4 points to consider when choosing a digital wealth platform
Endowus Insights

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4 points to consider when choosing a digital wealth platform

Jun 2022
Jul 2020

The Singapore digital wealth ecosystem (commonly known as the robo-advisory space) has seen reasonable growth since its debut in 2016.

Today, there are many players in the market. To name a few, there are newer financial services entrants such as AutoWealth, MoneyOwl, StashAway, Smartly (closed), Syfe, and brokerage and bank offerings from Saxo, OCBC, UOB AM, DBS and more.

Endowus, another option for you, is the first and only digital advisor for CPF, SRS and cash investment solutions, and also offers Cash Smart for lower-risk cash management portfolios targeting higher yields with no lock ups.

Investing is a serious decision, and choosing the right partner for your wealth will have a lasting impact on your life for decades to come. Prospective users of digital wealth offerings need to understand what robo-advisors do to be able to choose the best robo-advisor or digital platform for their needs.

What are robo-advisors?

Robo-advisors are financial advisors who provide investment management online with low to minimal human intervention. They often combine brokerage services, investment instrument selection, risk profiling, and investment performance tracking services in a convenient, end-to-end service. As such, robo-advisors or digital wealth platforms are best seen as a combination of an online brokerage and an investment advisor.

Unlike traditional advisors which have large sales team, robo-advisors operate on a much leaner structure, relying heavily on technology to scale its services, and therefore typically have lower fees due to lower costs. They typically do not charge on a transactional basis: there are no upfront sales charges, no withdrawal charges, and no brokerage charges. They typically charge a low percentage-based fee (billed periodically) against their clients' average asset value (assets under advice, "AUA").

Now, let's take a look at how to choose between robo-advisors and their variants. The 4 key factors to consider are convenience, security of the platform, cost, and their range of investment options available.

Key criteria for choosing the best robo-advisor/digital wealth platform

1. Convenience of robo-advisors

The main draw of using a robo-advisor (as opposed to a brokerage platform) is convenience, and the investment experience can be made seamless in 3 ways:

  1. For most robo-advisors, an automated regular savings plan can be set up. This means that once you initiates an automatic recurring investment instruction and standing transfer from your bank account, the robo-advisory platform will invest the money they receive from you without the need for you to manually key in investment instructions each time.
  2. Robo-advisors can help to keep your investment plan on track and within your risk tolerance by auto-rebalancing. As the financial markets are volatile, certain investments will do much better than the other during different times. Holding too much or too little of an investment that is doing better can lead to over or under-exposure. Auto-rebalancing help you keep to your investment goals despite market movements, with no intervention needed from you by selling investments that are too overweight, and buying investments that are too underweight, therefore keeping your your portfolio within your target portfolio weights and risk profile.

    Read more: The importance of rebalancing your investment portfolio (Endowus Insights)
  3. Robo-advisors can be a one-stop shop for your financial needs. In the US robo-advisory market, which started more than 12 years ago, one of the biggest players, Wealthfront, provides bill-payment facilities, debit card, cash accounts on top of investment solutions.

    Are you trying to invest CPF, SRS & cash towards your long-term goals such as retirement? In Singapore, the industry is a lot newer, but certain robo-advisors are already differentiated. Consider conveniently consolidating your short and long-term investment goals with a digital wealth platform that can serve many or all of your investment needs.

At Endowus, the first and only digital advisor for CPF, you can invest your CPF, SRS and cash savings with an automated regular savings plan, auto-rebalancing, at different levels of risk-return towards your longer-term (General Investing "General Wealth Accumulation") and shorter-term (Cash Smart) goals.

2. Safety and security of robo-advisors

How are client assets held? Is the robo-advisor licensed by the Monetary Authority of Singapore? Who am I sending money to?

Robo-advisor safety and security is more important than other B2C (business-to-consumer) tech products - apart from usual concerns surrounding personal data security, the security of one's hard-earned savings is exposed.

Any legitimate digital wealth platform has to be licensed by the Monetary Authority of Singapore (MAS) as either a Financial Advisor or a Capital Market Services Provider, which means that they undergo yearly audits, ensure that they keep to certain capital requirements, and keep clients' cash and investments separate from their own business's cash and investments.

However, that does not mean that all platforms are equally secure and safe. Even if the base regulatory requirements are met, how the cash and investments are segregated is important too. The investments assets can either be:

  1. Custodised or separately held in the client's own legal name at multiple licensed financial institutions, or
  2. Custodised together/co-mingled with other client's assets, legally held under the name of an entity owned by the robo-advisor.

With the second scenario, if the robo-advisor ceases operations, it's likely that the assets will be forcibly sold within a timeframe, much like what happened when Smartly ceased its operations in March 2020 this year, where Smartly client were forced to sell down their positions. If clients' assets are co-mingled under a subsidiary owned by the robo-advisor, once the robo-advisor ceases operations, the subsidiary is no longer be able to have to a custodian account, nor will it be able to manage assets as a defunct entity.

At Endowus, client assets are held in your own name at Endowus and at Endowus' partner custodian UOB Kay Hian, Singapore's largest broker. When you open an Endowus account, a UOB Kay Hian account is also opened in your own name for added security of your transactions and assets.

Read more: Security & safety of your assets (Endowus Insights)

3. Cost of using robo-advisors

Other than the platform's fee (often called an access, wrap, advisory, or management fee), there are often other charges involved, such as foreign currency conversion costs, dividend withholding taxes, and fund-level fees.

For the platform fees, it is important to check whether the fees quoted are inclusive of Good and Services Taxes (GST). Currency conversion costs can also be expensive - ranging from less than 0.1% to an exorbitant 0.9% for certain robo-advisors. Fund-level fees vary too, ranging from 0.1% to 1+%.

chart of cost of using robo advisors

While minimising fees is the surest way to save on costs, considering how Dividend Withholding Tax and US Estate Tax may affect your investment returns is essential.

At Endowus, the platform Access Fee is inclusive of GST, and range from 0.05% to 0.60%. Endowus' underlying funds are SGD-denominated to avoid unnecessary foreign exchange conversion costs and tax-efficient for Singapore-based investors (by not investing in US-listed ETFs), with 100% trailer fee rebates so that total all-in costs are transparent and the lowest achievable.

4. Range of investment options offered by the robo-advisor

Some prospective robo-advisory clients want a wider range of investment options - they may seek an income portfolio that gives out high dividends periodically, whereas others want to invest in certain industries (technology, REITs etc) or geographies (Asia, Singapore, US, etc.). To these people, the greater the number of choices, the better.

However, the issue with thematic investments is that just like fad diets, thematic investments fall in and out of fashion quickly, and those that have done poorly are rarely remembered. It does not help that most investors identify viable thematic investments by recent high returns, which may lead to chasing after investments that are already over-priced. The same applies in trying to time which country or region will perform best. The below chart clearly shows how difficult it is to time markets, and which and when a geography will out-perform.

table of annual equity returns of markets from 1999 to 2018

In contrast, it may be prudent to diversify broadly across industries and geographies, according to each individual's wealth goals and risk profile. By being broadly diversified and passive in your asset allocation, you are more likely to achieve your goals in the long-run and be compensated for the risk you take by being invested.

At Endowus, investing does not try to time which sectors and geographies will out-perform in the short-term. Instead, Endowus relies an evidence-based approach to capture higher expected returns through a passive and strategic asset allocation suitable for your goals. This is then implemented through access to time-tested practitioners (globally leading asset mangers managing trillions of dollars) such as PIMCO, Dimensional, Vanguard, Schroders, First State, and more.

Should I compare returns across roboadvisors?

Knowing that you have invested in a platform with fair, or great returns is important. As a discerning client of robo-advisory platforms, it is also expected that you compare the returns across different solutions to make the best choice foryourself.

Unfortunately, reported figures shown by different platforms cannot be compared like for like. Not all cost of investments have been,or can be egregiously accounted for the different platforms, especially for roboadvisors that use US ETFs. These costs include:

Dividend withholding tax incurred between underlying fund and roboadvisors

For platforms using US ETFs, there is an additional 30% withholding ETF that is payable by the roboadvisor. This withholding tax implication might be excluded in total returns calculations. For a platform that yields a 2% annual dividend, a 30% withholding tax would mean an additional 0.6% cost per annum, and a similar decrease in returns.

At Endowus, as we use either UCITs or SG domiciled funds, all dividend withholding tax implication are already accounted for in the NAV of the fund used.

Price transacted by roboadvisors for ETF may vary widely

ETFs, being exchange traded, are subjected to intra-day market volatility. Any transactions may be executed at a price that is higher or lower than what is reflected in the robos’ returns calculation. Actual returns experienced by clients of these robos can be lower because of this difference.

For example, returns reported by these robos may be proxied using entry or exit prices with the end of day trading price of the ETF. Every client might have different entry/exit prices for that investment. This is an especially significant issue when the roboadvisor decide to transact huge amounts of buy/sell orders in an ETF with lower liquidity, such as KWEB.

At Endowus, all the transaction is made based on end of day NAV of the funds, and our returns calculation is based on that. There is no bid-ask spread to cross, no deviation in entry/exit price, making our returns figures more accurate.

FX transaction fees

Currency conversion rates by platforms using USD-denominated ETF also adds to the cost of investing, which again are often not reflected in performance figures. This FX spread can be as high as 1.4% in some of the bank robo advisory platforms, which can be seen as an immediate cost of investment.

At Endowus, our advised portfolios on our platforms are all SGD denominated, and our returns would have already accounted for any FX implications which is recognized at the fund level.

Fees difference between platforms

Roboadvisors and wealth platform typically charge less fees as you invest more with them. This makes it difficult to include a performance update with all fees inclusive, asdifferent client base would have different returns.

One should note that at Endowus, our all-in Endowus fees are extremely competitive fees: for cash, it starts at 0.6% p.a. and for SRS and CPF, 0.4% p.a..

How should I compare performance then?

Ultimately, as an investor, you would mainly be interested in getting the best estimate of the the returns that you will eventually get, rather than one that may deviate signficantly from your personal experience. One of the better ways is to look at what other clients' actual performance are in a third party review.


While the physical act of investing will only get easier with the proliferation of technologically driven services and products launched by the financial institutions, the responsibility of assessing the right product and risk for you remains a personal endeavour, and the rewards and losses from that decision are for the investor to experience and learn from.

With the emergence of more robo-advisors and digital wealth platforms, it is crucial to find out what matters most to us as prospective clients and prioritize platforms that serve our needs the best and have our best interests at heart.

Investment involves risk. Past performance is not necessarily a guide to future performance or returns. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endow.us Pte. Ltd (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus Pte. Ltd., its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

Investment into collective investment schemes: Please refer to respective funds’ prospectuses for details of the funds, their related fees, charges and risk factors, The listing of units of the fund on a stock exchange does not guarantee a liquid market for the units. Before making an investment decision, you are reminded to refer to the relevant prospectus for specific risk considerations.

For Cash Smart Secure, Cash Smart Enhanced, Cash Smart Ultra: It is not a bank deposit and not capital guaranteed, and is subject to investment risks, including the possible loss of the principal amount invested. Investment products are not insured products under the provisions of the Deposit Insurance and Policy Owners Protection Schemes Act 2011 of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme. Interest rates are indicative and subject to change at any time.

Product Risk Rating: Please note that any product risk rating (the “PRR”) provided by us is an internal rating assigned based on our product risk assessment model, and is for your reference only. The PRR is subject to change from time to time. The PRR does not take into account your individual circumstances, objectives or needs and should not be regarded as advice or recommendation to purchase, hold or sell any fund or make any other investment decisions. Accordingly, you should not solely rely on the PRR in making your investment decision in the relevant Fund.

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