These 3 wealth managers want to re-write rules of financial advice. Will they succeed?

The founders of Dezerv: Vaibhav Porwal, Sandeep Jethwani, and Sahil Contractor

The onset of COVID-19 has led to many of us buying things online. That’s true for investments also. Anecdotal evidence suggests that at least 95 percent of mutual fund (MF) inflows come through the online channels, instead of physical cheques earlier. According to the data from the Indian mutual fund industry, there are five online platforms, among the 15 largest in terms of new systematic investment plan (SIP) accounts, that were added in the April-June 2022 quarter.

Dezerv Investments Ltd aims to join this club of a growing number of fintech wealth management firms that aim to bring in investors into the financial world by the busloads. Founded by Sandeep Jethwani, Vaibhav Porwal and Sahil Contractor, dezerv. is an online wealth management firm that offers investment portfolios across mutual funds, bonds and alternate assets.

The question is: How will dezerv. inspire confidence among investors when robo advisors — online platforms with no physical advisors — couldn’t disrupt the market a few years ago like they were expected to?

Packaged portfolios

At the heart of it, dezerv. is an investment advisor. However, unlike registered investment advisors (RIA) registered with the capital market regulator Securities and Exchange Board of India (SEBI), who give personalised investment advice, dezerv. has packaged portfolios. These are baskets of schemes made by its internal research team of around 14 people. Each of these baskets consists of mutual fund schemes.

For instance, you could choose between five portfolios of mutual fund schemes across equity, fixed income, gold and international schemes, depending on your risk profile.

For those with a taste for riskier strategies, dezerv. runs 10 portfolio management scheme (PMS) strategies. While the minimum investment for its MF baskets is Rs 50,000, its PMS strategies require a minimum investment of Rs 50 lakh, in keeping with SEBI guidelines. The PMS strategies come with a combination of mutual fund schemes and bonds.
dezerv. also helps you invest in early-stage start-ups. The firm is also a SEBI – Category-1 Alternate Investment Fund (AIF) manager. Jethwani explains that once the firm has identified enough start-ups to invest in, it raises money from investors and then gives the option to them as to which of the identified start-ups the investor wishes to invest in.

Online: convenience…

dezerv. aims to tap investors who are tech savvy.

“One set of investors are those who would like to do everything on their own. They do their own research, choose schemes on their own and go to platforms like Groww and Zerodha and buy MFs. The other set of customers are, potentially working professionals in their full-time jobs, who may not have the time to spare for the investment process. And when you don’t have the time, you sometimes make investment mistakes or money continues to lie in your bank accounts,” says Jethwani.

He explains that dezerv. targets bank customers who may have been mis-sold products by their relationship managers. Jethwani says that a low number of investment advisors and the inability of bank relationship managers have enabled platforms like dezerv. to enter the space of wealth management.

Some of its more prominent competitors in the packaged portfolio space are Scripbox, FundsIndia and Wealthy.in. These are essentially technology firms that recommend baskets of portfolios. Every few months — or once a year in dezerv.’s case — they rebalance the schemes. Customers are either nudged to buy and sell schemes, on their own, accordingly, or the firm takes consent from them and does the rebalancing on behalf of the customers.
By offering somewhat of an advice with a lot of technology ease and convenience, online wealth management firms like dezerv. are aiming to catch the young and the mature investor.

…or wanting trust?

Critics say that it might be tough for large investors to stick to the online way of investing beyond a point. “When portfolios become bigger over time or when investor contributions go up over time in keeping with the growth of salaries, sit’s tougher for people to trust online firms,” says the head of marketing at an online wealth management firm. Especially, since dezerv. runs PMS schemes and aims to go in the Alternative Funds’ space too where the minimum investment threshold limit at the start itself, runs into lakhs.
Srikanth Meenakshi, Founding Partner & Head, Platform and Technologies, says: “The more affluent a person gets, the more hand-holding she would want. Online is good for that ease of investing, seeing your portfolios and valuations. But in times of extreme volatility, a physical contact is necessary especially if you are investing large sums of money.”

Meenakshi earlier co-founded FundsIndia.com and ran it for many years till a bitter feud with its private equity investors led to the ouster of the co-founders. Meenakshi, then, co-founded Prime Investor, a subscription-based investment research firm, with two former FundsIndia employees.
Jethwani says that he is aware of the need to have close contacts. “There will be a need for handholding and guidance. Over time, we will increase our capacity internally to provide for more calls. But they needn’t be physical and face-to-face meetings. Even today, we have some of our users doing Zoom calls with the team when they need more help,” he says, arguing that such cases would still be few and far between.

To that extent, Jethwani believes that his firm is not a traditional robo-advisor. In fact, Jethwani frowns upon being called a robo-advisor and insists that dezerv. is not a robo advisor. He says that unlike the earliest robo-advisors that used to ask users a few questions and then an algorithm at the backend used to put forth a bunch of MF schemes it thought were suitable, dezerv.’s internal research team curates portfolios as per 5-10 risk profiles and investment strategies between its MF and PMS offerings. “There is a human element involved in the way we construct portfolios and monitor them,” he adds.

Will dezerv. succeed in filling that large space between pure mutual funds distribution and personalised advisory? Only time will tell.