How Decision-Making Tools Helped Wealthtech ET Money Grow 48% YoY Against Industry’s 7%

Wealthtech startup ET Money (formerly SmartSpends) grew 48% year-on-year (YoY) during July 2021 to July 2022 period, with its assets under management (AUM) rising to INR 30,000 Cr (over $4 Bn). 

Of the total AUM, users have invested over INR 11,000 Cr ($1.4 Bn) on the platform itself, while INR 19,000 Cr ($2.7 Bn) came via investments imported by users on ET Money, the startup said in a statement.

“Between July 2021 and July 2022, while the stock market has been extremely volatile, ET Money’s AUM has grown by 48%,” the startup said. 

While the startup even grew at the rate of 70%-80% YoY before this period, the 48% growth came at a time when the overall mutual fund industry registered a decline in growth.

“Our growth significantly outpaces the mutual fund industry’s AUM growth of just 6.9% during the same period,” ET Money founder Mukesh Kalra told Inc42. “Once the market starts to rebound, we will grow 80-90% YoY.”

Founded in 2016, SmartSpends was a Times Internet company that helped users with expense management. It was rebranded in 2016 as ET Money to help users with personal finance management. 

Today, the startup’s USP products are its systematic investment plans (SIPs) (a no-commission-no-charge product) and a subscription-based investment decision-making tool called GENIUS. 

“The instant growth factor has been the SIP – where once a user starts a SIP, they continue to invest. The growth in the segment is perennial,” Kalra added. “The average SIP on ET Money has also grown by 8% while the same for the industry has fallen by 6%.” 

Kalra claimed that ET Money saw the 8% growth in its monthly SIPs while clocking 12 Lakh monthly transactions worth INR 275 Cr during the above-mentioned period. 

An average user on the platform invests nearly INR 1.5 Lakh yearly and 85% of its user base is in the 27-40 age group. Further, as the SIPs keep on getting added every month, the AUM is growing consistently with the users not stopping even when the market is volatile.

“We get consumers because we don’t charge commissions, making it a much more ‘unbiased’ platform. Besides, the large portfolio of products allows one to also invest in mutual funds from one place. That is what the consumers like – having a wide product range and unbiasedness of the platform. So, that continues to be our growth engine,” Kalra said.

Decision-Making Tools Powering Growth

While several competitors of ET Money offer ‘no commission’ products, the startup emphasised that it has evolved and is ‘democratising’ its advisory product. 

ET Money offers its users tools that offer investment strategies and advice on asset allocation rather than focussing on timing the market.

“What works in our favour is that we are always suggesting consumers earn higher returns. We help them make intelligent decisions for investments. Hence, we are creating several strong decision-making tools,” Kalra said. 

Currently, the startup offers a report card-style product called Mutual Fund Report Card, where one can evaluate a fund’s performance. Other products include a portfolio health card called Portfolio Health Check to help users analyse their portfolio vis-a-vis their goals, and GENIUS, a subscription-based recommendation platform that helps users make investments in equity and debt based on the investor’s personality.

“These initiatives have resulted in the company retaining 96% of its investors annually, with 60% of them investing every month,” the startup said.

Earlier, Kalra had said that the wealthtech market has not democratised and mass ‘productised’ the usage of asset allocation tools. The market has several edufintech products, but most of them are theoretical and largely available only to HNIs. 

Furthermore, a large number of decision-making tools in the sector are education-focused, whereas ET Money’s GENIUS applies the principles of a diversified portfolio, with a booking of regular profits and minimising loss. It offers a monthly rebalancing strategy in line with market downturns and focuses on higher returns during upswing markets.

“These consistent efforts to be on the right side of the consumers and enable them to make smarter outcome-based investing decisions have led us to this stage (on YoY growth of 48%). The industry has been volatile (because of the stock market), but since we focus on the decision-making tools, users rely on ET money as a platform more than any other place,” Kalra said.

SEBI’s EOP Framework To Boost Growth 

Recently, the Securities Exchange Board of India (SEBI) floated a consultation paper proposing a framework for execution-only platforms (EOP) such as ET Money. 

The framework proposes to levy a transaction fee on direct plans, Kalra said. This would mean that ET Money would be able to monetise its mutual funds’ services (from the issuing partners), making the business more sustainable. 

According to the framework, any entity that provides execution-only services in direct plans of mutual funds will be allowed to act as a registered intermediary.

“India is in the very early stages of financialisation of savings. We see headroom to grow to $20 Bn (from the current $4 Bn) sooner than we imagined and are also excited with the possible regulatory tailwind which will make our business even stronger and more sustainable,” Kalra said.

Besides, the startup also plans to enter the stockbroking market in the near future, he added.

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