Traditionally, financial advice typically involves engaging with human financial advisors or wealth managers.

In recent years, the landscape of financial advisory services in Singapore has undergone a significant transformation.

This can be seen with the rise of robo-advisory platforms offering low-fee solutions, such as MoneyOwl.

While once hailed as a beacon of affordable financial planning, this platform has recently grabbed headlines for winding down its operations.

In this article, I will share my opinion of what happened and what is coming next.

Background of MoneyOwl

MoneyOwl, a social enterprise established in 2018 under NTUC Enterprise Co-operative Limited, aimed to revolutionize financial planning. It provided integrated solutions encompassing investment, insurance, and will-writing.

The company’s mission was to offer “comprehensive, competent, and conflict-free” financial advice to ordinary working families in Singapore. Holding dual licenses from the Monetary Authority of Singapore (MAS) as both a financial adviser and a fund management company,

MoneyOwl aimed to be a one-stop solution for individuals seeking financial security. In 2022, MoneyOwl ventured further into the realm of low-cost digital investing with a Central Provident Fund (CPF) investing service, allowing Singaporeans to utilize funds from their CPF Ordinary Account (OA) and Supplementary Retirement Scheme (SRS) account.

If you have heard, however, MoneyOwl is winding down its financial advisory business, and all commercial activities will cease by December 31, 2023.

What happens to your investment with MoneyOwl?

As of December 31, 2023, MoneyOwl will cease all commercial activities. Its fund management business and insurance advisory business will be transferred to iFAST Financial Pte Ltd.

According to MoneyOwl, here’s what’s going to happen next to the MoneyOwl’s clients:

While this transition ensures the continuity of investment holdings for MoneyOwl’s clients, it raises questions about the sustainability of low-cost platforms.

At least for now, no disruption is expected. If you have investments with MoneyOwl, your investments are safe.

What does MoneyOwl’s closing down tell us?

MoneyOwl is not the first robo-advisor in Singapore to shut its doors.

Smartly, another robo-advisory platform also ceased operations in 2020.

With nearly two decades of experience in the financial advisory industry, I have witnessed things come and go. Robo-advisers are an interesting development in the industry, and people have little understanding of them because they comprise two difficult topics for the average person: technology and finance.

The inherent misunderstanding is that technology is better than humans, and there’s an ego-driven belief that you are better off doing it by yourself. This gives people the illusion that they can invest without using any intelligence.

Could it be possible? Do you know the finance world has the world’s smartest people from all fields, from rocket scientists to professional traders, from politicians to money tycoons?

I am not here to say that you shouldn’t use robo-advisers, but you need to go in with the right expectations.

We all know the past 3 years have been tough for the financial market. And if you read the online investment forum, you see many people are turning to the discussion group to ask for advice. It was the same place where they learned that a personal financial adviser is not needed since the robot can do everything for them fast and automatically.

I think the robo-adviser is a great invention. But speed and automation have nothing to do with achieving your financial goals.

Usain Bolt is the fastest man on earth, but any car can easily run faster than him. You can be the strongest person, but a lousy digger can dig a hole bigger and faster than you.

The difference between humans and other animals is that we know how to use tools. I believe the future of financial advisory has to be a hybrid model as illustrated below. With technology doing the heavy lifting of client enrollment, market and position monitoring, and reporting, but leave the human adviser to handhold you based on your personality, character, and preferences.

Financial advisor hybrid model

What’s next?

The closing down of MoneyOwl should not be surprising.

According to the Straits Times article:

“MoneyOwl found that few wished to pay planning fees or purchase investment or insurance products. While it had a database of close to 90,000 contacts, fewer than 10,000 clients had undertaken any revenue-generating service.”

I do not agree.

I think the issue here is not that people are not willing to pay planning fees. Because as a licensed financial adviser, many of my clients paid me fees for retirement planning and investment planning. People are willing to pay fees if it is quality advice, they do not want to pay fees to purchase an investment or insurance products.

MoneyOwl started with the mission to provide financial planning at a low cost. This is a noble cause which I fully support, but the business model is not viable by downplaying the human interaction model.

Google is the smartest AI in the world, but it probably cannot decide what birthday gift you should buy for your mum.

Because we are all humans and we are emotional. A machine doesn’t care which day you retire and whether you will sleep well at night after you purchase the investment. It is a program and it follows the rules. The real investment success has to do with self-awareness and emotional control.

The real matter is not about this stock or that bond being a good buy now, but if you can sit through the game and be happy with the outcome.

Investment success comprises 40% strategy, 40% psychology, 10% execution, and 10% luck.

As I said earlier, robo-systems and human advisers are not competitors. The consumers wrongly view them as competitors. Most robo-advisers automate the tedious process which was done by human advisers previously, and that is a good thing.

That is why I say advisers who understand and leverage technology to provide personalized advice provide the best value for clients.

People overestimate Warren Buffett’s value investing methodology but underestimate the temperament that he can possess to carry on the strategy.

Likewise, you need to find an adviser who can understand your concerns, share similar investment beliefs and yet is willing to handhold you through good and bad times.

If you think what I say makes sense, you should relook at how you invested in the past and think about whether your past assumptions of investing still hold.

If you want to find out how I can help you advice on your retirement and investment portfolio. Submit your application below for a non-obligatory investment discovery meeting.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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