Finance Smiths

Personal finance apprentices-in-training

Exiting Smartly and only going with StashAway

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There’s been a lot happening in our household. Even though it was good to have the helper around, it turned out to be a mismatch of expectations on both sides. Especially when it came to taking care of the baby. I feel that it was mostly our fault for not communicating our expectations of the helper from the onset and even when the nanny was here to help out with the handover.

The helper didn’t step up to the challenge and it was clear after 2 weeks in that this is not going to work out. So we decided to let the helper go because we reckon she would be happier in another household. She was surprised and upset at how quickly we came to this decision. But she understood the situation better after we explained to her in detail.

Anyway, the maid agency has assisted to transfer the helper to another household that is more suitable for her. Primarily one without a baby to take care of because she just doesn’t have the confidence yet. We considered keeping and training her but decided there wasn’t enough of a foundation to work off. Because we don’t think she is as willing to learn as she says she is.

This is a bad outcome because we waited a few months for the helper to come in and even re-engaged the nanny to assist with her training. We may have learnt how to be better employers but it has been a costly experience in terms of time and money. We have gone back to the maid agency with more specific requirements and a bigger focus on past employers’ testimonials for a new helper. Let’s see what happens.

It’s an interesting link between this bad experience with our first helper and the topic of this post on robo-advisors. In the past few months, I blogged about how Smartly is going through a major platform upgrade and is unable to accept new deposits for investing. I stood by Smartly and was willing to give them time to resume this service. But their timeline kept getting delayed.

The whole point of me having an investment portfolio with a robo-advisor is the convenience. That’s why I’m willing to pay an annual platform fee (based on AUM) to the robo-advisor so they can manage all aspects of my investment portfolio. I just have to automate my funds transfers into my robo-advisor account and they should take care of the rest. Minimal work from my end to monitor but I remain vested in the markets with an investment strategy employed by the robo-advisor.

Imagine the frustration when I have to keep contacting Smartly to ask about when I can resume depositing funds into my account again. And I keep hearing about this major platform upgrade that never seemed to materialise. Smartly hasn’t been updating their platform since they started and this is what happens when they do their first one.

Investing with a robo-advisor is supposed to be easy and fuss-free. But this is exactly the kind of thing that makes you lose confidence in the service provider. As my frustration built because other parts of my life are not going well (like the situation with my helper), I decided to pull the plug on Smartly. Too much effort for too little reward. Interesting how one aspect affects another in my life.

A few years ago, I blogged about having both Smartly and StashAway robo-advisor accounts because I want to see which service provider I would choose in the end. It never made sense to have more than 1 robo-advisor account and I was always going to have to decide which one to go with.

While a few more service providers have entered the robo-advisory business, I have not considered setting up accounts with them. I just wanted to make my decision and be done with it. Not to keep exploring more options by opening other robo-advisor accounts.

Since then, StashAway has improved significantly in terms of its user interface and product offering – both on the desktop and mobile app. They have a strong team that is focused on the customer and you can see that in the way their product has developed over the years. I like their educational engagement of the public and the continual effort made to add value to their robo-advisory service.

With this move to exit Smartly, StashAway has become my sole robo-advisor service provider of choice. I hope to increasingly rely on them to meet my wider investment needs. Such as income distribution and cash management. Which means I may take a closer look at Stashaway’s Income and Cash Management Portfolios.

The idea is to eventually use StashAway as a full-service wealth management service. Where they can manage much more of my financial assets and their growth & allocation going forward. Without me having to step in and monitor. This will be what makes the annual platform fee (based on AUM) worth it as long as it remains reasonable.

Using robo-advisors to buy the market dip

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Our cash balance increases every month but its proportion of our total assets remains the same at 50%. It’s a drag on our asset portfolio return but we are okay with it since we are not in a rush to chase for higher returns. But we do keep a look out for opportunities to invest some of this cash.

And it looks like one has arisen. The recent Wuhan Coronavirus Crisis has caused a market sell-off. We have been slowly transferring cash funds into our StashAway robo-advisor accounts to be invested. My wife has also been topping up her DBS DigiPortfolio – Asia and Global Portfolios for investing.

Just a little at a time to buy into the market dip. We have no idea whether it will worsen and by how much. If the market does keep dropping, we will probably make larger cash funds transfers to be invested. This is a good way to value average our investments in the StashAway robo-advisor accounts and DBS DigiPortfolio – Asia and Global Portfolios.

We haven’t made much manual investments yet because that’s only activated when the market fall is significant enough for us to take action ourselves. This is when we invest the largest sums of money to make it worthwhile for us to step in and make manual investments.

We hope to utilise some of the cash balance since it has been sitting there for quite a while. Since we are still earning salary income every month, we can rebuild the cash balance in time. The important thing is to deploy the cash efficiently and effectively when there are opportunities.

It would be nice to sit on an ever growing cash pile even when you are investing some of it. Since it takes away the stress of having to find ways to utilise it. And we can spend it on what we want. Which can be things like travel, gifts, dining and entertainment. Doesn’t always have to be investments.

Top up function available for DBS DigiPortfolio

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We got an email from DBS today about the top-up function being available for the DBS DigiPortfolio. The last time I wrote about my wife setting up her Asia and Global Portfolios, I expressed my disappointment at how she was unable to increase her investment in them by making contributions.

Instead, she would have to close her existing portfolios and open new portfolios. Which made no sense for this type of investment product. It’s about time this top-up function is made available for the DBS DigiPortfolio.

We logged into DBS Digibank online to play around with this feature. The top-up process for both the Asia and Global Portfolios is simple and straightforward. The email mentions it will take a few days for the respective ETFs to be purchased and reflected in her portfolios.

We are hoping this can be shortened to 1 day, at most 2 days. Otherwise, we have to take into account this lag to invest the transferred funds when she does make contributions. It’s not good for the processing time to be so long since you would want the funds invested once the markets open.

Anyway, we found out there seems to be no way to set up a regular funds transfer into the DBS DigiPortfolio. Which means an automated monthly investment plan into my wife’s Asia and Global Portfolios is out of the question for now.

We are hoping the top-up function can be further developed to allow for automated regular funds transfer into the DBS DigiPortfolio. In addition to being able to top-up whenever and however we like. The main thing is we don’t want to have to manually log into DBS Digibank online each time to do the top-up.

We want to be able to set up a regular investment plan with DBS DigiPortfolio. This forms the Dollar-Cost Averaging part of our investing strategy i.e. has no market timing element to it. Sure, when we see market dips or even crashes, we want the flexibility to manually transfer in larger sums of monies to be invested. But that’s for the Value-Cost Averaging part of our investing strategy i.e. has a market timing element to it.

While this is an improvement to DBS DigiPortfolio, we feel it still has a long way to go when compared to robo-advisors. It’s better than OCBC RoboInvest if it’s any consolation. But traditional banks continue to be slow-moving and inferior in terms of technological advancements of products and services they offer compared to the FinTech Companies.

My view continues to be that traditional banks have only been able to remain profitable because FinTech Companies have not been able to make inroads into core banking businesses. Which is about to change with the advent of Digital Banks. Eventually, our core banking businesses that generate the majority of the profits will come under attack. And traditional banks will be too slow to react – bogged down by legacy systems, people, processes and procedures.

Can’t imagine why people worry about whether Digital Banks will be profitable. There’s so much that can be scalped from the existing profits of traditional banks. If only you realise the amount of excess capacity we are carrying. The number of people that works there just collecting a salary and going through the motion every day. You will be shocked at how long we have been allowed to operate this way.

I am looking forward to the results of the MAS Digital Bank Licenses Applications. And I hope they get awarded soon so that the Digital Banks can start operations after that. I can’t wait to put my skill sets to the test to see whether they are actually value-adding or I have been doing nothing useful at all. If I get eliminated, it just means I’m one of those people and was unable to pivot in time. And I deserve that outcome. Exciting stuff to deal with in time.

Anyway, my wife has planned in the dates of her manual funds transfers into the DBS DigiPortfolio as part of her monthly investment plan. It’s going to be annoying for her to log into DBS DigiBank online each time to do it so I might help her with it. Fixed amounts on fixed dates to be executed manually. Sigh, can you find a way to automate this DBS?

We also adjusted some of our monthly investment plan automated contributions to weight out portfolios in accordance with our earning power. Since my wife earns more than me, her portfolio is weighted towards reinvestment of dividends/distributions i.e. more capital-growth focused. Since I earn less, my portfolio is weighted towards dividends/distributions payout i.e. more income focused. To compensate for my lower salary income. I wonder how will this work out.