Hi Adrian,
Thank you for your question! Allow me to repost one of my previous answers to a similar question, though I will also address the issue of algos and AI.
I will try to describe the value-add that MoneyOwl brings and let you decide how it compares with the other companies that have a robo platform.
First, MoneyOwl is not really a pure roboadvisor but a bionic financial advisor - meaning we combine human wisdom and tech - we have an investment robo but we also have a substantial team of well trained (fully salaried) client advisers. We believe that good advice helps to bring about a successful investing experience and that such advice must involve a human element. Advice includes asset allocation, risk profiling, fund selection, monitoring, rebalancing and very importantly risk coaching to help investors stay invested through turbulent market times. There are many reports that show that investors lose out on market return because they panic and sell too early. An adviser adds value when he or she can help investors understand how markets work and stay invested over the long term to capture market return, rather than time the market. Because it involves connecting the head and the heart, we need technology to do the quantitative parts but we also need human wisdom and empathy. Hence sometimes I hesitate actually to say we are a roboadvisor!
The quantitative parts done by the robo for advisory I mentioned above do not have decisions or recommendations based on predictive or simulated statistical models or AI. For example, we do not say that people are of a certain income/age profile do better with a certain portfolio and we would not look for spurious correlations (eg whether people who live in Jurong are more risk averse). Rather, all recommendations in the algos are based on sound financial planning principles applied to each individual. Specifically, in matching you to your portfolio we consider your ability, willingness and need to take risk, in combination. Sometimes these can contradict each other (eg if you have a large capacity to take risk but very low willingess) and this is when we suggest you speak with our adviser - possible because of our bionic model - for a better understanding, and it is up to you if you wish to do so. Where we do use some statistics is in projecting your portfolio returns, in particular the range of returns you can expect 75% of the time (worse or better scenario) around a median (or base case scenario), but we do this calculation without any Monte Carlo simulation. Rather, we use a lognormal or also known as a theoretically correct model. (On models in investment management, please see fourth point below.)
Second, in terms of scope of advice, MoneyOwl is not only an investment (robo)advisor, but a comprehensive financial adviser. The investment robo module is our third - after insurance and wills - and soon we will launch comprehensive planning where we integrate both CPF planning and investments for retirement planning, plus introduce retirement withdrawal concepts.
Third, we are confident to be this bionic, comprehensive financial advisor because of our DNA and parentage. MoneyOwl is not a pure start-up in that we are a JV between two home-grown Singapore corporates, NTUC Enterprise and Providend, who have been serving Singaporeans for decades. From the NTUC side, we inherit our inclination to serve the ordinary folk through fit-for-purpose solutions, hence our investing quantum starts from $100 lump sum/ $50 monthly. From the Providend side of our parentage, we inherit deep expertise and experience in best-in-class, conflict-free and holistic financial advice.
Fourth, we believe that our investment philosophy and expression of it through the way we construct and manage portfolios - when coupled with advice - give clients a very good chance of a successful investing experience. Because we are at our core advisors, more than fund managers, (even though we have a full fledged fund management licence), we do not define successful investing as being about maximising return or even maximising risk-adjusted return. Rather, we want to advise and structure investments for clients in such a way as to give you the best odds of meeting your goals. From a combination of evidence we have examined and experience including across the GFC, we know that the keys to successful investing lie in 4 areas: being globally diversified; aiming for market-based return, rather than trying to beat the market through "active management"; keeping costs low; and staying invested over the long term.
In particular, on active management, I would like to highlight that neither we nor the Dimensional funds we use utilize any statistical models to try to read such events as to determine macro/economic regime or to predict market movement based on indicators, and thereafter shift asset allocations tactically to try to time entries into and exits out of certain asset classes. Such active management has had a poor track record especially in longer tone periods. You can read more about this at https://advice.moneyowl.com.sg/the-right-way-to...
I hope that this gives you a good picture of how MoneyOwl thinks about its journey with Singaporeans in putting their money to work towards greater financial security. Thank you again for your question!
Hi Adrian,
Thank you for your question! Allow me to repost one of my previous answers to a similar question, though I will also address the issue of algos and AI.
I will try to describe the value-add that MoneyOwl brings and let you decide how it compares with the other companies that have a robo platform.
First, MoneyOwl is not really a pure roboadvisor but a bionic financial advisor - meaning we combine human wisdom and tech - we have an investment robo but we also have a substantial team of well trained (fully salaried) client advisers. We believe that good advice helps to bring about a successful investing experience and that such advice must involve a human element. Advice includes asset allocation, risk profiling, fund selection, monitoring, rebalancing and very importantly risk coaching to help investors stay invested through turbulent market times. There are many reports that show that investors lose out on market return because they panic and sell too early. An adviser adds value when he or she can help investors understand how markets work and stay invested over the long term to capture market return, rather than time the market. Because it involves connecting the head and the heart, we need technology to do the quantitative parts but we also need human wisdom and empathy. Hence sometimes I hesitate actually to say we are a roboadvisor!
The quantitative parts done by the robo for advisory I mentioned above do not have decisions or recommendations based on predictive or simulated statistical models or AI. For example, we do not say that people are of a certain income/age profile do better with a certain portfolio and we would not look for spurious correlations (eg whether people who live in Jurong are more risk averse). Rather, all recommendations in the algos are based on sound financial planning principles applied to each individual. Specifically, in matching you to your portfolio we consider your ability, willingness and need to take risk, in combination. Sometimes these can contradict each other (eg if you have a large capacity to take risk but very low willingess) and this is when we suggest you speak with our adviser - possible because of our bionic model - for a better understanding, and it is up to you if you wish to do so. Where we do use some statistics is in projecting your portfolio returns, in particular the range of returns you can expect 75% of the time (worse or better scenario) around a median (or base case scenario), but we do this calculation without any Monte Carlo simulation. Rather, we use a lognormal or also known as a theoretically correct model. (On models in investment management, please see fourth point below.)
Second, in terms of scope of advice, MoneyOwl is not only an investment (robo)advisor, but a comprehensive financial adviser. The investment robo module is our third - after insurance and wills - and soon we will launch comprehensive planning where we integrate both CPF planning and investments for retirement planning, plus introduce retirement withdrawal concepts.
Third, we are confident to be this bionic, comprehensive financial advisor because of our DNA and parentage. MoneyOwl is not a pure start-up in that we are a JV between two home-grown Singapore corporates, NTUC Enterprise and Providend, who have been serving Singaporeans for decades. From the NTUC side, we inherit our inclination to serve the ordinary folk through fit-for-purpose solutions, hence our investing quantum starts from $100 lump sum/ $50 monthly. From the Providend side of our parentage, we inherit deep expertise and experience in best-in-class, conflict-free and holistic financial advice.
Fourth, we believe that our investment philosophy and expression of it through the way we construct and manage portfolios - when coupled with advice - give clients a very good chance of a successful investing experience. Because we are at our core advisors, more than fund managers, (even though we have a full fledged fund management licence), we do not define successful investing as being about maximising return or even maximising risk-adjusted return. Rather, we want to advise and structure investments for clients in such a way as to give you the best odds of meeting your goals. From a combination of evidence we have examined and experience including across the GFC, we know that the keys to successful investing lie in 4 areas: being globally diversified; aiming for market-based return, rather than trying to beat the market through "active management"; keeping costs low; and staying invested over the long term.
In particular, on active management, I would like to highlight that neither we nor the Dimensional funds we use utilize any statistical models to try to read such events as to determine macro/economic regime or to predict market movement based on indicators, and thereafter shift asset allocations tactically to try to time entries into and exits out of certain asset classes. Such active management has had a poor track record especially in longer tone periods. You can read more about this at https://advice.moneyowl.com.sg/the-right-way-to...
I hope that this gives you a good picture of how MoneyOwl thinks about its journey with Singaporeans in putting their money to work towards greater financial security. Thank you again for your question!