Wednesday, October 15, 2014

Singapore Finance Industry: Innovate, or DIE

I was reading this great interview by A Wealth of Common Sense with Patrick from Millenial Invest. Two of my favourite blogs to read actually. I actually feel like buying Patrick's new book, but I feel that it is probably very skewed and biased towards the US investor, which is his main target demographic.

However, reading the interview, I came across some fantastic financial products. They were Acorns, Wealthfront and Betterment. I have come across both Wealthfront and Betterment before, and how I wish that the Singapore market had such products. Just take a look at these products.

Acorns help you round up your purchases to the nearest dollar, then invest that fraction of a difference into a diversified portfolio. What. The. Fish. That's amazing, TAKE MY MONEY!


Wealthfront and Betterment are both robo-advisors. They are the PLUS version of Acorn. Instead of just investing your daily chump change (which honestly slowly adds up to be a substantial amount over time, trust me), both these products are more comprehensive. They can be seriously used (and are) for proper long-term investments. Think of it as a super-duper awesome RSP.




Not only do they allow you to invest regular amounts in regular intervals, they also allow capital injections. They have a wide variety of investment options. They do auto-rebalancing and dividend re-investing. They have rock-bottom fees for a superior product which is CHEAPER than transaction costs of the closest similar product here (0.25% vs 1%).

This is like the RSP investor's wet dream come true.

If Singapore had anything similar to this, I bet this will be a massive hit. POSB Invest-Saver is the closest product. Even with only 2 damn ETFs, they can't manage to allow percentage allocation, capital injections, auto-rebalancing, dividend reinvesting. Sorry sweetcheeks, I'm not gonna sugarcoat it, POSB Invest-Saver is the weakass version of their US counterparts. Not only do they have much much MUCH MUCH much much MUCH MUCH more better cooler awesome useful features, it's also way CHEAPER. What. The. Fish.

POSB Invest Saver is getting there, but it is still not good enough in my opinion.

My hopes and dreams: A company in Singapore comes up with a fantastic RSP option similar to WealthFront or Betterment. Even with just the STI ETF and the ABF, with all the features of the US products, I bet it would be a hit here. Add in more products, heck, add in all the SGD ETFs. Add in the USD denominated ETFs too, charge a small spread. Or offer hedging options. Maybe even offer direct feeds into index funds. Accept monthly giro and lump sum investments. You want to be a total comprehensive choice.

Once that is done, why not try the Acorn model since the infrastructure is already set up? Work with banks so that every credit card purchase is rounded to the nearest dollar and have the balance sent to your main account. Work with ez-link and have every transaction rounded up to the nearest 20c or 50c or even $1, and have the balance sent over. Work with the other payment options too maybe.

Hell. Maybe the government should develop and maintain something like this? Then they can also give a choice to CPF members / SRS account holders a decent alternative to invest their money in a relatively prudent way. Now, that would just be magical and amazing.

Singapore is massively lagging in the finance industry. The financial hub of Asia? I scoff at that title. Good financial services are still only offered to the highest net worth individuals, who are being charged arms and legs by having an AUM-based fee structure. Retail investors like you and me, have to deal with expensive, low-grade products along with inexperienced "financial advisors" who wouldn't even be able to tell you how many companies are in the S&P500 (the answer is 500). Mark my words, in 10 years time, the financial industry here in Singapore will HAVE to change, or else we will definitely lose out. We need to move to flat fees, based on the specific type of service done, not based on the amount of money clients have in their bank accounts. Financial advisors should be like lawyers, charging for the effort and amount of work done.

The finance industry here is still operating in the same unsustainable greedy ways of the pre-GFC. If your banker is driving a Porsche today and you aren't, maybe you should ask yourself why.

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