There has been quite a bit of interest in the fees for investing via MoneyOwl, and also quite a bit of some confusion with many comparisons.

First, let’s break down the fees for investing with MoneyOwl so that if you wish to compare, they are of apples to apples. Our fees are in three parts:

  1. 0.65% p.a. advisory/wrap fee;
  2. 0.18% p.a. custody/ platform fee;
  3. 0.3%-0.4% p.a. fund management expense.

All in, this is 1.15%-1.21% p.a. MoneyOwl receives only the first 0.65% p.a. advisory fee; the others are to third parties. This is regardless of whether you invest a small amount of $100 one-off /$50 monthly (our minimum) or a large amount with more zeros.

MoneyOwl vs. DIY Investing

1. Investing with MoneyOwl should not be compared to DIY investing which does not come with advice. We are not a brokerage or a marketplace for funds. MoneyOwl’s services are for the man on the street who needs and wants to receive advisory services. DIY investors who have the knowledge and ability to perform all the aspects of the advisory value chain on their own as described below should really continue to invest directly themselves as that is the cheapest way to invest. These advisory services are:

  • Risk profiling – ability, willingness and need to take risk
  • Portfolio construction with the right strategic asset allocation (return/risk)
  • Regular review of strategic asset allocation, in case of major strategic shifts that affect our fundamental investing assumption
  • Fund/instrument selection
  • Monitoring performance of underlying funds
  • Execution of buy and sell
  • Rebalancing at regular intervals to asset allocation
  • Risk coaching of investor to stay invested during turbulent markets

Not everyone is able or wants to do this on his own. Investors who can, should do these things on their own. For those who prefer advice, MoneyOwl will do all of these for our clients through a bionic model (tech + human advisers), for 0.65% p.a.

2. For small investors who are accumulating modest amounts every month, though, there may be additional challenges in DIY-ing a Regular Savings Plan (RSP):

  • managing transactional costs well (brokerage, exchange rate, bid-offers)
  • not being able to buy fractional ETF shares, thus impacting desired asset allocation and
  • effort to pump money in regularly without emotion that can be a barrier.

Ordinary working people who have modest amounts to do an RSP from their income are at the very core of whom MoneyOwl wants to serve.

3. Dimensional’s funds, which are market-based and backed by Nobel prize-winning research, are only available through advisers. Worldwide, DIY investors cannot buy these funds directly via international or local brokerages. This is because Dimensional themselves believe in the value of the various aspects of advice described above for most people.

[On the value of advice, you may also wish to read this.]

In the world of “advised investing”

4. Within “advised investing”, MoneyOwl has worked hard to keep fees low. At an all-in cost of 1.15%-1.21% p.a., we are convinced that our total fees still remain low and affordable enough to give investors a good return from their investments to meet their financial goals – and this with the full works of advice described above delivered through both tech and human advisers.

5. Relative to industry norms:

  • We are less than half the fees, and we do this not only by having no sales charge, a lower Advisory/wrap fee, a well-negotiated platform fee, but also by choosing low-cost funds that fit our investment philosophy rather than expensive “active” funds. (See details of fee comparison: here).
  • Besides zero sales charge, we do not get trailer commissions from Dimensional funds (average 0.35% p.a. fund expense), while many active funds (average 1.4%-1.9% p.a.) pay advisers up to half of their fund expenses as trailers, one of the reasons why their costs are high. But we do not choose funds only on the basis of costs. Besides being low-cost, funds must be market-based in investing philosophy with no tactical asset allocation or market-timing. (See our investment philosophy here)

6. Relative to “roboadvisory”:

Our Advisory fee of 0.65% is also lower than the current average of around 0.75%, especially for small investors. Our all-in fee of ~1.2% might be slightly higher than some robos, especially those who use ETFs, but there are reasons why we do not choose ETFs. But actually, we do not compete to be the lowest cost – the lowest cost would be achieved by DIY investing without advice. Rather, we add value through advice, in particular, by being:

  • Bionic (i.e., with human advisers): We have a team of trained client advisers to discuss need, ability and willingness to take risks, trade-offs and special circumstances, and understand Dimensional funds, if you want to do so. Some people have observed that many “roboadvisors” are more robo-enabled portfolio tools. We have a robo platform, but our core is advice, including human wisdom.
  • Comprehensive: We are not just an investment advisory. Besides having launched our insurance bionic advisory last November (where we champion cost-effective term insurance), and our complimentary online digital will writing service in March, in a few months’ time you will also have the chance to experience our comprehensive bionic financial advisory service that will integrate CPF planning, together with investments in a holistic and sensible accumulation plan for retirement.

[On why we prefer Dimensional unit trusts to ETFs, though ETFs have a lower expense ratio, please read this. In summary, the main reasons are:

(a) higher additional hidden costs of popular US-listed ETFs including withholding tax rates (compared to Dimensional SGD funds that are Irish domiciled), bid-ask spreads, forex spreads.

(b) difficulties in splitting small amounts into ETFs without unclear legal ownership of fractional ETF shares.

(c) no globally-diversified bond ETF that is hedged back to SGD, unlike Dimensional’s SGD bond fund.]

7. At MoneyOwl, we are confident to bring our services to our clients not just because we believe we have the right investment philosophy and process to deliver results to our clients, we have the right people and resources behind the technology. MoneyOwl in many ways is not a “pure start up”. We are a JV between NTUC Enterprise and Providend. We have been around for decades. NTUC in particular is a trusted household Singapore brand for ordinary working people. Providend has championed conflict-free advice for the last two decades and has deep expertise and experience in comprehensive financial and investment planning. We are definitely committed to the well-being of fellow Singaporeans. Hopefully, this information helps you with your choice of service provider.