IIM-A graduates' Expowealth helps young investors get bang for their buck by managing their investments

With a strict no-commission approach, the Mumbai-based startup is aiming to stand out in the up and coming robo-advisory scene in the fintech space

Financial planning is a dreaded exercise for many. Most of us either don't have the wherewithal to understand the ramifications of our decisions or palm off the responsibility to others whose only qualification is that they're a good friend who knows a thing or two about money.

Kushal Kothari and Arjun Bharadwaj, who were college mates at IIM Ahmedabad, realised the need for a startup that manages the personal investments of people.

The idea for Expowealth struck when Kushal was doing his research at college.

He reiterates,

“When it comes to retail investments, people do not have much knowledge. Further, personal investments are made based on personal relationships with individuals or banks and other institutions, without the use of any logic.”

In order to make personal investments and financial planning easy, they started working on Expowealth last May.

Prior to IIM, Arjun had worked as a market and risk analyst with Bank of America in Hong Kong, while Kushal had worked as an analyst at JP Morgan in Mumbai.

The beta product for Expowealth was launched in January this year, with the platform open to individuals around March.

Helping you earn extra

From Public Provident Fund (PPF) to insurance, the market is filled with investment options, but the duo decided to concentrate on mutual funds.

“The main problem with mutual funds is that there is a conflict of interest that runs in the industry,” says Kushal, explaining that higher interests may lead advisors or brokers to sell inferior portfolios.

The duo, therefore, sought to sell direct plans (open-ended and growth schemes) on the platform. This ensures that what consumers buy is directly from the mutual fund company, without any intermediary in the middle taking a cut.

The founders describe Expowealth as a 'no-commission online investment planning platform selling direct mutual fund plans'. The platform not just looks at advisory but also looks at executing transactions, thus involving portfolio management services.

Further, the company plans to introduce goal-based investment by the end of this month.

The platform links to MF Utilities, a transaction aggregation portal that allows customers to transact across multiple schemes from different fund houses. This allows Expowealth to also give a consolidated dashboard view to the users about their past investments.

First-time users have to upload details of their PAN card, bank statements along with their KYC status. There is also a fund selection page, which allows individuals to do research on different funds and add them to the cart.

However, for the firm, their prime focus is on advanced investors in their late twenties and are second-time investors having an idea of what to invest in.

The firm’s revenue is based on a per-transaction model, where users have to pay Rs 149. The second model is the annual subscription model of Rs 1,800 per year, with features like goal planning, quick invest and infinite transactions linked to the plan.

At present, the firm plans to have a total base of 600 users with a tenth being paid users. The total value of transactions or the asset under management for this is close to almost Rs 32 crore.

The founders state that this revenue model will further evolve into a service-based fee model for different service levels.

This may include a quarterly or annual review of user’s portfolio through seasoned professionals.

This month, the firm is also looking to introduce a customised user portfolio index, which uses analytics to detail out the result of a user portfolio’s over performance or underperformance.

Additionally, the company is building its artificial intelligence and machine-learning algorithms and would go live with it by the end of this month.

In the next six months the firm is looking to approach big fund houses to integrate as service partners helping them understand their portfolio performance. At the same time, the platform is looking to onboard advisors only until they reach the 10,000 user mark.

Bootstrapped, the startup was a part of Startup Bootcamp in Mumbai and had received a grant of € 15,000.

The market

With multiple robo-advisory platforms hitting the scene, what makes Expowealth different from its competitors?

According to the founders, 90 percent of the robo-advisors are commission-based, taking a cut from intermediaries. This makes it free for the users.

However, the founders opine that Expowealth’s strict no-commission approach makes them stand apart from the crowd.

In the past few years, a plethora of wealth management and financial advisory platforms have emerged. Kuvera, Zerodha-incubated Balance and ProsperX have recently started operating in this space. Older players like FundsIndia, Scripbox and Zerodha have been functioning for a while now.

There is also PoAncho Solutions with its product iMoneyPlant looking at financial literacy and advisory.

However, robo-advisory is seeing increased activity over the past few months in the Indian fintech scene. Despite this, it still has to see some strong validation from investors in terms of funding.

And that’s not the only form of validation, with strictly bootstrapped players like Zerodha gunning for profits of Rs 120 crore.

However, the space is still nascent and one has to wait and watch for success stories.