MoneyOwl to Wind Up – My Thoughts as a Fee-only Adviser and What Happens Next?

Disclaimer: I work in Providend as a client adviser. MoneyOwl was a joint venture between NTUC Enterprise and Providend. Providend exited the joint venture in middle of 2022. Views expressed in this site are entirely my own.

In a rather shocking announcement, financial advisory firm MoneyOwl announced that it will wind down its business and cease operations by end of 2023.

My brushes with MoneyOwl

Before I rejoined the industry, MoneyOwl was already a fascinating business to me. A fee-based financial advisory firm with salaried advisers prioritising clients’ interests over commissions? This is the future, I thought!

I did a few referrals to the brand while it was still running an affiliate programme which sadly stopped quite quickly. Nonetheless, I was still more comfortable referring people to MoneyOwl without any referral or affiliate fee rather than direct them to the few insurance agents who have contacted me trying to see how they could “work something out”.

The company became more relevant in my life after I joined Providend. After all, MoneyOwl was the result of a joint venture between Providend and NTUC Enterprise. I started my full-time job in Providend around the same time they completed their exit from the joint venture, and to me it seemed like we were once close neighbours who moved away from each other. There was no acrimonious split – from my perspective at least – and both companies’ people say “hi” to each other when we bump into each other during meal times.

Maybe because both entities have rather different target demographics, the “divorce” didn’t seem like a big deal. In fact, I continued to direct a couple of clients over to MoneyOwl when it was more appropriate for the person I was speaking to.

Gap in the market

Given its more consumer-friendly approach and objective to help the mass market with financial planning, it is unfortunate that MoneyOwl had to close. MoneyOwl’s CEO Chiun Ying Weber explains eloquently that “there is a gap in the market, but no market for the gap”.

Indeed, financial planning for the masses is something that is sorely lacking in Singapore and definitely a massive gap that needs to be filled. Yet, few people – clients and “financial planners” alike – actually want to go through the relatively lengthy process, and fewer people wish to pay for such a service.

The sales process is a lot more “efficient”. Problem? Meet product. Fees? Nope, it’s “free”! What you don’t know can’t hurt you, never mind the fact that embedded commissions can often cost more than upfront advisory fees not just in amount paid to the adviser, but also in form of costs arising from unsuitable advice.

But no market for the gap(?)

Despite being the model better for consumers, paying an upfront fee seems to be an issue for many, and the demise of MoneyOwl ostensibly proves that the mass market is simply not ready for paying fees for financial advice.

Perhaps this is so, but I sense that the market has been gradually shifting. Increasingly, consumers are becoming savvier as financial literacy improves in Singapore. Every now and then, I also hear from practitioners who prioritise ethics and clients’ interest over earning high commissions. I am confident that it is inevitable that the industry evolves for the better given enough time.

Sadly, time is a luxury that MoneyOwl has run out of, and it is unfortunate that MoneyOwl did not manage to survive to a point where it could reap the rewards despite being a force to nudge our financial advisory industry towards a better place.

What’s next?

For MoneyOwl’s clients, there is no need to fear that your money is in trouble. What happens next in terms of practical steps to take is pretty straightforward. You could do nothing, and the company will transfer their investment and insurance business to iFAST. I’m making a wild guess here, but I imagine some of the advisers you’ve come to know would also be recruited over.

Otherwise, you can always pick another person/firm to help manage your portfolio, and I imagine many – insurance agents and roboadvisers alike – would be more than happy to take you on as client.

But what happens next in the idealogical, abstract sense is more uncertain. Where does financial planning for the masses go from here? Is commission-based remuneration truly the way to go, and if so, how do we mitigate the conflicts of interest? Is proper financial planning only for people with higher net worths?

I honestly don’t know and leave this problem to brighter minds to solve. Perhaps my interview of my big boss could yield some answers, and in the video (pardon the audio) he has indeed dropped some hints about what Providend plans to do in the near future. As usual, stay subscribed.

In the mean time, I think what I’ve always advocated continues to be the advice I offer to people: nobody would care more about your money than yourself.

Whether you are handling your finances yourself or engaging an adviser to help you, there is no substitute for having some knowledge yourself, and that is possibly the best course of action to take regardless of what happens.

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