The Role of Technology in Modern Financial Planning: Maximising Efficiency and Returns

India is seeing a transformative digital tsunami in our everyday lives. Technology has been the backbone of the heightened participation of the masses in investing over the last few years. The JAM trinity (Jan-Dhan, Aadhaar & Mobile) has transformed the financial landscape of the country over the last decade.

Since 2019, close to 135 million investors have registered as per NSE data. The surge in mutual fund participation has also been staggering with more than 80 million active SIP accounts, contributing more than 19,000 crores of monthly investments.

Around 65% of India’s population is below 35 years of age. The success of digital transformation in India can be credited directly to the fact that we are a very young nation who are more than willing to embrace technology-led change. This demographic dividend is also very visible when it comes to investing in products with higher risk-return than what was traditionally acceptable in the past.

A decade back, investing advice was restricted mainly to HNI’s alone. As India is rapidly progressing today, people irrespective of location have much bigger aspirations for themselves and their families. Today, investing to meet future goals has become a norm as people understand the need to create future wealth.

The key role technology has played in changing the way India invests:

· Mass awakening due to surge of information: digital platforms have brought a massive amount of awareness on the importance of investing. The spread of information through chats, social media platforms and investor awareness programmes has led to investors understanding the advantage of investable asset classes and risk-adjusted returns.

· Geographical inclusion: Tech-led investment platforms have made investing location agnostic. This has led to a huge increase in investors from every nook and corner of the country.

· Democratisation of advice: Through cutting-edge technology deployment, some investing platforms are breaking the scale vs customisation paradox. New-age business models are making hyper-customised investing advice and investing experts available by creating assisted softwares and a bionic business model by going virtual. This ensures a wiser generation of successful (and happy) investors. From ‘planning to invest’ to ‘investing to plan’, technology plays a critical role in customising this journey of investors and aligning the right products towards their goals.

· Convenience, speed, and safety: Technology has enabled the investor to access information, advice and transactions seamlessly at their convenience. With a strong regulatory framework, transparency, information availability & investor safeguard framework in place, access to quality investment products has gone mainstream.

· Process and Discipline: Technology can establish strong best practices and automate investments. Quality of interactions and advice can be controlled through tech deployment. Great returns are an outcome of a fantastic investing process and this is where the role of technology becomes critical. If technology can solve the behaviour biases of investors, this is the win-win situation we all can yearn for

· Knowledge Enhancement: Technology assists in doing the maths around investing. From understanding how much to invest for how long, to the impact of inflation and compounding. These precise calculations enable an investor to make informed investing decisions.

· Data Reporting and Visualisation: Today, technology has also been able to provide reporting and visualising capability of portfolios in greater detail thereabout bringing efficiency to financial decision-making. Fresh allocations or reviewing existing portfolio

allocations has become faster and smoother today. Moreover, machine learning and AI tools are making strides to bring about more relevance in the field of investment management.

· Return centricity vs. goal centricity: Evolved technology platforms are moving beyond not just helping people to start investing but also towards managing investment behaviour and building resilience to remain invested.

While technology has played a constructive role in enabling investments, there are several pitfalls that an investor should keep in mind when it comes to investing:

· Information clutter: Too much information leads to decision paralysis. Make sure technology plays a role in providing you with actionable intelligence and enables joint decision-making with experts.

· Investing based on past short-term returns: Greed and herd mentality can lead to a terrible investing experience. No one size fits all when it comes to investing. Moreover, because there is ease of transaction, hence can give rise to speculative investing and frequent portfolio churn.

· Recommendation trap: An investment product being quickly recommended online, without considering your needs and requirements first can lead to a mis-selling trap. Make sure the investment recommendations are customised as per your financial plan.

· Get rich quick scams: There are no shortcuts to wealth creation. Always apply logic and common sense. If it’s too good to be true; it probably is. Technology in the hands of scamsters and fraudsters can be very risky.

· Impulsive mis-buying: Stay away from complicated products that are difficult to understand. Have a trusted investment expert – No amount of technology can replace a trusted investing expert. Technology should be an enabler for you as well as for the investment expert. Investing is an emotional journey; you will need human expertise.

Conclusively, we believe that technology will play a critical role in modern-day financial planning. However, it will not be the sole foundation for investment success. A combination of human expertise, effective management of investor behaviour, and personalized investment roadmaps—all enhanced by technology—are essential for achieving investment goals and generating optimal returns.