Digital robo-adviser Smartly throws in towel

Singapore

SINGAPORE'S nascent robo-adviser space has reported a casualty - digital advisory firm Smartly will shut after fewer than three years in the business.

And with its demise coming at the time of heightened market volatility, customers being forced to liquidate their portfolios could be smarting from realised losses.

Smartly said "intense" competition in the digital advisory space has led to the "difficult" decision, according to a note seen by The Business Times on its website.

"We are writing to inform you that we have taken the difficult decision to cease Smartly's operations in Singapore.

"As you may know, competition in the digital investment advisory space is intense and maintaining a high service standard on the platform has been challenging. Despite initially contemplating core platform improvements, strategic corporate considerations by our parent company, VinaCapital Group (VCG), ultimately guided our decision," said the firm.

VCG Partners is regulated by the Monetary Authority of Singapore (MAS). The firm said VCG has since notified MAS of its decision to cease Smartly's operations.

Smartly said it is targeting to return related monies to its clients' bank accounts within three to six business days, though "slight delays" may occur due to "potential high transactions volume".

The clients have until April 27 to withdraw their assets, following which Smartly will initiate account closure the next business day by selling the assets, said the firm.

In an email to clients seen by BT, Smartly said it has reached an agreement with rival StashAway, which will offer Smartly clients 50 per cent off management fees for the first six months - capped at the first S$50,000 invested - should they choose to transition over to StashAway's platform and continue investing. This offer is valid till the end of April 2020.

StashAway chief executive and co-founder Michele Ferrario confirmed the offer. He further told BT that Smartly had contacted StashAway a few months ago on setting up such an arrangement.

To be clear, there is no direct asset transfer from Smartly to StashAway. Smartly clients interested in StashAway's promotion would have to liquidate their assets and go through StashAway's usual client onboarding process.

"With markets at current levels, it might make sense for them to liquidate their investments soon and get back into the markets," said Mr Ferrario.

Records from the Accounting and Corporate Regulatory Authority (Acra) showed that Smartly's paid-up capital stands at S$380,996, compared with StashAway's paid-up capital of S$27.5 million.

It remains unclear the current size of Smartly's assets under management, or its customer base. According to its pricing plan online, customers pay an annual management fee of between 0.5 per cent and one per cent per year, as well as the underlying exchange-traded fund (ETF) fee charged by the ETF provider of between 0.1 per cent and 0.25 per cent per year.

In a statement on Wednesday evening, VCG Partners said Smartly "no longer aligns with our group's strategic objectives", and that the decision to shut operations had been made "weeks ago".

"We understand that some customers may be anxious about our decision to end Smartly's operations, given the current market turmoil as a result of the Covid-19 outbreak. We have been working to develop a process that ensures the wind down occurs in an orderly manner," the group added.

EY global emerging markets fintech leader Varun Mittal told BT that independent digital wealth startups in Singapore - Smartly, StashAway, AutoWealth and Bento Invest, to name a few - have been faced with rising competition from incumbents, digital bank hopefuls and insurers looking to capture a share of Asia's growing mass affluent market.

DBS and OCBC have launched their own robo-advisory services, while Grab recently followed suit with its acquisition of Bento in February.

"There are now more options for consumers at almost the same price, or, at most, a 10 basis points-difference. The market volatility is not helping either," said Mr Mittal.

He noted that digital wealth startups typically acquire "lower revenue" customers - that is, those who are relatively new to investing and belong to the lower tier of the mass affluent market.

"Digital wealth platforms are good at onboarding people who are first-time investors. There will definitely be traction, but it's not easy to be sustainable. (These players) have to offer more holistic (products) to stand out," Mr Mittal added.

Smartly said customers with questions relating to their accounts can contact the firm at support@smartly.sg or via telephone at 6332 9081 / 6332 9084.