SECTOR REPORT: WEALTHTECH
Leon Ong
WealthTech players are fractionalising the minimum investment and spreading it out over many investors
Singapore and across Asia-Pacific. “With several MAS-licensed WealthTech platforms reporting Assets Under Management (AUM) reaching into billions of Singaporean dollars, this interest is likely to grow and present opportunities for Singapore’s fintech(s) to partner and participate in the asset and wealth management sectors,” SFA and PwC said in its FinTech State of Play report. New models Two entities, in particular, trump other WealthTechs in the city: Endowus and StashAway. Both have succeeded in tapping into the large gap of mass affluent, not-yet high-net-worth individuals looking for a platform to accommodate their wealth management needs. This was exactly what Endowus CEO Gregory Van told Asian Banking & Finance as one of the three things that allowed WealthTechs in Singapore, and particularly Endowus, to successfully grow their AUMs. “Number one is our business model, where we can be totally client-aligned, [or] what the industry calls fee-only; which means we can only be paid by our clients. This business model is very difficult unless you can do it at scale, and that scalability is helped through technology. Technology allows expertise to be delivered at scale, and in a business-like wealth management, that expertise is really, really important,” Van said. Second is that their use of technology allows WealthTechs to deliver the best access to products
and solutions at a very low cost. “Number three is, there’s a generational shift or an experiential shift in what the end clients expect from an experience. That experience is more and more moving online even for things as intimate as wealth management,” Van noted. KPMG’s Ong further noted that WealthTech’s success as a subsector of the financial technology sector lies in its ability to change the narrative in the wealth management services space. “The way I look at it is, if wealth tech is a sub-segment of fintech, if it becomes truly successful, what you actually are successful in doing is democratising a lot of the wealth management services that traditionally are only reserved for the ultra-wealthy,” Ong said. Traditional wealth management services do so from a base, which is retail banking. “They lack visualisation of the portfolios, the visualisations of that person’s
Theron Lam
Sin Ting So
Gregory Van
WealthTech platforms have significantly changed how people invest
wealth, and the ability to be able to suggest what that person should do based on their previous actions. This is definitely something that the wealthtech players do better and they’re also kind of changing the dialogue when it comes to how you engage with the client,” Ong noted. Michele Ferrario, CEO and co-founder of StashAway, further noted that the emergence of WealthTechs changed the game when it came to offering wealth management services. “Wealth in Singapore is still largely managed offline, with people buying unit trusts, insurance products, and structured notes from banks’ relationship managers and independent financial advisors. Not only do clients pay higher commissions, they also don’t receive any real advice on portfolio construction,” Ferrario said, adding that financial products are sold individually, as the system is built on revenues generated by buying and selling products. WealthTechs has now made it simple and cost-effective to invest in diversified portfolios offering access to different investment products – from crypto to ETFs and stocks. “WealthTech platforms have significantly changed the industry and how people invest. As a significant amount of investors opened accounts with these new players and started to invest part of their savings, many banks and advisors felt the need to offer similar services, and a few launched digital wealth management services,” Ferrario noted. “The push from new players
Mapping Singapore’s fintech industry (Photo from PWC.com)
ASIAN BANKING & FINANCE | Q2 2023 23
