Why Robo-Advisors Are Gaining Popularity in India for Financial Planning in 2025?

​In 2020, Rajesh, a 30-year-old IT professional from Bengaluru, found financial planning complex and costly. Traditional advisors charged hefty fees, making him hesitant to seek guidance. 

Fast-forward to 2025. Rajesh now uses a roboadvisor, an automated platform that offers tailored investment advice at a fraction of the cost. He's not alone in this shift. India's wealth-tech investors have grown from ₹40,00,000  in FY20 to an anticipated 1.2 crore by FY25, driven by rising investor interest and technological advancements. 

This surge reflects a broader trend: more Indians are embracing robo-advisors for their financial planning needs, attracted by their affordability, accessibility, and user-friendly interfaces. 

As digital literacy and smartphone usage rise, these platforms democratise financial advice, making it accessible to a broader population. Keep reading to discover how robo-advisors transform Indians' approach to wealth management. ​

Growing Awareness of Digital Wealth Management

For years, financial planning in India was seen as something only the wealthy could afford. But in 2025, thanks to digital wealth management, more people are taking charge of their finances. 

Robo-advisors, which use technology to create investment plans, are gaining popularity. They make investing easy for first-time investors and experienced ones alike.

With more than 80 crore internet users and over 75 crore smartphone users in India, digital platforms are becoming the preferred choice. 

Many young professionals, freelancers, and small business owners now use robo-advisors to manage their money. They no longer need to depend on expensive financial advisors or struggle with confusing investment options. 

The simplicity of these platforms and automated investment strategies encourage lakhs of Indians to start their financial journey confidently.

Cost-Effective Alternative to Traditional Advisors

Hiring a financial advisor in India can be expensive. A professional wealth manager may charge between ₹25,000 and ₹1,00,000 per year or even more for high-net-worth individuals. 

On the other hand, Robo charges a much lower fee—sometimes as little as 0.25% of the investment amount.

For example, consider Meera, a 28-year-old marketing professional from Pune. She wanted to invest ₹5,00,000 in mutual funds but found that a financial advisor would charge her nearly ₹20,000 annually. 

Instead, she used a robo-advisor, which charged her just ₹1,250 a year while offering her personalised recommendations. This cost-saving factor is a significant reason why more Indians are switching to robo-advisors.

1. Low Management Fees

Traditional financial advisors charge high fees for investment planning, tax-saving strategies, and portfolio management. 

In contrast, robo-advisors operate at much lower costs. A robo-advisor typically charges between 0.25% and 0.50% of the assets under management, making it a budget-friendly choice for investors.

2. No Hidden Charges

Many financial advisors have hidden charges such as transaction fees, commission-based product selling, and service fees. Robo-advisors follow a transparent pricing model. Users know exactly how much they pay upfront, making financial planning stress-free.

3. Affordable for Small Investors

One significant advantage of robo-advisors is that they allow people to start investing with as little as ₹5,000 or ₹10,000. Traditional advisors usually cater to clients who can invest ₹5,00,000 or more. This low entry barrier means salaried professionals, students, and homemakers can all begin their investment journey without hesitation.

4. Monthly SIPs Made Easy

Systematic Investment Plans (SIPs) are a popular investment method in India. Robo-advisors make setting up SIPs simple and automatic. Investors can start a SIP with just ₹500 per month, receive timely reminders, and get automatic portfolio adjustments based on market trends.

5. Comparison of Costs

The table below shows a cost comparison between traditional financial advisors and robo-advisors for different investment amounts:

AI and Machine Learning Enhancing Investment Strategies

Robo-advisors do more than suggest investments—they use Artificial Intelligence (AI) and Machine Learning (ML) to make smart financial decisions. These technologies analyse millions of data points to create the best investment plan based on investors' risk appetite and financial goals.

Take the example of Anil, a 35-year-old businessman in Hyderabad. He wanted to invest in stocks but was unsure about market risks. 

A robo-advisor analysed his spending habits, income, and market trends to recommend a low-risk investment portfolio. Within three years, his investments grew by 15%, all without him spending hours researching stocks.

1. Personalised Investment Advice

Unlike traditional advisors who may offer generic advice, AI-powered robo-advisors provide personalised recommendations. Before suggesting investments, they consider factors like income, expenses, market trends, and future goals.

2. Real-Time Market Analysis

AI-driven platforms constantly monitor market changes. If an investor’s portfolio needs adjustment due to a market downturn, the robo-advisor suggests changes instantly, ensuring better risk management.

3. Goal-Based Investing

Whether it’s saving for a house, a child’s education, or retirement, robo-advisors help set clear financial goals. They adjust investment strategies automatically to keep the user on track to meet these goals.

4. Automatic Portfolio Rebalancing

Markets go up and down. If certain investments perform poorly, robo-advisors rebalance the portfolio to maintain the right mix of assets. This ensures steady growth while minimising risks.

5. Tax-Efficient Investing

Some robo-advisors also optimise investments for tax savings. They suggest tax-saving mutual funds, capital gains harvesting strategies, and deductions under sections like 80C to help users maximise returns.

Easy Accessibility and User-Friendly Interfaces

Financial planning used to be complicated, requiring in-person visits to banks or financial advisors. Today, robo-advisors have changed this. They are available as mobile apps and websites, making investment planning as easy as ordering food online.

For example, Ramesh, a 32-year-old teacher from Chennai, started investing ₹2,000 per month through a robo-advisor. He found the process simple and stress-free, with clear explanations for every step. 

Today, he checks his portfolio on his smartphone whenever he wants. With accessibility at their fingertips, more Indians are feeling confident about investing.

Customised Portfolios Aligned with Financial Goals

Every investor has different financial goals—some want to save for a house, while others focus on retirement or travel. Robo-advisors create customised portfolios based on individual goals, income, and risk appetite.

For example, Arjun, a 40-year-old software engineer in Bengaluru, wanted to save ₹50,00,000 for his child's education in the next 10 years. His robo-advisor suggested a mix of equity and debt funds, automatically adjusting his investments as market conditions changed.

Types of Customised Investment Portfolios

Customised portfolios help investors stay on track without constantly worrying about their finances. With the power of automation and smart AI-driven insights, robo-advisors are making financial planning more effective and personalised.

Automated Rebalancing for Optimised Returns

Investing is not a one-time process. Market conditions change, some assets perform better than others, and financial goals evolve. Investors may face unexpected losses or miss growth opportunities if investments are not adjusted regularly. This is where robo-advisors help.

Robo-advisors automatically rebalance portfolios to maintain the right mix of stocks, bonds, and other assets. Instead of manually tracking investments, users get an optimised portfolio without effort. 

For example, Priya, a 35-year-old doctor from Delhi, started investing ₹10,00,000 in 2023. By 2025, her robo-advisor adjusted her portfolio four times, ensuring her returns remained stable despite market fluctuations.

1. Maintaining the Right Asset Allocation

Every investment portfolio has an ideal asset allocation, such as 60% stocks and 40% bonds. If stock prices rise, this ratio may shift to 70%- 30%, increasing risk. Robo-advisors rebalance automatically by selling some stocks and reinvesting in bonds to restore balance.

2. Reducing Risk in Volatile Markets

When markets crash, many investors panic and sell their holdings at a loss. Robo-advisors prevent this by gradually shifting funds to safer assets when risks increase. This ensures steady growth without unnecessary losses.

3. Ensuring Higher Returns Over Time

Regular rebalancing helps investors earn better long-term returns. The table below shows how automated rebalancing improves returns compared to a non-rebalanced portfolio:

4. No Manual Effort Required

Traditional investors must check their portfolios frequently and adjust holdings manually. Robo-advisors do this automatically, saving users time and effort. Investors can focus on their careers and personal lives while their money grows.

5. Aligning with Financial Goals

Rebalancing is not just about market changes; it also adapts investments to personal goals. For example, as someone nears retirement, a robo-advisor shifts funds from high-risk assets to safer options, ensuring financial security.

Integration with Tax and Retirement Planning

Financial planning is incomplete without considering taxes and retirement savings. Many Indians lose money due to poor tax planning and delayed retirement investments. Robo-advisors now integrate tax-saving strategies and retirement planning, helping users secure their future.

For instance, Ravi, a 45-year-old sales executive from Bengaluru, used a robo-advisor to invest ₹1,50,000 annually in tax-saving instruments. His platform automatically selected the best tax-saving mutual funds and fixed deposits under Section 80C, reducing his tax burden by ₹45,000 annually.

1. Automated Tax-Saving Investments

Robo-advisors identify the best tax-saving options for investors based on their salary and expenses. They recommend Equity-Linked Savings Schemes (ELSS), Public Provider Funds (PPF), and the the National Pension System (NPS) to maximise deductions.

2. Tax-Efficient Withdrawal Planning

When withdrawing funds from investments, taxes can eat into returns. Robo-advisors suggest withdrawal strategies that minimise taxes. For example, selling investments in smaller portions across financial years can reduce capital gains tax.

3. Long-Term Retirement Fund Growth

Many Indians start retirement planning late. Robo-advisors encourage users to invest early, ensuring higher wealth accumulation. The table below shows the difference between starting early and delaying investments:

4. Auto-Adjusting for Inflation

The cost of living rises every year due to inflation. Robo-advisors factor this in and increase monthly investments accordingly, ensuring that users have sufficient savings for retirement.

5. Hassle-Free Tax Filing Assistance

Many robo-advisors also generate annual tax reports, making it easier to file Income Tax Returns (ITR). Investors can quickly download statements showing their taxable income, deductions, and investment profits, reducing paperwork stress.

Conclusion

Robo-advisors are revolutionising financial planning in India, making investing easier, more cost-effective, and highly efficient. As technology continues to evolve, robo-advisors will become even more intelligent, offering better financial advice with precision. 

In 2025 and beyond, robo-advisors are set to become an essential financial tool for millions of Indians looking to secure their future.

FAQs

1. What is a robo-advisor?
 A robo-advisor is an online platform that provides automated investment advice and portfolio management using AI and algorithms.

2. How much money do I need to start investing with a robo-advisor?
 Depending on the platform, you can start investing with as little as ₹500 or ₹1,000.

3. Are robo-advisors safe to use?
 Yes, they follow strict regulations and use encryption to protect user data and investments.

4. Can a robo-advisor help with tax savings?
 Yes, robo-advisors recommend tax-saving investments like ELSS, PPF, and NPS under Section 80C.

5. Do robo-advisors offer better returns than traditional advisors?
 They help optimise returns by automatically rebalancing portfolios and using AI-driven investment strategies.

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