By Chuin Ting Weber – Since the announcement of our wind-down on Thursday, 31 August 2023, MoneyOwl team has been asked a few times why we chose to transfer our clients to iFAST and not to another platform. I thought I would take some time to pen down the thinking that we went through to come to this decision.
Allow me to begin by saying that we have no vested interest in whether clients stay with iFAST or go with another platform. MoneyOwl has neither obligations, incentives nor disincentives of any kind under our arrangement with iFAST that is tied to the level of Assets Under Management (AUM) we hand over.
Our top-most concern in all decisions related to the wind-down is our clients’ interests. For client transfer, there were five questions we had asked, to figure out the partner that would be the best for our clients:
- With whom would the transition be most seamless and most painless?
- Is the company experienced, financially stable and trustworthy?
- What is the scope of advice and the planning philosophy?
- What is the format of advice – digital, human, bionic?
- What kind of fees/rebates would apply to our clients?
First, iFAST, by far, provides the most seamless and most painless transition for our investment clients. After all, iFAST has been doing the backend heavy-lifting for all MoneyOwl portfolios (custody, platform services in buying and selling, payment of dividends, statement production, returns calculation etc.) since 2019, and each client’s holdings are kept separate in an identifiable account at iFAST.
There will be no change to the portfolio account numbers (the “G” reference numbers), the iFAST Client Trust Account to which clients are currently transferring monies into for both one-time and monthly buy orders, and even portfolio names given by the client (with the exception of emoticons not being supported). The portfolios remain “as they are” – there’s still Dimensional, WiseIncome, WiseSaver and our CPF portfolios – constituted in the respective portfolios. Clients can continue to buy and sell, into portfolios they currently hold or other portfolios within the MoneyOwl suite. When Dimensional’s CPF-approved funds are available, transferred MoneyOwl clients would also be able to access them at iFAST.
The key change is that you log in from a different place from Wednesday, 25 October 2023, onwards. But as early as Monday, 4 September, clients will start to get their new login credentials from iFAST via email. Upon performing a first-time login, clients would already view their MoneyOwl portfolios on iFAST’s app, even as they continue to transact on MoneyOwl’s platform.
This is as seamless and painless a solution we could find for our clients.
Second, we wanted a strong pair of hands, that is experienced and financially stable. I can understand that many clients are worried about digital platforms. I’ve recently written about how MoneyOwl’s wind-down, which follows a review of commercial viability with considerations unique to a social enterprise, cannot be extrapolated to roboadvisers. Nonetheless, it is understandable if some clients still prefer to be with platforms that have a longer history and a stronger financial position.
iFAST has been in business since 2000. In all our 4.5 years with iFAST, we have had very few operational glitches, and no major problems like missing of dividends. As far as security of your investments is concerned, if you had been able to trust MoneyOwl which used iFAST thus far, then please be assured regarding the transfer, because the platform is still iFAST.
In terms of financial stability, iFAST Corp has been listed since 2014 on SGX Mainboard. and has been an SGX mainboard-listed company since December 2014. As of 30 June 2023, it has Assets Under Advice (AUA) of S$18.81b, a market capitalisation of S$1.358b and shareholder’s equity of $230.05m. iFAST has been profitable every financial year since its listing.
Is iFAST trustworthy? I have been asked if iFAST would keep to what it said regarding fees and portfolios. My response is this – iFAST has made a public commitment, and it is no small matter for a listed company to risk its reputation with non-serious promises. iFAST has a reputation of being hard-headed about business, such that they would not say “yes” just to look good. But my experience dealing with iFAST both as a service provider over the past 4.5 years, and more recently in the business transfer discussion, has given me confidence that once they commit, they will keep to their word.
Third, iFAST provides a wider scope of advice than just investments. They have an insurance capability. MoneyOwl has always believed in comprehensive planning; in fact that has been our core advocacy. Especially for the mass market who can’t “self-insure”, it is very important to take care of protection needs and not just wealth-building.
The financial planning philosophy that underpins advice is also key to good outcomes. In the area of investments, it is true that iFAST may not have the same investment philosophy as MoneyOwl, of keeping to the broad market expressed in a passive or passive-plus type of portfolio. Some roboadvisers might seem closer to ours, at least in the stated description of their philosophy, but the reality is that there is no other mass market advisory firm curates investment funds the same way we do. Except for Providend which serves the affluent and mass affluent, we do not know of another firm which has market-based funds forming the bulk of its investment stable. However, iFAST will keep all our portfolios as they are, and has committed to managing them in line with our low-cost, globally diversified philosophy.
In terms of insurance, this may not be well known, but iFAST is protection-focused, like MoneyOwl. I had asked iFAST for the composition of its life insurance policies sold. From 2020-2022, over 80% of life insurance policies purchased by iFAST Global Markets clients were Term Life policies; and iFAST does not do Investment-Linked Policies (ILPs) at all. This is very similar to MoneyOwl’s insurance book. I was very glad to know this, because mistakes on buying insurance are arguably more costly than mistakes on investments for mass market families where resources are limited. As an added bonus, iFAST will be continuing MoneyOwl’s work of promoting transparency in insurance pricing and digital insurance advisory by taking over our insurance comparator and needs-analysis robo.
Fourth, we wanted our clients to both be able to have access to human advice when they wanted to, and to be able to “DIY” on their investments – as Singapore’s first bionic adviser, MoneyOwl believes that the best advice would be given by humans augmented by technology. Nowadays, quite a number of advisers fulfil this criteria. Different clients would have different preferences for the UX and the design of the technology interface, so that would not be the main factor. But that iFAST has over 60 advisers who are able to advise clients on both insurance and investments was a big plus point.
Fifth, in terms of fees and rebates, clients are expected to be no worse off (with some caveats for insurance). iFAST has committed to MoneyOwl’s wrap fees for investments. It already operates a system of insurance commission rebates, and on the caveat that the relevant insurance company reaches an agreement with iFAST and the policy is successfully transferred, iFAST will pay the higher of MoneyOwl’s rate and iFAST’s rate.
Does the compensation model of the company matter? We had thought about this quite a lot, not just for the wind-down, but for the industry and market in general. MoneyOwl believes that commissions do create a conflict of interest. But we have never taken the stance that all commissioned advisers are bad advisers or that all salaried advisers are good advisers. In practice, there are many commissioned advisers who do a good job and truly care for their clients. Being fee-based or fee-only also does not mean that there won’t be other types of conflicts of interests. For example, if the adviser just wants to grow volume of AUM to maximise wrap fees at all costs, this could put the client at risk if growth becomes unsustainable or if clients are pushed to invest even when they should not. From what we see in other countries who have banned commissions, advisers also tended not to be as interested in those who don’t have that much to invest.
It is a delicate balance. In the end, we decided that fulfilling the above five criteria would be most important for the majority of our clients; while the agreement reached with iFAST on investment philosophy, including access to trailer-free funds, and low fees for our MoneyOwl clients, would allow continued access to our solutions that had been set up from a non-conflicted lens at the beginning. However, should clients feel strongly about this point, they are able to fully redeem their investments anytime and not transfer to iFAST. When it comes to insurance, we were hard pressed to find an established company serving the mass market that uses salaried advisers, and among traditional advisers, iFAST stood out in terms of alignment in insurance philosophy and its commission rebate policy.
The business transfer in iFAST was the result of rigorous consideration on what would be the best for our clients, against the backdrop that MoneyOwl would wind down and there is no second MoneyOwl in Singapore. We are committed to a smooth transition for our clients, and I hope that my sharing of some of the details of our thinking has given you greater confidence and comfort. We fully appreciate that the transition would cause inconvenience and uncertainty, and should you have any further concerns, please drop us an email or give us a call. Our contact details as well as a set of FAQs are on our microsite.
While every reasonable care is taken to ensure the accuracy of information provided, no responsibility can be accepted for any loss or inconvenience caused by any error or omission.
iFAST will be holding a webinar for our investment and insurance clients on Monday, 4 September 2023, 7pm to address any questions you might have. Terence Lin, GM, iFAST Global Markets (Singapore) and Chuin Ting Weber, MoneyOwl CEO, will be at the live session. Please check your email to register.