Thursday, June 30, 2016

The Case For Robo-Advisors in Singapore

Robo-advisors. What are they? To the average retail investor in Singapore, we haven't a clue about what it is. It's not really our fault because it has never been talked about. So why should I care about robo-advisors and what can they do for me?

Were you thinking of a small cuddy cute robo-advisor?

In my mind, robos are like TimberWolves. Just 1 of them is enough to kill off a hundred useless advisors.

Robo-advisors are actually more than just advisors. Not only do they all have some form of testing to determine a suitable portfolio for you, they also allow you to cheaply and simply invest in those portfolios (Check out Wealthfront or Betterment to have a better idea of a live, working robo-advisor). Basically, the point of robos is to automate away all the irritating, annoying and complicated parts of investing. And I think that by and large, the technology has improved to a point where it is not only feasible to use a robo-advisor, but it is ideal to use one!

Let me just break it down simply to show you how it goes.

  1. Visit and register with a robo-advisor
  2. Answer some questions to determine your risk profile, and accordingly, your recommended portfolio
  3. Review the portfolio recommendation and tweak it to your preference
  4. Transfer money
  5. Watch it grow

And that is it. THAT. IS. IT.

  • No hard-sell for privately managed funds
  • No offer of leverage to boost your returns
  • No shady investment options
  • No need to open a CDP account
  • No need to open a brokerage account
  • No linking that brokerage account to your bank account
  • No linking your bank account to your CDP account
  • No overseas brokerage account
  • No overseas / foreign currency bank account
  • No expensive FX spreads
  • No need to execute any trades with any brokerages
  • No need to think about lot sizes and bid-ask spread
  • No transferring money around for securities settlement
  • No need to worry about dividends, rights issues or other corporate actions
  • No complicated expensive or complicated fees
  • No large minimum capital required

Honestly, I could go on and on about more of the things that you don't have to do, as well as things that they can do better, but for the sake of brevity (the list is already rather long!), I stopped there. All these things listed above are things that normal retail investors like you, me and everybody else have to deal with if they want to buy stock and bonds on the local SGX and on overseas exchanges. 

Robo-advisors literally deals with ALL of these annoyances, wrap everything up nicely for you in a nice clean package and all you have to do is open an account, transfer in money and finally pay a small fee for them dealing with all the shit we don't like to deal with.


I would consider myself a sophisticated investor by circumstance, not by choice. While many people who read and surf finance blogs are mostly capable of doing their own trading, many of us have acquired this knowledge exactly like me - being forced to learn and do it yourself, because there is just no other way. Even if we wanted to have a passive portfolio, the best that we've got is POSB Invest Saver, and that frankly, highlights the sad state of the financial industry here.

There is a huge void in the local finance industry. After people have learnt about unit trusts and then buying off the local SGX, the next step is a huge leap forward that ends up with you having your own broker to get you into international markets and buy in foreign currencies. That is pretty complicated stuff. There isn't anything in between! I think many, many people (myself included) would prefer to have a suitable product so that we can finally spend our lives doing other things instead of being constantly worrying about our investments (rights issues, brokerage changes, trading suspensions, etc etc). I know that I would use a robo-advisor if there is a suitable one for me.

I've recently actually met the founders of Smartly, and guys, let me tell you, the product looks absolutely amazing. It might not be perfect yet (in the sense that more sophisticated investors might feel restrained), but I'm sure it will meet, if not, exceed the expectations that what most people would want to have in a local robo-advisor. And I think that they would be able to provide an excellent service and serve tons of millennials who currently have no clue about how to invest. This is a systemic problem is our society today! I try doing my part, but I know none of you buggers share my posts on Facebook or social media, haha!


They still aren't ready to launch yet, but why not join their waiting list and check them out? I heard that their Beta is launching soon, maybe you might get to be a part of that ;) 

My fingers are crossed for a good launch for them!

Guys (and girls)! Thoughts on robos?

8 comments:

  1. When Keir mentioned yesterday that he had already met with a SG blogger who wrote about them, I was thinking there couldn't be that many in SG ;)

    I think that rather than a replacement to what we already have, a robo-advisor in its infancy would perhaps work really well as a complement, considering that at launch the product would be the plain-vanilla type that caters to the vast majority. This will probably be how I might use the product.

    Anyway, very encouraging signs and I'm really excited by the development.

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    Replies
    1. Hehe! I do agree that it would work out well as a compliment to those with existing portfolios. However, I can see this being the bulk of people's investments if they are entirely green to investing. I would use myself it as a compliment, at least initially.

      No news about the beta launch yet though! I'm so anxious, haha.

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  2. Sounds interesting on robo advisers; i keep robos (hamsters)

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    1. Hi Starlight,

      Robo hamsters are so small and cute! Hehehe! Yes, keep an eye out for them, I think that this might be the start of something big here in Singapore!

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  3. Betterment is only for residents living in United States

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    Replies
    1. Yup SR, it's unfortunately only there. Still waiting for Smartly to launch... *yawn*

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  4. hello! how did you manage to get in touch with the founders of smartly?

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    Replies
    1. Hi Anon, the founders of Smartly sent me an email, so they were the ones that reached out to me.

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