Singapore’s First Robo-Advisor Helps Southeast Asian Millennials Invest Smartly
Clueless about investing? Let the machines do it for you
PHOTO CREDIT: Getty Images
Perhaps the most apparent rite of passage into adulthood is this: a sudden inclination toward saving money for retirement (among other things) instead of spending it.
With the desire to have a financially secure future in mind, one would think that more people would be dabbling into the world of investment, but this is rarely the case. Apart from the common misconception that investing is only for the wealthy, among the hurdles that keep people from investing is that it is seemingly so complex that one would not even know where to begin.
“Everyone understands that to ensure a financially safe future, you need to save money and invest it. It was frustrating to see a world where the average person faces investment options that are made deliberately complex, forcing them to trust a system blindly, or disregard their future wellbeing,” relates Singapore-based Estonian entrepreneur Artur Luhaäär.
Letting robots do the work
Guided by a vision to provide users with financial education while simplifying the investing process, Luhaäär, with fellow Estonian Keir Veskiväli, co-founded Smartly, a robo-advisory platform targeted at Southeast Asian millennials. Utilizing artificial intelligence-driven software, robo-advisory platforms have been disrupting the fund management industry in the United States for a while now. Yet despite its enormous potential, similar efforts are few and far between in the Asia-Pacific region.
How the platform works is fairly straightforward: It starts off by asking the user to fill out a questionnaire that assesses one’s risk tolerance, financial situation, and monetary goals. The robo-advisor then recommends a portfolio made up of a basket of exchange-traded funds (ETFs) or low-cost index funds. The algorithms then rebalance the portfolios monthly, factoring recent changes in the world economy.
“At Smartly our core mission is to simplify investing — to build a platform through which the average person can understand where their money is going, as well as having the freedom to withdraw it without hidden penalties if they wish to do so,” explains Luhaäär.
To start using Smartly, a minimum of S$50 is required. After a user deposits funds into his account, the robo-advisor begins to purchase ETFs based on the suggested portfolio. Smartly also monitors portfolios 24/7 and rebalances it frequently to ensure that investments track the user’s preferred selection of assets.
While the Smartly platform is suitable for everyone, the co-founders reveal they are targeting a specific niche: Gen Y or the millennial generation. “It’s mainly the way they use technology,” says Luhaäär. “Being born into the digital age, they are the biggest users of digital products, favoring these for their speed and convenience. On the other hand, the current investment market doesn’t offer people, with their income or wealth levels, very many quality choices for saving and investing,” he adds.
As far as financial literacy goes, it’s always best to start them young. More than an investment platform, Smartly is all about financial literacy — using a series of articles, videos, and quizzes to boost financial awareness among its users. Users can also unlock weeks of free portfolio management by accessing Smartly’s education program.
“The core basics of investing are not rocket science and can be understood by anyone. We’re not talking about being able to identify great companies to invest into but rather to help users understand the most important things to look out for when investing their money,” Luhaäär says.
In bringing its product to market, Smartly partnered with VCG Partners Pte. Ltd., the Singapore subsidiary of VinaCapital Group, a leading asset management firm in Vietnam with over US$1.8 billion assets under management. VCG Partners Pte. Ltd. is a fully licensed fund manager regulated by the Monetary Authority of Singapore. While the robo-advisory service is offered by VCG Partners Pte. Ltd., the core technology is provided by Smartly.
“As a young technology start-up, we completely understand the need to collaborate with seasoned industry players. We’re delighted to have found a partner who shares a similar vision and values, and we’re working together to change the market for the better,” states Luhaäär.