Howdy! I might have mentioned before that I’m taking the first year to evaluate all three retail robo-advisors that we have in Singapore. They are what I affectionately call the Singaporean ASS – AutoWealth, Smartly and StashAway.
Jokes aside, I recently opened my AutoWealth account after attending one of their workshops to find out more about them. Well, I learnt quite a few things along the way. I figured you would be interested in them!
AutoWealth has a Financial Advisers License (FA100064-1) whereas StashAway holds a Capital Markets Services License (CMS100604-1).
I think Smartly is simply the technology provider (VCG Partners is the license holder) and thus, itself does not hold either of the two license. To the best of my knowledge, a robo-advisor in Singapore would require one of the two license type. I don’t know the differences between them though. Help me out if you do.
Personal Wealth Manager
AutoWealth has a personal financial advisor or wealth manager that is assigned to each client. The human touch is what separates it from Smartly and StashAway. They call it the hybrid approach, and you will meet him/her when you open your account. There is a variety of meet-up locations in Singapore that you can choose at your convenience. Even after account opening, if I have any questions pertaining to AutoWealth, he is only one WhatsApp message away.
Stashaway and Smartly do not have such as arrangement.
Fractional Units of ETFs
Both Smartly and StashAway pools investors’ money and invests them as a whole. This means that investors can end up having fractional units of ETFs. That’s how the asset allocation can be so precise.
AutoWealth, as part of the account opening process, requires clients to open a personal Saxo Capital trading account (the entire process is handled for you) and authorize AutoWealth to use the account to trade on behalf of the client once the account is funded. After opening my account, I received the following from Saxo :
Dear Saxo Capital Markets client
On a daily basis, you will receive a “Trades Executed” report relating to your activity on your account(s) on the previous business day.
On a monthly basis, you will receive a “Trades Executed” report, an “Account Statement” report and a “Financial Statement” report all relating to your activity on your account(s) in the preceding month.
On a quarterly basis, you will receive a “Trades Executed” report, an “Account Statement” report and a “Financial Statement” report all relating to your activity on your account(s) in the preceding quarter.
Each client’s account has physical segregation from other clients. This means that you will NOT end up with fractional units of ETFs. This point is important, and this is why you need to invest a minimum of S$3,000. This ensures that the portfolio is meaningful in the sense that they sort of reflect the equities/bonds allocation. For example, my portfolio of six ETFs is about 56% equities and 44% bonds, instead of 60/40, because one unit of ETF is fairly “expensive” for the lack of a better word. As the portfolio size grows, the portfolio will be more and more accurate in reflecting the desired allocation.
To me, this also helps to explain the unique fee structure of a flat USD$18 platform fee + a low 0.5% advisory fee.
The Closest Thing To Passive Investing
AutoWealth uses a proprietary investment strategy. What AutoWealth does is to create a simple and no frills, Bogleheads two-fund portfolio comprising of global equity (MSCI index) and global government (US + International) bonds at your desired allocation.
I see this as the true passive portfolio because one does not deliberately assign heavier weightage of equities to one’s country of residence like what I’m doing for my Kevin Boglehead portfolio. In fact, this is my preferred investment methodology out of the three robo-advisors. Pure market returns.
Simple in theory? Yes. Go ahead and DIY with a global equity ETF such as VT (if you don’t wanna dissect) and bonds ETFs such as IGOV and IEF and you’re sort of replicating it. Just put in money and re-balance periodically.
Then again, Spaghetti aglio e olio has an extremely simple recipe, but how many restaurants can say they make a good one? It took me years to perfect my version of it.
With AutoWealth, you can opt to receive dividends or reinvest them automatically. Some of you like to be given a choice, I know.
Estate Taxes Concerns
To side-step the potential problem of estate taxes (since the portfolio are all US-listed ETFs), just convert your personal account to a joint-account (with your spouse, for example).
Because people like to see proof (something I learnt when dabbling with alternative income), I will attach a screenshot of my account for proof of investment.
Just like what I did for Smartly and StashAway, it’s my hard-earned money going right into AutoWealth.
What I Think
I like what I’m seeing with AutoWealth. It’s ticking all the right boxes in my head and I foresee it being a really strong contender for my money. Now that I have my half-year free trial (via referring a new client) with StashAway and one-year free trial (see below) with AutoWealth, all I have to do is to sit back and relax.
Is there anything else that you would like to know about AutoWealth? Let me know with a comment below and I’ll try to find out for you.
Never underrate the importance of asset allocation. Investing is not about owning only common stocks. Nor are historical stock returns a sound guide to future returns. Consider not only the probabilities of future returns on stocks, but the consequences if you are wrong.
John C. Bogle
Founder and Former Chief Executive – Vanguard Group
Public Service Annoucement
AutoWealth is having its Two Year Anniversary Celebration and they are giving away ONE YEAR FEE WAIVER to the 1st 200 sign ups! If you are interested, all you have to do is – Book an appointment by completing their questionnaire Open an account Fund the account within 2 weeks from account activation Disclaimer : If you’re going for it because of the fee waiver, please confirm with AutoWealth that you are eligible before sign-up as I have no visibility over the remaining quota. There is nothing in it for me 🙂
The above anniversary promo has ended.
You might be interested in a referral code which nets you a S$20 credit when you sign up. There is new running promotion and there are two ways to enjoy this perk – valid only from 19th Jan 2018 to 30th April 2018. As I have no direct to how the promotion works (whether 30-Apr-2018 is the last day by which you have to sign up OR fund your account), please check with the representative who contact you on whether you will get the $20 as it is nearing the end of the promotion.
- Sign up for AutoWealth with friends and family. Each of you, when signed up together, will get a S$20 direct top-up. (Appointments can be on separate days) Great deal huh? There is nothing in this for me.
- Can’t find anyone to find to sign up with? AutoWealth has kindly provided me with a referral code which you can quote when signing up to enjoy the S$20 direct top-up. If you sign up via this method, I will then get a S$20 direct top-up. Use this code if you would really like to : turtleinvestorjan2018
Remember, there is absolutely nothing stopping you from using method #1 to get the $20 bucks with your friends and family. In fact, I encourage it.
I don’t like method #2 because there is always gonna be folks who come to me and say, “.. but you recommended it! Now platform so-and-so isn’t doing well. Hmpf.” when I helped you to save $20 in the first place. Robo-advisors ain’t a sprint. It’s a marathon. Don’t start if you’re not going to hold for ten or fifteen years 🙂
Do note that the S$20 reward is subject to a “claw back” if the participating accounts are closed in less than 3 months and accounts must be funded within 2 weeks of account activation.
As always – capital is always at risk when invested and you are making a decision of your own free will to start investing with AutoWealth.
Updated 31st Jan 2018 : To the anonymous person who used my referral code, I don’t know who you are, but thank you for the $20 credit 🙂