MONEYOWL, a “bionic’’ financial adviser set up by NTUC Enterprise Co-operative, is winding down five years since it began operations in 2018.
Over the past year, high operating costs and low revenue generation from clients raised serious questions about its commercial viability. The Business Times (BT) understands that efforts to sell the business or find other partners were stymied by its business model as a social enterprise.
In a statement, MoneyOwl said a review by the company and NTUC Enterprise concluded that the business would not be commercially viable, and “a decision was made to redeploy resources to other areas where NTUC Enterprise can deliver greater social impact’’.
MoneyOwl chief executive Chuin Ting Weber told BT that the firm was “hardwired’’ for its social mission. “We were not just another financial advisory or robo. We wanted to do financial planning for the mass market… There is a gap in the market, but no market for the gap.’’ Its bionic model combines robo with human advice.
Unlike other robo advisers who focus mostly on investments and portfolio services, MoneyOwl was established to provide comprehensive financial planning. It offered four main services – financial planning, investment services, wills and insurance. Financial planning was initially free on a promotional basis. In partnership with NTUC, the service was heavily subsidised for union members and unionised companies.
MoneyOwl is one of only two robos allowed to offer investment services for the CPF Investment Scheme. The other is Endowus.
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But even as a social enterprise, MoneyOwl is not a non-profit. From the outset it was expected to become self-sustaining financially, although Weber made it clear it would not seek to “maximise’’ profits. Its initial paid-up capital was S$10 million. It was 60 per cent owned by NTUC Enterprise and 40 per cent by Providend Holding, whose DIYInsurance business was taken over by MoneyOwl.
Providend divested from MoneyOwl last year. Weber indicated that the firm currently has paid-up capital of S$12 million.
Weber said MoneyOwl built a contact base of 91,000, including those in its email list. Of these, 45,000 set up accounts. About 23,000 signed up for one of its four services. But only around 10 per cent or 9,700 opted for a revenue-generating service, which suggests that few acted on their financial plans.
“While many recognised the importance of financial planning, most did not take further actions, and far fewer were inclined to pay financial planning fees or purchase investment or insurance products through which we earned revenues.
“In addition, many of our fit-for-purpose solutions were designed with low fees to benefit mass market clients. This, coupled with high costs associated with client acquisition, technology development and a fully salaried workforce, made it challenging to achieve commercial viability,’’ she said.
NTUC Enterprise group chief executive Seah Kian Peng said MoneyOwl set out to “empower Singaporeans to make wise financial decisions and live their best possible lives”. “We are glad to see how MoneyOwl has enabled better financial planning outcomes for many Singapore families and thank MoneyOwl’s customers for their continued support over the years.”
MoneyOwl’s investment and insurance businesses will be transferred to iFast Financial, which will reach out to MoneyOwl clients from September. Investment clients may transact on MoneyOwl’s portal until October 24, and can do so on iFast’s portal from October 25.
MoneyOwl employs 40 staff and has informed them of the decision to wind down. Seven staff will join iFast. For the rest who will be retrenched, it will offer “fair and equitable compensation packages’’ in line with market norms.
To ensure a seamless transition, Weber said iFast will maintain MoneyOwl’s current portfolio fees for MoneyOwl’s clients. Access to trail-free funds by Dimensional Fund Advisors (DFA) will also continue, even though this is inconsistent with iFast’s model, which collects trail fees.
Clients may also continue to access MoneyOwl’s financial planning services and will writing online until December 15, after which all MoneyOwl online services and account logins will be disabled.
BT understands Providend was approached to buy over MoneyOwl’s business, but this was turned down. Providend founder and chief executive Christopher Tan said this was a commercial decision. “We did not feel that acquiring a robo/digital-based adviser is suitable for us at this stage of our business.
“The investment business is tough to do for lower-income households. While they really need to save for their retirement adequacy, they may not understand investing very well and need a lot of education and risk coaching. Yet their investment amount may be too small to make the business commercially viable.
“A non-profit model may work but our government must be willing to fund it for the long term. But even if the government is willing, execution is still key to make sure the business can be successful. I believe for this segment, the human adviser model is probably still better in encouraging action.’’
Endowus chairman Samuel Rhee said the firm’s social mission is similar to MoneyOwl’s – that is, “solving for advice, access and cost by leveraging technology to help individuals invest better and achieve better outcomes’‘.
Traffic data shows that Endowus is ahead of other robos, including MoneyOwl, in terms of metrics such as monthly visits and page views. Its assets under management now exceeds US$5 billion, and it recently raised US$35 million in capital from investors including family offices. Endowus itself has yet to turn the corner in terms of profitability; it incurred a loss last year of S$26.7 million. But Rhee said that the recent fundraising has given a “much longer runway’’ towards profitability.
“It is not a surprise that MoneyOwl has decided to cut its losses, and we may see others exit the industry... With our latest fundraise, we are confident that we will continue to be well-supported by a strong list of shareholders.”
“I think the philanthropic approach towards helping low-income households plan their finances better (more education) has to be decoupled from the practical realities of helping everyday people invest better for the future... Even though it is a social enterprise, the mission has to be aligned with a combination of good client outcomes and a good business outcome.
“The goal is for the business to continue to achieve growth to reach breakeven against operating costs to ensure the sustainability of its efforts, or have a sustainable funding that will plug the hole forever if it is never going to scale to achieve profitability.”
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