GlobalData Plc

StashAway needs to grow via partnerships

Singapore’s first licensed robo-advisor got a big boost with S$3m ($2.15m) in funding for its Series A capital raising in May 2017. It is on track to be the Lion City’s first retail robo-advisor when it launches later in the year. While retail investor interest is sure, real growth in client assets will come from partnering with traditional wealth managers in the city state.

StashAway is a Singapore-based digital wealth management platform that tailors ETF investment portfolios for clients following a short questionnaire on their finances and goals. Like other robo-advisors, StashAway uses sophisticated algorithms and software to automate the investment process, while using ETFs to ensure its fees (advertised as low as 0.2% a year) remain rock bottom. There are also mechanisms to rebalance and optimize the portfolio as market and economic conditions shift. Plans exist to expand but StashAway’s initial focus will be on Singapore. So far, so much the same.

What sets StashAway apart is the fact that it will launch with a Capital Market Service License for Retail Fund Management, something no other robo service in Singapore has managed yet. This means investors need not be accredited in order to join up, which is important when reaching out to smaller-scale retail investors.

However, even with the entirety of the market to fish from, the volume from inbound retail investors will not be huge. Our 2016 survey of consumers in Singapore found that only 9% of residents had used a fintech firm in the savings and investment space. This is hardly a massive market, particularly when looking at the sums that can be invested by such clients, although the potential is there. Even the largest independent robo-advisors in the US have struggled to maintain momentum in their client inflows, so we know this is a tough sell among even tech-savvy consumers with an aversion to bank brands.

However, what is promising is the fact that when we polled private wealth managers in Singapore as part of our Global Wealth Managers Survey, 51.6% said that they need to invest in automated investment services to complement their existing offering. This suggests that wealth managers are eager to offer their clients what StashAway could easily provide, particularly as it has its own license from the Monetary Authority of Singapore. Partnering with StashAway could easily be positioned as a quick win for many existing traditional wealth managers in Singapore and around the region.

Providing these established players with white-label solutions would also give StashAway the business volumes it needs, and that so many other robo-advisors have struggled to obtain. Under such a scenario, the start-up could very quickly become a major ASEAN success, bringing robo-advice to the hundreds of millions.

By Andrew Haslip, Head of Content Analyst, Asia Pacific

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