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NTUC, Providend tie up to offer low-cost advisory

MoneyOwl, a conflict-free model, may be game changer in high-cost retail investment scene

From left: Chuin Ting Weber, CEO, and Christopher Tan, executive director, of MoneyOwl. The company will reach out to individuals and families who need to save and invest, but are under-served by banks and financial advisers.


THE cost of investment and insurance products is stubbornly high in Singapore. But a new financial advisory venture - backed by a social enterprise group - may well be a game changer.

MoneyOwl Pte Ltd is a joint venture between NTUC Enterprise Co-operative Ltd and Providend Holding Pte Ltd, the holding company of homegrown financial advisory firm Providend.

MoneyOwl will offer a comprehensive suite of financial planning services, including protection, investment and wills. This will be done at a low cost; 50 per cent of insurance product commissions, for instance, will be rebated back to clients.

The service will reach out to individuals and families who need to save and invest, but are under-served by banks and financial advisers.

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MoneyOwl's first service will be insurance. The firm has taken over DIYInsurance, the online platform operated by Providend. DIYInsurance, which already offered a 50 per cent commission rebate, carries a range of products including term life, endowment and critical illness plans. It has become the insurance module of the MoneyOwl site, and will eventually also offer whole life policies.

Over the next six to nine months, MoneyOwl also will roll out low-cost portfolio services. It will also offer will writing and comprehensive financial planning.

For an initial period, fees for will writing and financial planning - both will be digital or via the platform - are expected to be waived using promotion codes.

MoneyOwl chief executive Chuin Ting Weber said the firm aims to deliver "competent, conflict-free and comprehensive'' financial advice that integrates CPF and other national schemes. "Assured of a solid financial plan to support their life decisions, and equipped with better financial knowledge overall, our clients can be empowered to pursue what is truly important to them for a fulfilling life, across all life stages.''

Christopher Tan, who founded Providend in 2001 as a fee-only firm, will be MoneyOwl executive director. He will continue to be Providend chief executive.

Kee Teck Koon, NTUC Enterprise executive director, said: "MoneyOwl will provide impartial financial advice to stretch workers' hard-earned dollars, by helping them take charge of and manage their expenditure and savings, select fit-for-purpose protection plans, and grow their retirement funds through low-cost investments.''

NTUC Enterprise was launched in 2012 to support NTUC Social Enterprises.

MoneyOwl has a capital markets services licence. It is envisioned as a "bionic'' FA, combining digital with human advisory capabilities. It has a paid-up capital of S$10 million, and is 60 per cent owned by NTUC Enterprise and 40 per cent by Providend Holding.

The firm is not a non-profit. Said Ms Weber: "The company will look to be financially sustainable and thriving as soon as possible, but we do not aim to maximise profits.''

She added: "MoneyOwl shareholders are committed to doing this for the long term and are driven by the mission to increase ordinary working families' financial security and improve lives through better financial planning.''

The firm currently has a team of around 25, and plans to expand this to 40. Among the staff are six advisers, and this will double by the end of the year. Client advisers will be salaried. They will not receive commissions or other incentives which create potential conflicts of interest.

At the start, four insurers - Aviva, Manulife, Tokio Marine and NTUC Income - are on the MoneyOwl platform. A fifth insurer is understood to be in the process of signing a distribution agreement.

In terms of investments, MoneyOwl's portfolios will comprise sensible, diversified, non-market timing funds. There will be no sales charges and no trail fees. Trail fees are the portion of funds' annual management fees that are paid to distributors. The funds' total expense ratios (TER) will be under 0.4 per cent, compared to the average equity TER of retail funds in Singapore of well over 1.5 per cent. The annual wrap or portfolio fee is expected to be set at 0.65 per cent.

Singapore's insurance and investment landscape is dominated by banks and tied agents, which is a reason why costs have been rather intractable. The total distribution cost of a term life policy, for instance, may be nearly twice one year's premium. The bulk may be paid out in the first year, and typically fully paid by the fifth year.

Commissions are fiercely guarded by the industry. This was evident in 2013 when 10 financial advisory firms pressured iFast Financial to withdraw some insurance products from its Fundsupermart site. The products would have offered a 50 per cent commission rebate. The firms were subsequently fined by the Competition Commission of Singapore in 2016.

In 2013, the Monetary Authority of Singapore initiated a Financial Advisory Industry Review (FAIR) panel, which partly looked into improving the efficiency of distribution of insurance and investment products. The panel concluded that rather than mandate a fee-only model among financial advisers, the preferred path was to let market forces dictate prices. Towards this end, the CompareFirst portal was set up to encourage consumers to compare prices of basic insurance products.

The segment of Direct Purchase Insurance (DPI) was launched in 2014, following the FAIR recommendations. DPI products may be purchased directly from insurance companies without commissions. It was hoped that consumers would benefit from price competition. But this has hardly made inroads. DPI policies have a sum assured cap of S$400,000. According to Life Insurance Association, DPI volume has been "stable'', averaging at slightly over 200 policies per quarter. Most of the policies sold are term plans.

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