Robo advisers could soon be running your finances
SINGAPORE — Investors will soon have the option to log into an online platform, answer some questions about themselves, and have a personalised investment portfolio prepared for them. All this will be made possible through robo-advisory financial services using automated, algorithm-based tools. Services are provided online with limited or no human interaction with clients.
The Monetary Authority of Singapore (MAS) released a consultation paper on proposals to facilitate the provision of digital advisory services yesterday.
The proposals seek to support innovation in financial services by recognising the unique characteristics of digital platforms.
Financial institutions currently regulated under the Securities and Futures Act (SFA) and the Financial Advisers Act can already provide digital advisory services, and some have started to do so.
OCBC Bank announced in March a pilot robo-advisory service for investors to help them monitor and manage their investments. In a press release, the bank touted its offering as a “guided investment journey” with regular rebalancing of investment portfolios “without having to interact with a relationship manager”. The bank’s pilot robo-advisory service is provided in partnership with WeInvest, a Singapore-based fintech firm.
Other than approved financial institutions, the regulatory authority has received indications of interest from new entities intending to offer digital advisory services to retail investors. Approval has been granted to at least two digital advisers: StashAway and Autowealth.
StashAway was founded last year by Mr Michele Ferrario, former group CEO of Zalora, together with partners Mr Freddy Lim, former managing director and global head of derivatives at Nomura, and Mr Nino Ulsamer, founder of a number of software companies around the world.
“Together, we have a few decades of experience in technology and financial services,” said StashAway CEO Ferrario. The company received in-principle approval from the MAS in April after several rounds of discussion and useful feedback, a process which took five months, he said.
With plans to launch the robo-advisory financial service in the coming weeks, Mr Ferrario said the company has a waiting list of “thousands of potential clients”.
The availability of digital advisory services will widen investor choice to low-cost investment advice, said the MAS in a statement. To make it easier for entities offering digital advisory services to operate in Singapore, the MAS intends to refine the licensing and business conduct requirements.
Digital advisers that operate as fund managers under the SFA will be allowed to offer their services to retail investors even if they do not meet the track record requirement, provided they meet certain safeguards.
These safeguards include offering diversified portfolios of non-complex assets; having key management staff with relevant collective experience in fund management and technology; and undertaking an independent audit of the digital advisory business within one year of operations.
The public consultation will end on July 7.