If you have not read the first/second parts of Introduction to RoboAdvisors, you can do so here :
In part III of Introduction to RoboAdvisors, we wanted to understand more about Stashaway’s business model and operation plans, which are information not readily available over the Internet. As such, we headed down to Stashaway HQ, and conducted an interview with the Head of Client Engagement & PR – Miss Amanda Ong.
1. Hello, thank you for taking the time to answer our questions. There are so many RoboAdvisors out there. How has Stashaway remained competitive and how will Stashaway continue to remain competitive?
Thank you very much for coming! Stashaway is the currently the biggest, fastest growing RoboAdvisor in the region.
We have a team with a strong understanding of the RoboAdvisors landscape. We also have the Capital Markets Services license for Fund management from MAS, which is the most stringent license offered by MAS. We meet the capital, compliance, audit, and reporting requirements from MAS.
We are also subjected to rigorous audits. For example, in our Series B funding led by Eight Road Ventures (ERV), one of the largest fund managers in the world, we manage to raise USD$12 Million. We were also audited by ERV before they decided to invest in the fund.
Re-optimisation is a unique feature of Stashaway, and we also have a clean UI design on our mobile application on the go to see how your portfolio is performing. These are features that some other RoboAdvisors may not have.
Our average call pickup time is 8 seconds, and our specific business line only to Robo investing, unlike some other RoboAdvisors.
Some of the Robos on the market are purely passive, but not Stashaway. We have done two re-optimisations since 2017. Once for gold when our data suggested that gold was undervalued, and also once last year in August 2018 when we realised that there was a global slowdown in growth apart from the US and that there was undervaluation in European equities. Thereafter, we increased our asset allocation towards US assets and European Equities in August 2018.
We have data indicators to support us in determining whether a re-optimisation is required. With data obtained, the investment team conducts a meeting, discusses, and decide whether to proceed with the re-optimisation. Freddy (CIO) then punches in the trades into the algorithm. Do note that the entire workflow for re-optimisation is audited.
Summarising the Workflow for Re-optimisation
a. Data indicators suggests under / over-valuation of a certain asset class
b. Investment team sits down together in meeting to determine whether there is a need to conduct a re-optimisation
c. Decision is made to conduct re-optimisation. Proceed with steps d and e
d. The CIO puts in trades into Robo Algorithm
e. Tech team ensures that the Robo Algorithm runs smoothly
2. Does Stashaway cater more to the retail investors or high-net worth individuals / corporate entities?
We cater to both. We have an increasing network of HNW clients, but we ensure that our sophisticated algorithm is made available to retail investors as well.
3. Are there any plans to expand the Stashaway service regionally?
One of the regions is Thailand. We are currently filling up positions in Thailand as you can see from our website. We are also looking at other regions but they’re not available for public disclosure.
4. How many departments are there in Stashaway? And what do each of these departments do?
We have 6 departments : Tech, Client Engagement, Marketing, Business Intelligence, Operations, and HR
The Tech Department manages the Robo Algorithm.
The Operations Department processes deposits and withdrawals, work with overseas team to ensure smooth funds transfers, assists Freddy in SGX trading, and ensures that investors do not have significant felonies or misdemeanors.
The Business Intelligence department supports every team in Stashaway. They analyse peoples’ actions, provide data, review and provide feedback to other teams.
Our largest department currently is our Client Engagement Department.
5. How many people do you hire annually and what positions do your new hires fill?
This is difficult to gauge. At the start of 2018, we have hired 30 people. Right now, we have close to 70 people. We still do not know how many people we will be hiring next year. One of the fastest growing team is our Client Engagement Team. Currently, we have 16 people in the Client Engagement Team made up of part and full timers to widen our outreach.
6. How do you plan to be prudent with hires?
We tend to invest in talented individuals who are very early in their careers. So the team is made up of very young people. One area that we will not compromise is the tech team, and our tech team is purely based in Singapore to respond swiftly to issues concerning our algorithm.
8. Under the Qualified Interest Income, how many percentage of the dividend WHT (WHT refunds) can we expect to get back yearly?
The WHT refunds varies yearly. Our investment team has given serious consideration to the 30% WHT and have considered other exchanges that have lower or no withholding tax. However, at the end of the day, we have decided to stay with US-listed securities despite the tax implications due to the its deep liquidity, reputable fund management and most importantly, the lower tracking error relative to their UK and Irish-Domiciled counterparts.
Generally, about 30% of the WHT is refunded back to you. However, given that different investors have different portfolio with different risk levels, it is difficult to provide an exact value.
9. What kind of products is Stashaway looking to launch in the future?
We are working on many different products in accordance to clients’ feedback. However, the information is currently not available for public disclosure. Firstly, we have launched the income portfolio for individuals looking for a fixed income stream. Secondly, we have launched Stashaway Simple is an alternative for people that are looking for another savings option that is low risk, and we do not charge any fees on it.
10. Will Stashaway consider a portfolio made up of individual stocks?
We are not looking at individual stock portfolio, because that would be active fund managing, and 90% of active fund managers do not outperform their benchmarks.
11. What is the most popular product in Stashaway currently?
Our USD denominated portfolio is currently the most popular, because it is a well-established portfolio compared to our newer portfolios.
12. What do you personally think of the ETF bubble?
The whole notion of ETF bubble is not very fair. It is only a small proportion of the market, when compared to active fund management and other types of investments.
13. There have been conflicting information over the Internet on whether the Income Portfolio really requires a minimum of 10k SGD to invest in. Does the Income Portfolio really require a minimum of 10k?
14. What other kinds of asset class do Stashaway plan to have for its portfolio in the future?
We initially had 19 asset classes in our portfolio, and we have increased it to 32 asset classes since, which is already very diversified. Of course, we will try to add more regions and more categories, so that the algorithm has a larger selection of ETFs to choose from.
15. How often are meetings conducted and what are they focused on?
This varies across departments. Certain teams may not conduct meetings as often as others. Meetings are very open. You can talk about your future goal with your boss, sound off opinions on things that you do not agree with, or talk about feature requirements.
16. Do disagreements happen often?
Disagreements are part and parcel of working. Hence, they do happen sometimes. But by the end of the discussion, there has to be a decision made so that we can move forward.
17. What kind of welfare benefits do employees have?
Publicly we have a team fund budget for departments to conduct their own leisure activities. Also, we have $1000 learning and development budget for our employees. We also have flexibility in insurance plans. Unlike normal companies with yearly evaluations, we have semi annual performance evaluations, bonuses, and salary review.
As an investor, I have gained a lot of new insights from this interview. The biggest takeaway I have is that when you are investing in Stashaway, the most important feature which makes or breaks Stashaway is its re-optimisation process. You are not just investing in the ETFs, but also investing in Stashaway’s viability as a long-term business. You are betting that Stashaway has a sound, legitimate decision-making process ranging from how sophisticated their data indicators are, to how the information is interpreted, and eventually what assets are re-optimised.
By nature, Finance Dude is a skeptical dude and does a lot of readings before deciding to invest in an investment product. From my personal research (In Introduction to RoboAdvisors Part I and II) and from my interview with Stashaway, it is clear to me that Stashaway understands what they’re doing, and are in it for the long term, especially since RoboAdvisors is their main business and a lot is at stake for the startup unlike other RoboAdvisors which may treat Robo-investing as a secondary endeavor.
As a startup, I find that Stashaway has a typical startup culture where anyone can voice out if they disagree with something, but yet commit to resolving conflicts and move forward. I personally feel that this makes for healthy discussion, and is a very important aspect in determining whether a startup is sustainable in the long run.
However, one small dislike I have of Stashaway would be its working environment. I tend to have a distaste for open concept environments as there is a lack of privacy. From my previous experience working in a tech startup, it can be a little tedious to be in an open concept environment where there is little privacy, and to have people to the right, left, and front of you, and this can have an impact on workers’ productivity.
One suggestion I’d have to improve such a space would be to replace the bar chairs with proper working chairs, so that workers can move away from the working area if they would like to. Another suggestion would be to have a PS4 machine for bonding. At the previous startup I worked at, the tech team would gather in front of the TV and play Fifa together after we were done with lunch and after work. I personally feel that a PS4 is a good investment in improving the overall well-being of workers in the startup, and also promote bonding within and between departments.
Overall, as an office space, Stashaway seems to be a startup where you will have a lot of fun interning at. There are a lot of learning opportunities across all departments and also events organized after work to learn more about finance (Stashaway Academy) and socialise. For those of you in Data Analytics, I can foresee that there will be a lot of chances to pick up data analytics if you’re working in Stashaway.
As for myself personally, I find Client Engagement a very interesting department to intern at, because you will be able to get to interact with actual investors interested in investing in Stashaway.
To end off, RoboAdvisors are considered as a relatively new investment in the market scene. As it does not have a long track record, I will continue to invest and monitor Stashaway’s viability as a business to ensure that they are always keeping competitiveness in the RoboAdvisors market. For now, I guess I’ll be sleeping well at night.
P.S Here are some pictures we took while touring the new Stashaway HQ! 😊