Robo-advisor platforms have become synonymous with low-cost and easy access to investing globally. Compared to more traditional investment solutions, robo-advisors typically provide digital tools that enable fully online account opening, risk assessments to recommend suitable portfolios, automated portfolio management and rebalancing, as well as digital access to customer support.
Beyond managed portfolios, robo-advisors have also expanded the types of services they offer. Traditional financial institutions have joined the space too. DBS offers digiPortfolio, OCBC offers RoboInvest, while UOB Asset Management offers UOBAM Invest. This means we do not necessarily need to open an account with a fintech platform to start investing through a digital advisory solution.
Many robo-advisors also provide cash management solutions, which allow us to potentially earn higher returns on our liquid cash by investing in instruments such as money market funds and short-duration fixed-income funds.
Some platforms have expanded even further beyond robo-advisory services. StashAway offers Simple Fixed, while Syfe offers Cash+ Guaranteed, which provide fixed-tenure returns as alternatives to traditional fixed deposits. Unlike bank fixed deposits, however, these products are not protected by SDIC deposit insurance.
Platforms such as iFAST through FSMOne, Syfe through Syfe Brokerage, and Saxo also allow investors to trade stocks and ETFs through brokerage accounts. Saxo additionally provides access to leveraged products such as Forex, CFDs and commodities.
Read Also: Complete Guide To Cash Management Accounts In Singapore
Content:
What Are The Robo Advisor Platforms Available To Singapore Investors?
Investment in Unit Trusts
#1 Endowus
#2 FSM MAPS
Investment in ETFs
#3 DBS digiPortfolio
#4 AutoWealth
#5 StashAway
#6 Syfe
#7 UOBAM Invest
#8 UTrade Robo (UOB Kay Hian)
#9 Kristal.AI
Investment in Individual Stocks and ETFs
#10 OCBC RoboInvest
Comparison Based On The Amount Invested, And The Fees Charged
Pros And Cons Of Investing With A Robo Advisor
Try A Robo-Advisor For Yourself
What Is A Robo Advisor?
The term “robo advisor” broadly describes digital wealth management platforms that use technology, automated processes and algorithms to help us invest and manage our money. By automating parts of the investment process, robo-advisors can reduce their reliance on human advisers while providing investment recommendations and portfolio management at scale.
Robo-advisor platforms also use digital tools to improve customer experience. We can typically open an account online, complete a risk assessment and receive a recommended portfolio without visiting a branch. Many platforms also provide educational content, market updates and events for their users.
Similar to unit trusts and ETFs, robo-advisor portfolios can invest across diversified funds and asset classes. This allows investors to gain broad exposure even with relatively small amounts, while taking a more hands-off approach through automated portfolio construction and rebalancing.
What typically differentiates robo-advisory platforms is their investment methodology or philosophy. We should therefore understand how a robo-advisor invests our money, as well as compare its underlying funds, fees and range of investment solutions.
While robo-advisors use algorithms to manage investments, these systems are ultimately designed by people based on specific financial models and rules. They also invest in the same financial markets as other investors, typically across equities, bonds and money market instruments. Our returns will therefore still depend on how these underlying investments perform, and we remain exposed to market risks.
Which Robo Advisor Platforms Can Singapore Investors Invest In?
| No. | Robo-Advisor Platform | Minimum Investment | Yearly Advisor Fees |
| Investments In unit trusts (for main portfolio) | |||
| 1 | Endowus | $1,000 | – 0.25% to 0.6% (cash investments in Core, Income and Satellite portfolios) – 0.4% (CPF and SRS investments in Core, Income and Satellite portfolios) – 0.3% (Cash, CPF and SRS via Fund Smart portfolios) – 0.15% (Cash Management) |
| 2 | FSM MAPS | $500 (lump sum) $100 (per month) | – from 0.0875% per quarter (Conservative portfolio) – from 0.125% per quarter (Other portfolios) |
| Investments In ETFs | |||
| 3 | DBS digiPortfolio | From $100 to $1,000/US$1,000 | – 0.75 – 0.85% (Global, Asia, Income and Retirement portfolios) – 0.25% (SaveUp portfolio) |
| 4 | AutoWealth | AutoWealth Flexi Cash: $1,000 AutoWealth Starter: $3,000 AutoWealth Plus+: $10,000 | – AutoWealth Flexi Cash: 0.1% – AutoWealth Starter: 0.5% + US$18 (platform fee) – AutoWealth Plus+: 8% performance fee on profit |
| 5 | StashAway | None | 0.2% to 0.8% |
| 6 | Syfe | None | Managed portfolios: 0.25% to 0.65% Cash+ Flexi: 0.05% to 0.2% Cash+ Guaranteed: No fees |
| 7 | UOBAM Invest | From $1 | Digital Advisor: Up to 0.8% for $25,000 and below or 0.6% above $25,000 (and US SEC fees for sell trades) |
| 8 | UTrade Robo (UOB Kay Hian) | $5,000 | 0.5% to 0.88% |
| 9 | Kristal.AI (Automated Portfolios) | Based on investment | 0.54% p.a. Investment Advisory & Management Fee + 0.162% p.a. Safe Keeping Fee |
| Investments In Individual Stocks And ETFs | |||
| 10 | OCBC RoboInvest | From US$100 to HK$350,000 | 0.88% |
Robo-Advisors That Primarily Invest In Funds
As you can see, even between robo-advisor platforms, there are different investment methodologies and costs also vary. Below is more detailed information on each of the robo-advisor platforms in Singapore.
#1 Endowus
Portfolios:
- Endowus Core: Flagship; ESG; and Factor (Advised portfolio)
- Endowus Income: Stable Income (100% fixed income); Higher Income (20% equities & 80% fixed income); Future Income (40% equities & 60% fixed income)
- Endowus Satellite: Real Assets; Technology; and China Equities (Advised portfolio)
- Endowus Cash Smart: 3 portfolios with differing risk levels (Cash Management portfolio)
- Endowus Fund Smart: Design your own customised portfolios
- Private Wealth and Institutional Clients: tailored for high net worth clients
Minimum Investment Amount: $1,000 (across all portfolios); $10,000 if you want to invest in its Income Portfolios
Annual Advisor Fees:
- Investing cash in Endowus Core, Income, Satellite and Fund Smart (Multiple-Fund Portfolio) (in cash): 0.25% p.a. to 0.6% p.a.
- $200,000 and below – 0.6%
- Above $200,000 to $1 million – 0.5%
- Above $1 million to $5 million – 0.35%
- Above $5 million – 0.25%
- Investing CPF or SRS in Endowus Core, Income, Satellite and Fund Smart (Multiple-Fund Portfolio) (if applicable): 0.4% p.a.
- Investing cash, CPF and SRS in Fund Smart (Single Fund Portfolio): 0.3% (and 0.25% for cash amounts above $5 million)
- Investing cash and SRS in Cash Smart and Fund Smart (Short-term Cash Management portfolio): 0.15%
Endowus is an independent fee-only wealth advisor, providing high-quality financial advice and creating personalised asset allocation and portfolio for investors. Endowus’ approach is to select the best-in-class funds, while building a globally-diversified and low-cost portfolio for investors.
It pioneered access to funds’ institutional share classes, which were never previously within reach, for retail investors. These funds include world-renowned global investment management companies, such as Dimensional Fund Advisory, PIMCO, First State Investments, Eastspring Investments, Vanguard, Schroders and others.
Besides its Endowus Core portfolio with cash, Endowus also offers investments funded by CPF or SRS monies. Endowus also offers cash management portfolios, via its Endowus Cash Smart and short-term cash management portfolios under its Fund Smart, to boost returns on your cash savings.
Endowus Fund Smart was launched to help investors custom-design your ideal investment portfolios. With Endowus Fund Smart, investors can choose from a curated list of more than 200 funds that have already been identified as best-in-class by its team while automatically accessing the institutional share class.
There are also Endowus Satellite portfolios that you can invest in for exposure to selected themes or market opportunities, as well as its Income Portfolio to provide a regular income stream for investors. As their names suggest, these funds complement your main portfolio.
DollarsAndSense readers can enjoy S$50 off Endowus access fees when they open an account through our exclusive link. Sign up with Endowus to enjoy the promotion. Terms & Conditions apply.
#2 FSM MAPS
Portfolios: 10 globally diversified portfolios, comprising 5 Income and 5 Growth portfolios across five risk profiles
Minimum Investment Amount:
- $500 (Lump Sum)
- $100 per month (Regular Savings Plan)
Management Fees:
- 0.0875% per quarter (Conservative portfolio)
- 0.125% per quarter (Other portfolios)
FSM Managed Portfolio, or FSM MAPS, does not completely leave its investment decisions to a predetermined algorithm. Instead, its portfolio managers and research analysts assess markets and investment products to determine portfolio positioning.
It offers 10 portfolios across Income and Growth objectives, with five risk profiles ranging from Conservative to Aggressive. Investors can start with $500 for a lump-sum investment or $100 per month through a Regular Savings Plan.
Through FSM, investors can also access a wider range of investment products, including stocks, ETFs, bonds and funds.
Read Also: What Are The Pros And Cons Of Investing Using A Regular Savings Plan (RSP)
Robo-Advisors That Primarily Invest In ETFs
#3 DBS digiPortfolio
Portfolios:
- Retirement Portfolio
- Global Portfolio
- Asia Portfolio
- Income Portfolio
- SaveUp Portfolio
Minimum Investment Amount:
- Retirement Portfolio: $1,000
- Global Portfolio (ETF and Unit Trust): $1,000/US$1,000; Global Portfolio Plus (Unit Trust): $10,000/US$10,000
- Asia Portfolio (ETF) (S$1,000)
- Income Portfolio (Unit Trust) (US$1,000 or S$1,000)
- SaveUp Portfolio (S$100)
Annual Advisor Fees:
- Retirement Portfolio: 0.75%
- Global Portfolio (ETF and Unit Trust): 0.75%; Global Portfolio Plus (Unit Trust): 0.75% to 0.85%
- Asia Portfolio: 0.75%
- Income Portfolio (Unit Trust): 0.75%
- SaveUp Portfolio: 0.25%
DBS digiPortfolio provides investors with five portfolios – Retirement Portfolio, 3 Global Portfolios, Asia Portfolio, Income Portfolio and SaveUp – consisting of the best funds from DBS’ platform.
Its 3 Global Portfolios are based on your investment preferences, with 2 portfolios comprising either UK-listed ETFs or 4 – 6 global Unit Trusts, and the third one investing in 8-10 global unit trusts, adjusted tactically to capitalise on market movements.
Most of its portfolios, including its Asia Portfolio, also offer three risk profiles: Slow n Steady (most conservative); Comfy Cruisin; and Fast n Furious (most aggressive). Its Asia Portfolio is made up of Singapore-listed ETFs that invest across Asia.
The Income Portfolio has both equity and bonds exposure, with an aim to generate a regular quarterly payout of 4% per annum. Its portfolio consists primarily of REITs, Asian equities and bonds – and is classified under the Comfy Cruisin risk profile.
DBS digiPortfolio’s SaveUp portfolio is meant for risk-averse investors who have lower risk appetites and prefer returns to have lower volatility. It invests in fixed income only.
As its portfolios may be purchased in SGD and USD, customers are required to also open a Multi-Currency Account with DBS. This can include the popular DBS Multiplier Account, My Account, eMulti-Currency Autosave (eMCA), eMulti-Currency Autosave Plus (EMCA+) or Multi-Currency Autosave Plus. This is one of the benefits of investing with a bank’s robo-advisory, as you can also use its other services.
Another benefit of using a bank-led robo-advisory solution is that benefits may span across its solutions as well. For example, when you invest at least S$1,000 with DBS digiPortfolio, you can boost your interest return on cash holdings in your DBS Multiplier Account up to 4.1%.
Apart from its 0.75% to 0.85% advisor fee, there are no other sales charges, platform fees, or switching fees.
Read Also: Investors In Singapore: What Is SIP Accreditation And Should You Get It?
#4 AutoWealth
Portfolios:
- AutoWealth Starter: Globally diversified stocks and government bonds
- AutoWealth Plus+: Thematic portfolios
- Flexi Cash USD
Minimum Investment Amount:
- AutoWealth Starter: $3,000
- AutoWealth Plus+: $10,000
- Flexi Cash USD: $1,000
Annual Advisor Fees:
- AutoWealth Starter: 0.5% p.a. (Management fee) + US$18 p.a. (Platform fee)
- AutoWealth Plus+: 8% of portfolio profit
- Flexi Cash USD: 0.1% p.a.
AutoWealth is a simple and easy-to-understand robo-advisory solution. Its primary AutoWealth Starter portfolio comprises a mix of stocks and government bonds spanning U.S., Europe and Asia Pacific. The AutoWealth portfolio tracks the MSCI All-Country World Index and the FTSE World Government Bond Index, with ETFs listed on the New York Stock Exchange (NYSE) and NASDAQ.
Its AutoWealth Plus+ portfolio enables you to gain exposure to a thematic portfolio that you may want greater exposure to. It currently offers five thematic portfolios:
1) The Future of New Economies portfolio: with greater emphasis on exposure to China, Taiwan, India and South Korea
2) Future 2050 portfolio: to gain exposure to futuristic multidecade macro trends, such as technology and healthcare
3) Future of Digital Economy portfolio: providing greater allocation to Fintech, Internet and E-commerce companies
4) Growth & Momentum portfolio: invest in growth and momentum companies with favourable multi-factor characteristics backed by rigorous and well-established empirical studies
5) Turnaround portfolio: gain exposure to sectors that are temporarily depressed or likely to benefit from specific market events, including consumer discretionary, lithium, clean energy, aerospace & home construction companies.
AutoWealth’s Flexi Cash USD portfolio enables investors to access US Treasury Bills ETFs. It also has a Flexi Cash SGD portfolio in the works, which will offer SGD-denominated money market funds.
AutoWealth also assigns clients a wealth manager who is readily available via whatsapp. AutoWealth’s fees are also structured slightly differently from other robo advisors, with both a management fee of 0.5% p.a. and an annual platform fee of USD$18.
You can also start investing your SRS funds via AutoWealth.
Read Also: Step-By-Step Guide To Opening An AutoWealth Account For New Singapore Investors
AutoWealth: Sign up with AutoWealth and use the promo code DOLLARSANDSENSE to receive a S$20 top-up after funding your account with the S$3,000 minimum investment amount. Terms & Conditions apply.
#5 StashAway
Portfolios:
- General Investing
- General Investing Powered by StashAway
- General Investing Powered by BlackRock
- Responsible investing with ESG
- Thematic portfolios
- Flexible portfolio
- Income portfolios
- Invest your SRS
- StashAway Simple (Cash Management portfolio)
- StashAway Simple
- StashAway Simple Plus
- StashAway Simple Guaranteed
- StashAway Reserve (for Accredited Investors)
Minimum Investment Amount: None
Annual Advisor Fees:
- Goal-based and income portfolios:
- First $25,000 – 0.8%
- Additional amounts above $25,000 to $50,000 – 0.7%
- Additional amounts above $50,000 to $100,000 – 0.6%
- Additional amounts above $100,000 to $250,000 – 0.5%
- Additional amounts above $250,000 to $500,000 – 0.4%
- Additional amounts above $500,000 to $1 million – 0.3%
- Additional amounts above $1 million – 0.2%
- Single ETF Flexible Portfolio – 0.3%
- StashAway Simple:
- StashAway Simple – 0.15%
- StashAway Simple Plus – 0.2%
- StashAway Simple Guaranteed – 0%
StashAway employs a proprietary investment strategy they call Economic Regime-based Asset Allocation (ERAA), based on the theory of economic cycles. Through monitoring changing economic indicators, they rebalance the asset allocation mix of customers’ portfolios accordingly.
Apart from its own General Investing portfolio, StashAway also introduced a General Investing portfolio powered by BlackRock. This solution enables investors to leverage on insights and asset allocation guidance by BlackRock, based on four risk levels, while StashAway takes care of the trades and servicing aspect.
You can also invest your Supplementary Retirement Scheme (SRS) funds via StashAway, as well as invest in its Singapore-focused income portfolio, comprising the STI ETF, Singapore government bonds ETF, corporate bond ETFs, REITs ETFs. StashAway also offers thematic portfolios, such as Technology Enablers, The Future of Consumer Technology, Healthcare Innovation and Environment and Cleantech.
Read Also: StashAway Income Portfolio: How You Can Get 3.75% Dividends From your Investments Each Year
For greater control over your portfolio, you can utilise StashAway’s Flexible portfolios to build a customised investment portfolio. You can choose to invest in ETFs provided by some of the world’s top fund managers, including iShares (by BlackRock), Vanguard, SPDR, Ark Invest and more.
StashAway also offers cash management accounts. StashAway Simple has a projected return rate of 3.1 % p.a. StashAway Simple Plus has a projected return rate of 3.6% p.a. Given the higher projected return, we should expect to take on slightly higher risk when investing in StashAway Simple Plus. StashAway Simple Guaranteed invests in fixed deposits, and currently has a projected rate of 2.8%. Since its underlying investment is a fixed deposit, there is a lock-in of 1, 3, 6 or 12 months.
They also provide private equity and venture capital investing through its StashAway Reserve portfolio, for accredited investors.
DollarsAndSense readers can enjoy 50% off management fees for 6 months on the first S$70,000 invested. Sign up with StashAway to enjoy the promotion. Terms & Conditions apply.
#6 Syfe
Portfolios:
- Core portfolios
- Core Equity100
- Core Growth
- Core Balanced
- Core Defensive
- Satellite portfolios
- REIT+ portfolio
- 100% REITs
- REITs with Risk Management
- Themes
- China Growth
- Disruptive Technology
- ESG & Clean Energy
- Healthcare Innovation
- REIT+ portfolio
- Income Portfolio
- Income+ Preserve
- Income+ Enhance
- Custom portfolio
- Cash portfolios (cash management account)
- Cash+ Flexi
- Cash+ Guaranteed
Minimum Investment Amount: None
Annual Advisor Fees: 0.35% p.a. to 0.65% p.a.
- Blue Tier: $20,000 and below: 0.65% p.a.
- Black Tier: Above $20,000: 0.5% p.a.
- Gold Tier: Above $100,000: 0.4% p.a.
- Private Wealth: Above $500,000: 0.35%
Syfe uses an Automated Risk-managed Investments (ARI) strategy, their proprietary investment methodology, which automatically adjusts your portfolio to ensure enhanced risk-adjusted returns by managing your portfolio’s downside risk.
Unlike many other robo advisors, Syfe’s main portfolio is diversified into not just equities and bonds, but commodities as well. It does so via ETFs listed on the US stock exchange.
Read Also: Investing With Syfe: 5 Things You Need To Know About Singapore’s Newest Robo-Advisor
Complementing its Core portfolios, Syfe also enables investors to build satellite portfolios, including Syfe REIT+, thematic portfolios, and custom portfolios, to give users more investment choices. Investors can also build an Income portfolio via Syfe’s Income + Preserve and Income+ Enhance solutions.
In addition, Syfe also has its cash management accounts, Syfe Cash+ and Syfe Cash+ Guaranteed.
Syfe: New Syfe users can enjoy exclusive rewards when they sign up through DollarsAndSense and enter promo code SPDNS in the Syfe app. Sign up with Syfe and check the prevailing promotion and qualifying requirements. Terms & Conditions apply.
#7 UOBAM Invest
Portfolios:
- Core
- Satellite
Minimum Investment Amount: $1
Annual Advisor Fees: 0.6% p.a. to 0.8% p.a.
- $25,000 and below: 0.8% p.a.
- Above $25,000: 0.6% p.a.
Launched by UOB Asset Management, UOBAM Invest employs a Glide-path model to gradually allocate funds towards safer assets as investors move closer to their target goal completion date. UOBAM Invest has recently updated its solution to two distinct products: Core portfolio and Satellite portfolio.
In its Core portfolio, you can invest in a guided portfolio. Its Satellite portfolio allows you to explore either a DIY method to build your portfolio or invest in its Megatrends Portfolio shaping Asia’s post-pandemic world – which include Changing demographics, Going Green and The Digital Economy.
Via the UOBAM Invest app, you also have access to Fund Direct, where you can also buy funds directly
#8 UTrade Robo (UOB Kay Hian)
Portfolio: Global Multi Asset Portfolio
Minimum Investment Amount: $5,000 per portfolio (minimum subsequent investment is $500)
Annual Advisor Fees: 0.5% p.a. to 0.88% p.a.
- $50,000 and Below: 0.88%
- Above $50,000: 0.68%
- Above $100,000: 0.5%
UOB Kay Hian’s UTrade Robo invests in multi-assets, including stocks, bonds and commodities, as well as globally diversified portfolios. It selects low-cost ETFs listed globally to represent each asset class.
On its website, UTrade Robo states that it utilises the Modern Portfolio Theory to allocate among asset classes to determine the maximum expected returns for a given level of risk.
While it has a minimum investment amount of $5,000 per portfolio, subsequent top-ups of investments can be made with a minimum amount of $500.
#9 Kristal.AI
Portfolios: 5 Thematic Portfolios
Minimum Investment Amount: based on investment
Annual Advisor Fees: Brokerage fee: US$1 + taxes; Standard Monthly Advisory Fees; and Safe Keeping Fee (from what we can tell, the monthly advisory fees and safe keeping fees are not stated upfront)
Kristal.AI offers several types of investment portfolio, many catered to Accredited Investors. These include Institutional Funds, Private Markets, and Structured Products. Retail investors can invest in one of its 5 Automated Portfolios:
1) Kristal High Growth: Ideal for high-risk investors focused on aggressive capital appreciation over a longer period.
2) Kristal Growth: Ideal for medium-risk investors focused on both safety and capital appreciation over a longer period.
3) Kristal Secure: Ideal for low-risk investors focused on safety and expecting slightly higher alpha over traditional deposits.
4) Kristal Balanced: Ideal for low to medium-risk investors focused on both safety and capital appreciation over a longer period.
5) Kristal All Weather US: Ideal for investors looking to gain a diversified exposure to various asset classes with the objective of balanced growth.
Investors can also access Kristal.AI’s algorithm-based advisory for an ETF portfolio based on their investment amount and risk appetite.
Investments In Individual Stocks And ETFs
#10 OCBC RoboInvest
Portfolios: 38 thematic portfolios across 7 markets
Minimum Investment Amount: From US$100 to HK$350,000
Annual Advisor Fees: 0.88% p.a.
OCBC RoboInvest offers a diverse selection of 38 thematic portfolios across three risk tolerance levels – low, medium, and high – for its investors. Uniquely, it is the only platform offering the ability to get invested into individual stocks and ETFs within the themes we select.
Its minimum investment amount starts from US$100 which is offered for several portfolios. However, the minimum investment amount can go up to several thousand dollars, typically under US$5,000, depending on the portfolio investors choose.
Investors can choose a lump sum investment or monthly investments that are only available for selected portfolios.
OCBC RoboInvest also charges its investors exchange-related fees and charges incurred when buying and selling the portfolios.
How Robo Advisors In Singapore Typically Work
Each platform has its own unique ways of offering a robo advisor financial service, but the broad overview is the same:
Step 1: Sign-up and answer a detailed questionnaire about your risk appetite and intended investment time horizon.
Step 2: Fund your account, either on a lump sum or monthly basis.
Step 3: Upon receiving your funds, your robo advisor will then purchase a mix of ETFs (and if applicable, other assets) that corresponds to what they consider “optimal” based on your profile and the current market conditions.
Step 4: The robo advisor will monitor the market and perform rebalancing when necessary to manage risk and maximise potential returns.
As far as we can tell, all of the robo advisors make the majority of their investments in US and global ETFs with exposure to a variety of asset classes including equities, bonds, gold and other commodities.
We typically also incur additional fees for trading/clearing investments.
Pros And Cons Of Investing With A Robo Advisor
Pro #1: You Don’t Need a Large Amount of Capital
When investing as an individual, there are minimum trade sizes and high transaction costs imposed on the account, and this makes investing as an individual cost-prohibitive. Robo advisors allow you to own fractional portions of ETFs, which is impossible to do on your own unless you have a large capital.
Pro #2: Diversification
Because of the scale that technology enables, robo advisors can offer detailed monitoring of market indicators and apply sophisticated investment strategies based on them, much like what mutual funds provide, but at lower cost.
Pro #3: Personalised Portfolio
Rather than needing to pick from a list of mutual funds that you think best fit your needs, robo advisors can give you a portfolio mix that is more finely tuned to your needs (as the robo advisor deems to be appropriate), though not completely personalised on an individual level.
Pro #4: Passive Approach
The idea with robo advisors is that you do not need to rebalance your portfolio as market conditions change. Rebalancing is done by robo advisors for you, automatically.
Read Also: 3 Important Differences Of Automated Investing From Traditional Investing
Pro #5: “Low Fees”
Robo advisors generally charge lower annual management fees than professionally managed funds do. We all know that fees have a compounding effect that eats into our returns, especially over the long term. The higher the fees, the less returns we enjoy for the same amount invested and asset performance.
This point about “low fees” does come with a caveat. While robo advisor fees are admittedly lower than what mutual funds charge, it is still an additional cost that you are incurring, as opposed to buying the ETFs yourself and managing your own portfolio. So you need to decide if the value robo advisors provide is worth the fees you pay, over the long-term.
Con #1: Letting Emotions Get In The Way
Even though you automate the investment process, your emotions can still sway your decisions. This means panic selling during a downturn or making the decision to sell after an upswing in the markets.
Con #2: Forgetting Your Long-Term Investment Needs
Because you automate your investments, you may think it is well taken care of. However, you may forget to increase your investment size as you progress in your career and earn more or when you have more children.
Con #3: Currency Exchange Spread and Risk
Typically, in Singapore right now, robo advisors tend to be heavily invested in US-based ETFs. This means your money will be subject to USD conversions at spot rates, as well as incurring currency conversion fees charged by brokers.
Con #4: The Fees
It might be ironic to say that the fees are a reason not to use robo advisors, since they are one of the draws. However, as mentioned earlier, robo advisor fees are recurring costs, which are on top of underlying fund-level fees or Total Expense Ratio (TER) that may also be charged. Finally, as mentioned, there is a currency conversion fee you also need to be aware of.
If you like the benefits of what ETFs offer and are willing to put in some time and effort to do-in-yourself, then you would be able to save quite a bit, especially over the longer-term. So you need to evaluate if you really need a “purely passive” option that robo advisors provide, or can spare some time to periodically review and manage your portfolio.
Read Also: Fund Management Costs: 3 Ways Your Returns Are Being Eroded By “Hidden” Charges
Con #5: Lack of Flexibility
The whole idea of robo advisors is that you take the emotion out of investing, and that they help you to make “smart” choices based on their algorithms. However, what happens when you do not agree with the choices made by the robo advisor?
If you have a particular opinion or insight that you think isn’t picked up on by the robo advisor, then you might want to give them a miss. Also, you cannot choose a specific ETF to include (or exclude), which can be irritating, since a portion of your money is deployed in something you do not believe in.
Con #6: Tax On Dividends
Many of these robo advisors buy ETFs listed in the US, your dividends are subject to a 30% dividend withholding tax. What that means is that your dividend returns are lesser compared to buying ETFs listed elsewhere. It is unclear whether the robo advisors take this 30% dividend tax into account when doing their projections.
Try A Robo-Advisor For Yourself
Since it doesn’t cost you anything to register and explore the platforms, you can try them out for yourself to see how robo-advisors allow you to set your risk profile, get insights into your portfolio and understand how your investments may perform over time.
If you’d like to try a robo-advisor for yourself, DollarsAndSense has partnered with Endowus, StashAway, AutoWealth and Syfe to give you a headstart on your robo-investing journey.
Endowus: DollarsAndSense readers can enjoy S$50 off Endowus access fees when they open an account through our exclusive link. Sign up with Endowus to enjoy the promotion. Terms & Conditions apply.
StashAway: DollarsAndSense readers can enjoy 50% off management fees for 6 months on the first S$70,000 invested. Sign up with StashAway to enjoy the promotion. Terms & Conditions apply.
AutoWealth: Sign up with AutoWealth and use the promo code DOLLARSANDSENSE to receive a S$20 top-up after funding your account with the S$3,000 minimum investment amount. Terms & Conditions apply.
Syfe: New Syfe users can enjoy exclusive rewards when they sign up through DollarsAndSense and enter promo code SPDNS in the Syfe app. Sign up with Syfe and check the prevailing promotion and qualifying requirements. Terms & Conditions apply.
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