Roboadvisors: Why do some hold Capital Market Services licenses (Stashaway, Syfe) but some hold Financial Advisers licenses (Endowus) yet provide similar services?

Hi!

The services may seem similar, but CMS license holders have greater flexibility in their operations and handling of money.

A Capital Market Service License holder, as defined by MAS is allowed to handle clients money, provide custodian services, and fund management business. This can be seen from how certain robo-advisors can allow clients' money

1. to be transferred to an entity that is legally owned by them,

2. allow fractionalisation of ETFs and pooling their clients' assets in a single custodian account

3. create new products pooling bonds, REITs etc and/or having the discretion to change the underlying investments (be it in terms of % holding or securities choice)

A Financial Advisor License holder will not be able to do any of those, and one can argue that it might be safer if the robo-advisor has limited services while engaging large reputable companies to handle other parts of the services.

At Endowus, we have decided to use unit trusts instead of ETFs because it allows for you to invest every cent of your money, while allowing you to directly own the funds. We also believe that fund managers like Dimensional, PIMCO and Vanguard, as well as UOB Kayhian as a broker, are in the best position to invest, custodise and generate market returns for you because of their long operating experience and efficiency.

Hope this helps!​​​