Fintech Tracker: Can BigDecisions.com Replace Your Financial Adviser?

Can your trusted financial adviser be upstaged by a data analytics platform? Can the comfort of advice over a cup of tea be replaced by a computer programme?

Bigdecisions.com believes the answer to those questions is yes.

The company was founded in 2013 by Manish Shah, an alumnus of the Indian Institute of Management, Ahmedabad, who worked with Citigroup for a decade; and Gaurav Roy, who started out as a software engineer with Wipro and then became the head of products at AEGON Religare Life Insurance.

Shah and Roy felt that people were being bombarded with financial products but what the market really needed was help in creating a strategy to achieve their financial goals. According to them, most people are unaware of their financial needs, making it tougher to sell the right products to them. This view, they believe, is borne out by the low single digit penetration of financial products like insurance in India.

To fill that gap, Bigdecisions.com, which provided algorithm-based calculators with the aim of creating financial literacy, was launched. While the company was initially bootstrapped by the founders, US-based News Corp bought out the company for undisclosed amount in 2014.

In Search Of A Niche

There is no dearth of financial advice in India. From bank relationship managers to financial planners, customers have a range of options to pick from. Those interested in specific products like a home loan or an insurance policy, also have the option to log in to portals like bankbazaar.com, apnapaisa.com and policybazaar.com among others.

How then does bigdecisions.com differentiate itself?

According to Shah, while other web portals provide information either on insurance, mutual funds or bank credit, they focus primarily on selling these products rather than helping a user figure out a comprehensive strategy to achieve financial goals.

In contrast, Bigdecisions.com has built calculators to help users plan for their retirement needs, income tax payments, life insurance cover, education costs for their children and any other financial objectives they may have.

To get started, customers have to enter specific data points.

For example, for the retirement calculator, a user needs to enter details of his income and that of his spouse, his current expenses on rent, transport, and healthcare, and current savings. BigDecisions.com builds in assumptions on inflation and throws out a plan which they think is most suited for the client.

There are others who are now offering similar services.

This includes online financial literacy portals like Jaagoinvestor.com and ETWealth. Aditya Birla Group’s MyUniverse, FundsIndia, and Scripbox are online distributors of mutual fund products and also offer advice on financial planning.

BigDecisions.com says that unlike its peers it attempts to straddle multiple financial products and does not advise on company specific products yet.

Apart from the growing competition in the online segment, there is also the question of whether online advice can replace personalized advice from financial planners or if it will eventually be an add-on.

Missing The Human Element?

Financial planners believe that algorithm-based analysis does not provide the complete picture and therefore cannot conclusively suggest a clear roadmap for an individual to achieve his or her financial goals.

“Data analysis throws up interesting statistics and data crunching gives indicative guidelines on schemes,” said Kartik Zhaveri, a certified financial planner at Transcend-India. “One has to remember that there’s an emotional element to the big spending decisions in life. For example a machine cannot tell you whether you should sacrifice your retirement plans for a little while and prioritise your child’s education.”

But Zhaveri agrees that financial planners in the current context are generally consulted by those with higher incomes. The introduction of robo-advisory will give many more people access to the benefits of prudent financial planning, he said.

“But here’s the irony–the reality is that a high networth individual can actually afford to go with a standard algorithm-based scheme to grow his income, but a person who has less money would need more hand-holding.”

Creating A Viable Business Model

Given the competition from both online and offline advice, creating a viable revenue generating model will not be easy.

BigDecisions.com is currently free to use. Visitors to the website can make use of its many calculators to get a clearer picture of various aspects of their finances, like how much tax they will have to pay, how much life insurance they would need, and how much they would need to save for their retirement.

“The business model is broadly two-fold,” said Shah. “The first side of it is really to help you understand consuming content. So you use tools, you engage with tools, you tell us a lot about yourself as you use those tools. So the first layer, which is the business model, is much more media like, which is that we partner BFSI brands.”

The next stage, according to Shah, will be to go deeper. As users start to understand where they stand financially and what they need to do to achieve their goals, Shah assumes that they would like to get more detailed and personalised in their financial plan.

Shah did not divulge information on the financial performance of the company but said that they are not unduly worried about revenue generation at this stage.

He believes that revenues on the company’s advisory business will remain small for another year but will take-off after that. With that in mind, he expects BigDecisions.com to break even in three years.

This report is part of a series profiling fintech firms changing the way financial services operates in the India. The series will play out every weekend on Bloombergquint.com