Robo Advice Comparison

Science-fiction writers have long been predicting that robots will take over the world, and those predictions could soon come true in the lucrative investment advice market.

Recent years have seen the emergence of digital financial advisers – known as robo advisers – which take advantage of modern technology to offer low-cost investment management services. According to a recent Legg Mason Global Investment Survey, Singapore leads the world in terms of the proportion of people using the services of a financial adviser – with an impressive 61 per cent of respondents consulting human financial advisers and many are open to robo-guidance. In this guide, we explain how these robo advisers work and how can you compare the services offered by different providers.

Robo advisers in Singapore

What is a robo adviser?

A robo adviser performs many of the same services as a traditional financial adviser. Using complex algorithms and technology, these digital advisers provide financial plans to consumers and automatically manage their investments. The basic operation of these automated financial advice services is quite simple.

Once you provide details of your investment goals, investment timeframe and appetite for risk, the robo advice service generates a recommended investment portfolio, which is usually based on Exchange Traded Funds (ETFs). Once you’ve invested your money, the robo adviser manages your portfolio and re-balances it whenever necessary to ensure it remains in line with your risk tolerance levels.

Proponents of robo advisers say that instead of being influenced by emotion when making trades, digital advisers use algorithms and mathematical models to determine the right asset allocations for investors. They’re also much cheaper than having a traditional financial adviser actively manage your investments, with robo advice available for as little as one-tenth of the cost of receiving advice the old-fashioned way.

Digital advice services are based more on building and maintaining a portfolio than providing strategic advice, so most analysts predict that there will still be a place for traditional financial advisers in the future – in fact, the advantages the technology presents could be very useful tools for financial advisers. However, for the 80% of the population who either cannot afford or are unwilling to pay the fees to receive traditional financial advice, robo advisers offer a convenient and affordable alternative.

The rise of robo advice

The robo advice revolution started in the US a few years ago, and since then companies such as Betterment, FutureAdvisor and Wealthfront have enjoyed enormous success. Both Betterment and Wealthfront each manage more than $2.6 billion of customer assets, with the market expected to continue to rapidly expand in coming years.

In fact, research by KPMG has predicted that by the year 2020, robo advisers will manage around USD$2.2 trillion worth of assets. In Singapore, the robo advice sector is still in its infancy. We’ve profiled and compared the established players below, with several more providers expected to launch their own robo advice services in the next 12 months.

• Crossbridge Capital

  Launched in 2008 as an independent wealth management firm, Crossbridge Capital advises over US$ 3 billion of client assets and has offices in Singapore, London, Malta and Monaco. The company has recently launched CONNECT, a robo advisory platform for Singapore’s accredited investors, including expatriates living in Singapore. Under Singapore law, an individual accredited investor is a person who with at least S$2 million worth of net personal assets, or a yearly income of S$300,000. The new online platform was jointly developed with asset management and technology companies, including Bambu and Pershing.

  CONNECT offers actively managed and regularly re-balanced portfolios with simple and transparent fee structures. Fees range from 0.20% up to a maximum of just 1.25% per annum, depending on investment selection.

• Smartly

  Smartly, an automated service provided in collaboration with VCG Partners, caters primarily to all segments of investors, including Millennials by allowing users to invest as low as S$50 monthly in a globally diversified portfolio of ETFs. The ETFs are recommended through Smartly’s proprietary algorithms on the basis of each investor’s risk profile. It is also possible to change the allocation of funds if an investor does not agree with the recommendations.

  Smartly’s fees are very affordable. The annual management fees are between from 0.5% to 1%, and the underlying ETF fee charged by the ETF provider ranges from 0.1% to 0.25% per annum, depending on the amount you invest. There are no extra fees imposed on rebalancing, trading and withdrawals.

• AutoWealth

  Started in 2015, AutoWealth is a MAS licensed robo-advisory platform that uses a proprietary algorithm to provide financial advice and investment management. This automated online process drastically reduces the processing time and intermediary profits, while still offering clients precise recommendations on the ideal composition of their investment assets, investment sums and periodic investment instalments.

  AutoWealth charges a competitive annual Advisory Fee of 0.5% on the total assets invested, and a Platform Fee of US$18 per year. The minimum investment to start an account is SGD $3000.

• StashAway

  StashAway, the first licensed robo-advisor in Singapore was started in 2016 and granted a Capital Market Services License in May 2017. The digital wealth platform offers goal-focus investment services that automatically designs tailored portfolio for its clients, based on their income, savings capacity, risk tolerance, and timeframe to help attain their goals. It also manages portfolios by continually monitoring economic and market cycles, rebalancing and optimising the portfolios accordingly.

  StashAway’s services are open to the masses, regardless of net worth. There is no minimum balance, and clients can make withdrawals any time. Its affordable management fees range from 0.2% to 0.8%.

• Bambu

  Founded in February 2016, Bambu is a B2B Robo-Advisor offering Asia’s businesses the ability to benefit from the ongoing digital transformation in wealth management. The company’s white-label robo-advisory platform creates a personalised portfolio and risk profile according to each of investors’ goals, enabling them to find suitable investment strategies effortlessly. The platform is also scalable and usable by every business. As Bambu only provides B2B services, its fees are determined on a case-by-case basis, so prospective clients can contact them for a quotation

• Pivort Fintech

  Pivot Fintech is a Singapore venture launched in 2017 by China’s robo-advisory company, Pintec Group. The company will operate in Southeast Asia to offer proprietary real-time wealth management and robo-advisory technology to financial institutions. With sophisticated AI and data-driven technologies, Pivot Fintech promises to provide effective investment strategies that mitigate risk, as well as taking into consideration market fluctuations and economic changes.

• Smartfolios

  Smartfolios is a highly flexible B2B online advisory and investment management platform targeted at financial institutions, promising more affordable, transparent and convenient solutions to their clients. The company uses proprietary technology and portfolio construction engine to provide tailor-made investment solutions to fit the specific needs of banks, brokers and wealth managers. The portfolios are fully customisable and rebalanced regularly, incorporating the best of active and passive investing, and ensuring that the businesses are on track to reach its financial goals.

• WeInvest

  WeInvest is an online wealth provider serving top financial institutions in Asia, with headquarters in Singapore and a growing presence in China, Dubai, Hong Kong, Indonesia, India and Malaysia. The company facilitates the delivery of a complete digital investing experience to their customers, three primary services: AdviseWealth, a B2C robo-advisory platform, TrackWealth, an aggregation as a service platform enabling clients to track their finances, and GroWealth, a goal-based and thematic investing platform.

Other services

The big banks are also moving into the robo advice sector. Last year, OCBC launched a robo-advisory service for accredited investors to invest, monitor and manage their portfolios of stocks and ETFs, through an automated, algorithm-based formula. The online platform offers clients direct advice on the regular rebalancing and optimisation of their investments portfolios without going through a relationship manager.

Robo advice is changing the face of wealth management around the world and could offer a more affordable way for you to look after your investments. However, make sure you compare the benefits and features of a number of robo advisers before choosing the right service for you.