All of us know that investing in the equity market has a lot of potential and can generate huge returns in the long term. But for that, you need to do it right. One cannot pick up a random stock and start investing a huge amount of money waiting for it to grow. That is why you need someone to guide you through it and here’s what Jarvis Invest is doing for you.
The Founder of the company, Mr. Sumit Chanda has been in the BFSI segment for over eighteen years now. His experience is totally from insurance or wealth management companies. Eventually, he got the idea to come up with a tech-based wealth product and that is how Jarvis Invest was born in 2016. It is an AI-based product that does fund management and research autonomously. Here’s what he shared with team Sociobits:
Team Sociobits: How did you come up with the idea of founding a tech-based wealth product?
Founder: With the experience that I have gathered working in the equity-based product market, I realized that the end customer was practically not happy while investing. So, if you look at the retail customers that are investing in the equity markets and the HNI customers, have got structured products like PMS, and AIA (F) where they get expert fund managers to take care of their funds. On the other hand, retail investors are completely left to their own choice of investing; they can open a Demat account and start trading by themselves. This is the class that loses money the most.
We thought that why can’t we create a pseudo-PMS product for this segment of customers? That’s why Jarvis Invest was born. And to cater to a huge crowd with a hyper-personalized solution we incorporated artificial intelligence too. We clubbed in both, pseudo-PMS and AI to form Jarvis Invest.
That’s why Jarvis Invest was born. And to cater to a huge crowd with a hyper-personalized solution we incorporated artificial intelligence too.
Team Sociobits: For someone who is very new to investing, could you explain what is Jarvis Invest?
Founder: Basically when you start using Jarvis Invest, the platform will ask you a set of 15-20 questions to know you and your profile better. It will also ask you how much you want to invest, how long you want to invest, and on which day are you investing, and gathering all this information, the system creates an individual’s unique persona. Next, based on that persona, the AI system looks at around 12 million data points from global and domestic equity markets, considers all the macro and micro economic factors, and shortlists a set of stocks that would suit your persona.
In short, a portfolio is recommended to you for whatever amount you choose to invest. Apart from portfolio creation, we have integrated our system with around 21 brokers in the country and we are one of the platforms with the highest number of local tie-ups in the country. So, if your broker is one of the brokers listed on our platform, the transaction is also super smooth. It can practically happen in a single click. This is how your entire portfolio can be managed for about a year using JARVIS Invest.
Team Sociobits: Considering that I don’t know how long I want to stay invested? How does Jarvis Invest suggest that?
Founder: As I said, it’s a pseudo-PMS so it generates wealth over a period of time. Whenever a customer comes on our platform, we tell them that it is at least a one-year product. Though there is no lock in period in this as the money stays in the customers’ Demat account and they can sell and exit anytime they want. But, we still say that one should wait at least a year or two to generate a good amount of return on the platform.
Team Sociobits: How does your platform earn in this whole process?
Founder: We charge a nominal fee from the customer. We charge 2.5% annually in two parts; the first part is 1.25% upfront and 1.25% after six months. This is a six-month cycle that keeps going on and the customer also understands the performance before they pay for their next installment of fees. It helps us build confidence while the customer enjoys a decent amount of returns.
We are coming up with a concept of ’emotionless investing’. What happens is, when it comes to equity, a lot of emotional bias comes into the picture so, buying and selling becomes an emotional decision.
Team Sociobits: In India, financial literacy is less compared to other countries. How do you tell people that there is an option available like Jarvis Invest who are more or less unaware of the potential of investing?
Founder: That would require us to put more effort into branding but on top of this, we are coming up with a concept of ’emotionless investing’. What happens is, when it comes to equity, a lot of emotional bias comes into the picture so, buying and selling becomes an emotional decision. When it comes to making and losing money, people sometimes tend to behave erratically. This is something we are trying to avoid using technology because only when the technology says that ‘xyz’ is possible, you should exit or you should buy, only then you should act on it and not based on your behavioral triggers.
We are coming up with a concept of customer awareness and education and we will be feeding our customers with a lot of information as to how they should control their emotions when it comes to investing.
Team Sociobits: Let’s consider a hypothetical situation where everyone is using Jarvis Invest. And the AI recommends exiting a stock that around 20% of people are investing in, wouldn’t that be affecting the market?
Founder: In Jarvis Invest, we mention that these are hyper-personalized portfolios so, the system first needs to know your persona, and then it will recommend a portfolio. Everyone will have a different persona. So, tomorrow, even if I have 100,000 customers on the platform, there will be 100,000 different combinations of stocks and portfolios.
Generally speaking, this situation will never happen, until we reach that really big scale that we are so heavy on one stock and if we sell it, the whole market will tumble. That’s a challenge we will face when we reach there. Currently, we don’t need to think about that.
Everyone will have a different persona. So, tomorrow, even if I have 100,000 customers on the platform, there will be 100,000 different combinations of stocks and portfolios.
Team Sociobits: Could you point out some of the challenges that you faced?
Founder: If you look at the investment market, especially the equity market, for years it has been driven by traditional approaches. There is a broker, a sub-broker, and a customer who goes to the broker who sits there and trades. Now, all of a sudden you are explaining to the customer that you don’t even need to get up from the sofa, you can do everything on a mobile application. Somehow you also have to convince them that what a human couldn’t do, a system can do and do it better. This is a very big challenge as the market is filled with traditional approaches to investment and we are saying that we have the technology and we can do far better work than what a human can do. It may seem very small but it’s a very big challenge and we need to work for it. It’s been five years and we are still working on it and I think our emotionless concept and branding will help us overcome this.
Team Sociobits: Looking at Jarvis Invest’s concept, the branding will vary for different age categories. Which age category do you think would be more receptive to something like this?
Founder: Definitely people of this generation will be more accepting of the idea but the only difference will be that people who are between the age of 35-50, and above that have understood that money can’t be made in a short span when it comes to the equity market. So, they are the ones who are staying on the platform for long but if you look at people who are in the below 30 age category, are the ones looking to make quick money. We are also coming up with different products for specifically addressing this segment. Here, instead of a portfolio, we will recommend individual stocks. It is absolutely on the customer whether they want to invest in one stock or multiple stocks. We’ll be calling it ‘One Stock’. I think this option would excite this generation.
We are also coming up with different products for specifically addressing the young crowd. Here, instead of a portfolio, we will recommend individual stocks. It is absolutely on the customer whether they want to invest in one stock or multiple stocks.
Team Sociobits: What advice would you like to give someone from the younger generation who wants to start investing?
Founder: From my perspective, I think that when it comes to investments, equity is the place that anyone should be investing into, especially the younger generation. Because of the kind of money that equities can make, no other asset class can make it. This has been historically proven. Take any decade or right from the inception of equity, there is no other asset class that could beat equities.
There’s a lot of FAD going on with cryptocurrencies now, but that is a highly volatile market so it can make money or lose money in a day. On the other hand, equity is something that over a period of time will only grow. It may have volatility in the short term but after a longer period of time, it will only grow.
So, for the younger generation, equity is the best option. There are also many options to get into SIP-based equity if not a lump sum. But, I would say any investment in equity has to be long-term.
Team Sociobits: Now that you spoke of the products that Jarvis Invest is coming up with, what are some of your other future plans?
Founder: Until now, using our core product we were only managing portfolios. Now, we have sliced down our core product and we are coming up with a solution like One Stop where we recommend individual stocks and it depends on you how much you want to invest and whether you want to invest in it or not. But we will keep sending you recommendations at specific time periods.
We are also coming up with a product called Jarvis Protect. It’s very unique and no one in the country has a product like this. In this, even if you have invested with any broker, anywhere or you have another portfolio manager, you can upload those portfolios on our platform and the AI used in Jarvis Invest will keep alerting you if it identifies any risk stock in the portfolio. On top of this, we will come up with this at a very nominal charge so that people can make the most of it. It’s basically a tracking mechanism and we are not going to tell you where to invest, we will just tell you when to exit.
We are also creating an enterprise solution for fund houses. These fund houses research over months to pick 30-40 stocks that one can invest in. So, we want to reduce that time-lapse from a few months to only a few hours with our solution. This will give readymade insights to the fund houses or fund managers on the platform. They can simply refer it and create funds within minutes or hours.
We are also creating an enterprise solution for fund houses. These fund houses research over months to pick 30-40 stocks that one can invest in. So, we want to reduce that time-lapse from a few months to only a few hours with our solution.
We are also exploring a few global opportunities because we have been presented only in the Indian market for the last five – five and half years. We realized that we have global capabilities also then why wait? As we speak, we are registering a company with AIFC Dubai and once we have established, we will create similar global products and cater to global players.
Team Sociobits: Would you say that technology would make investing safer?
Founder: Absolutely! Since we only talk about 2 million data points that include many specifications, we process whether one should go and buy, hold or sell a particular stock. Assessing so many data points by a human is difficult and we are still scratching the surface when it comes to AI in finance. We don’t know where the technology can reach 10 years down the line, maybe we’ll be looking at 10 billion data points.
So, as we move ahead technology will improve and although it is already outperforming humans, it will outperform us further in a few years.
Team Sociobits: Is there anyone else like Jarvis Invest?
Founder: Not completely similar to Jarvis Invest. Majorly you will see human-based advisors but there is no clear player that is using AI for the whole process. We have hybrid players who are using AI and ML for some portion and some of it is still managed by humans. While we don’t have even a single analyst or fund manager on board and we are managing around 100,000 customers.
Team Sociobits: Since you have been in the investing sector for more than a decade, what are your thoughts on crypto?
Founder: I think that crypto is here to stay but it is still the early years for people to understand the product. Again, people are looking at it as a financial vehicle that allows them to make faster money. There may have been instances of it but that’s not always possible. People need to understand more about its fundamentals there are thousands of cryptocurrencies listed but there are only a handful of good ones. But the crowd is looking to identify that one crypto coin that would give them 1000x returns.
We are looking to get into crypto also but not immediately. We will be setting this up in UAE where will apply AI to crypto to markets to identify the potential coins. This still has some time. We will first capture the equity market and then move on to crypto!
People need to understand more about its fundamentals there are thousands of cryptocurrencies listed but there are only a handful of good ones. But the crowd is looking to identify that one crypto coin that would give them 1000x returns.
Fund managers definitely made investing easier but imagine AI coming into the world of investing. We can only imagine the potential Jarvis Invest holds with respect to the development of AI and also people choosing to invest in equity over traditional financial vehicles.