement, said the report.
Young investors are willing to experiment with products which drives demand in innovating product designs such as thematic investing and goal-based investing.
The overall asset management market of India has surpassed Rs 50 trillion, the report said.