The traditional wealth management services model has one critical flaw: it focuses on managing rich people rather than managing wealth. Wealth management should be accessible to everyone, not just the ultra-rich.
The Gap in Wealth Management Services
Leon Ong, a partner in financial services advisory at KPMG Singapore, says that the current state of wealth management services is mostly focused on serving high-net-worth (HNW) and ultra-high-net-worth (UHNW) clients, leaving out the mass affluent market.
The mass affluent market has the ability to save money while not having a lot of cash on hand, but it does not fully match the requirements for traditional wealth management services. This gap in the wealth management market is where wealth technology, or “WealthTech,” firms have found an opportunity to fill.
WealthTech Companies Make Wealth Management Services More Affordable
WealthTech companies have made it simpler, cheaper, and less expensive for people to access wealth management services and products that were previously only available to HNW people at a higher price.
Theron Lam, the head of Schroders’ Southeast Asia product development, and Sin Ting So, the chief client officer of Endowus, speaking on behalf of the Singapore Fintech Association’s (SFA’s) WealthTech subcommittee, highlighted how WealthTechs have helped democratise access to private assets. Individuals can now access them via lower minimum investment amounts.
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The new generation of investors is very likely to use digital financial services. They want more advanced products and more control over their wealth journeys. These investors were charged high fees, didn’t have easy access to investment products, and didn’t get good advice. Now, they form a key market that encourages traditional financial institutions to rethink their models and service offerings.
Singapore as a WealthTech Hub
WealthTech firms have found Singapore to be a welcoming environment. Its location, regulatory environment, and reputation attract investors across the region.
The city has an increasing population of middle-class and high-net-worth individuals. Singapore’s stable economy, position as a financial services hub, and organisations such as the Monetary Authority of Singapore (MAS) and Singapore Economic Development Board encourage innovation. They provide grants and funding to startups to accelerate their growth, attracting venture capital funding and startups to set up shop in Singapore.
Opportunities for WealthTechs to Partner and Participate
WealthTechs are increasingly shaping the asset and wealth management sector in Singapore and across Asia-Pacific, according to a report by the SFA and PwC. With several MAS-licenced WealthTech platforms reporting Assets Under Management (AUM) reaching into the billions of Singaporean dollars, this interest is likely to grow and present opportunities for Singapore’s fintechs to partner with and participate in the asset and wealth management sectors.
New Models of Wealth Management Services
Endowus and StashAway are two entities that stand out among WealthTechs in the city. Both have successfully tapped into the gap in the market for mass affluent, not-yet high-net-worth individuals looking for a platform to accommodate their wealth management needs.
Gregory Van, CEO of Endowus, says that the company’s success is due to the way they run their business, which allows them to be completely focused on their clients and offer fee-only services that can only be paid for by their clients. Because they use technology, WealthTechs and Endowus can also offer the best products and services at very low prices. Van also said that there is a change in what people expect from an experience based on their age, and that more and more people prefer online experiences, even for personal things like wealth management.
Democratising Wealth Management Services
WealthTechs are changing the narrative in the wealth management services space. They are opening the market to the mass affluent and providing them with access to products by democratising wealth management services.
