StashAway, the Singapore-based digital wealth manager, continues to bet on curated investment solutions and technological innovation to challenge the region’s traditional banking giants.
Michele Ferrario, co-founder and CEO, says the digitalization of wealth management in Asia is still in its infancy. “Most retail investment money goes to someone’s bank, to buy structured products or mutual funds, via a relationship manager. This won’t be true in 10 years from now, however,” Ferrario told DigFin.
Despite being an established player in Asia’s direct-to-consumer wealthtech industy, StashAway remains small compared to banks’ wealth divisions. He would not disclose the company’s assets under management. The company appears to have a large enough business to be self-sustaining, but is still too small to trouble the banks. For now.
Indeed, Ferrario said the gap versus banks’ wealth-management business signals to him that companies like StashAway are likely to grow rapidly for a sustained period of time.
That’s not just true of companies that began as robo-advisors. It’s true of banks as well. The entire wealth industry in Asia is growing. Private banks, retail banks, insurers, and brokerages today manage around $32 trillion of Asian client assets. The upward trajectory of Asian wealth remains on track, with Asia-Pacific wealth management expected to grow at a compound annual rate of 8 percent over the next five years, according to website Mordor Intelligence.
Growing pies
The biggest winners of that growth are banks, which dominate wealth management across the region, particularly in the major booking centers of Hong Kong and Singapore.
To that end, those firms continue to build out front-end, customer-facing digital experiences, but they are not threatened by disruptive but small wealthtechs. This is unlikely to change until that growth in wealth slows down and private banks can no longer grow, as an industry, on cruise control.
In theory, that will be the day when players like StashAway will be able to challenge banks directly.
In the meantime, Ferrario says StashAway is building a business that cleaves between the extremes of a fund supermarket, and a bank’s relationship-management model.
Unlike neo-brokers and fund supermarkets that offer a dizzying array of investment products, StashAway’s philosophy centers on curation rather than overwhelming choice. “Most people want advice, guidance, curation,” Ferrario explained, noting that his team spends considerable effort selecting the best investment instruments for each asset class.
For instance, StashAway favors U.S.-traded ETFs for S&P 500 exposure due to their liquidity, while choosing products with tax advantages for U.S. fixed income. “Instead of offering a lot of choice, we offer a choice of solutions,” Ferrario said.
While StashAway partners with banks for custody and cash management, it also competes directly with them for clients’ investment dollars. Ferrario believes banks’ reliance on commission-driven incentives and slow digital transformation leaves them vulnerable as Asian investors become more discerning. “At some point, more people will understand the value they are getting from banks compared to from us,” he said.
Manufacturer partnerships
StashAway now operates in five markets—Singapore, Hong Kong, the UAE, Thailand, and Malaysia—targeting the mass affluent (net worth $100,000 to $2 million) and, through its Reserve service, high-net-worth individuals up to $10 million.
Reserve, which started with private credit and is expanding into private equity, has become the company’s fastest-growing segment, attracting wealthy, financially savvy clients seeking alternatives to bank-driven, commission-based products. It is also here where the company has entered into partnerships with alternative specialists.
StashAway generally avoids exclusive deals with asset managers, instead selecting vehicles for each asset class. However, it has co-developed portfolios with industry heavyweights like BlackRock and JP Morgan Asset Management. For example, its Singapore-dollar fixed-income portfolio, built with JP Morgan, provides local currency hedging and passes liquidity rebates directly to clients.
The firm is now cementing similar deals that provide access to private markets for affluent clients. It has partnered with Hamilton Lane to offer semi-liquid private equity and infrastructure funds, products typically reserved for institutional investors. “We are the only Asia-focused wealthtech partnered with Hamilton Lane,” Ferrario noted.
