When 18-year old Sankarsh Chanda conceptualized Savart in 2016, it was to build a high tech investment advisory company with an algorithm-based system to help people manage their money better. His mentor, however, asked him to conduct an on-ground survey. On speaking to people, he realized that some very basic problems kept people away from investing in the market.
Armed with that information, he launched Savart in 2017 to cater to retail investors starting with small amounts of investment for the first time in their life. And the idea of retail advisory and investment business driven by technology transformed into Savart.
Savart began with the AMFI distributor license for regular mutual fund distribution. In 2019, after it received the SEBI license for registered investment advisor, the startup switched to an advisory model completely. While Savart did experiment with allowing investors through tie up with brokers, it has now switched to a fully advisory model.
It currently manages around Rs 200 crores of assets under advisory.
Personalised portfolio advice for a fee
Where Savart essentially differs from traditional advisors is that it offers personalized portfolio advice based on the customers unique needs, goals and risk appetite. Chanda says, “When each investor is unique and their goals, risk appetite is unique, why shouldn’t your portfolio be; and that’s not a very radical idea or a revolutionary idea in itself because that’s so common with high-net-worth investors (HNIs). They always have a customized portfolio and this customization is associated with a high cost.”
Most HNIs manage their wealth through portfolio management services (PMS) and wealth managers. But the ticket size in these investments is upwards of Rs 25 lakh. Services of a relationship manager or a personal advisor come with a high cost for small retail investors.
Savart is attempting to bring the tailor-made investment advice and bespoke portfolios to the retail investors as well.
“To achieve this, our advisory platform leverages AI and ML for robust market research as well as the proprietary Emotional, Financial and General Analysis (EFG) to perform a holistic analysis of the investor’s needs.”
Chanda says technology is easily scalable, and makes customized advice affordable as it is run via a tested and tried algorithm. “We bring micro level customizations to our clients and help them with tracking of the portfolio without making it unaffordable.”
Savart today has 10,000 unique portfolios that it runs and tracks real time for its investors. He says it is not easy to manually track 10,000 portfolios and understand their components in terms of intra-asset allocation, inter-asset allocation or the tranches, in which the money is invested or executed.
So how does it acquire customers? Chanda says it has been completely organic through the exposure that the company got over time through videos and textual content. Currently, the company does not have a marketing team, but its sales team interacts with the prospective clients that come on to the platform and interacts with them.
“The thrill that we derive from helping retail investors make money is unparalleled. Somebody who’s investing Rs 20,000, we get another Rs 5000 – 6000 of profit for them; that excitement is great,” Chanda says.
Most of its customers are young, and a majority of them in the age group of 25 to 34. Around 3/4th of its clientele are first-time market investors.
And the rest have around 5-6 years of investment experience they would already have through another advisor or through their personal research. Their investment generally starts at around Rs 5000 to Rs 10,000 a month and then as they gain trust they increase it by four or five times.
Making customized investment advice affordable
The company has three different plans based on the geography of investment – India, the US and Canada. For up to four lakhs of investment advice, subscription charges are Rs 2500 rupees per annum and for investments over Rs 4 lakhs, 0.5 per cent upfront free.
But are people willing to pay for investment advice as traditional brokers typically do not charge a fee? He points out that there are no free lunches and when investment advice is offered for free, the fee is charged to the customer somewhere either in the brokerage or in their account maintenance charges.
He also points out the conflict of interest as brokers encourage investors to trade and transact more.
Unlike traditional brokers, Savart does not focus on getting people to transact more.
Savart’s entire philosophy is based on having less activity churn as much as possible and to buy, and forget and bring in the discipline of long-term investing.
“One of the key aspects that we discussed of personalization, somebody who has a goal three years down the line and wants to withdraw their money, their perspective towards investment will be completely different,” he adds.
Savart is primarily focused towards equity investments, but also advices on debt investments either through mutual funds or bonds and gold.
On goal-based investing, he says each goal has a different time horizon and a one-size-fits-all portfolio may not be adequate. Savart is working towards launching the advanced version of goal-based investing in September or October this year.
Chandra says there has been a big change in sentiment towards equity investments in line with the stock market boom.
“The questions earlier were why should we invest in stock? How should we invest in stock? Now the question we see is how do you or what are you offering different from other advisors. So the questions have kind of matured,” he says.
Gold has definitely slightly fallen out of favor among Savart’s younger investors. Chanda has recently stepped down as the CEO though it’s yet to be formalized and would take on the role as Chairman and focus on their AI investment research product Vantage. Hiren Chandariya has taken up the executive role and would be spearheading the growth and overall operations of the business.
Savart is also working towards allowing its investors to invest in private equity investments with a ballpark figure around Rs 25000. “We are still at least 6-12 months away from having a breakthrough with getting private equity for retail investors because private equity generally has been a game for the bigger investors.”
(Deepa Nair is a Mumbai-based journalist specialising in finance and international affairs.)