A company proclaiming itself to be the first bionic adviser for high-net-worth investors (HNWIs) officially launched in Singapore yesterday, with an unspecified number of clients on board.
Named Bento, the fintech start-up already has big ambitions, with plans to expand into Hong Kong, the Middle East and Europe in 2017, according to co-founder and chief executive Chandrima Das.
The company is called a bionic adviser because it uses algorithms to build tailored investment portfolios for HNWIs and family offices, but also incorporates human input at all stages, from client on-boarding to incorporating capital market data in asset allocation to portfolio review and rebalancing.
Bento is initially offering only liquid and physical exchange-traded funds on its platform, to keep its costs low and automation relatively straightforward. Key product providers include ETF giants Blackrock, Vanguard Group and State Street Global Advisors, all of which supply ETFs with fees typically in the single digit range.
The advantage of using large ETFs is a lower cost for HNWI clients. Bento is charging 30 basis points (bp) to invest its clients’ assets, versus the 150bp to 200bp typically charged by a private bank.
Das declined to reveal how many clients have signed up, or how much in assets under management they have supplied, but claimed she and her team were surprised by how quickly wealthy clients bought into the concept of bionic advising.
“I see a combination of few factors in play – the proposition has no embedded conflict of interest between advisor and client, it is a back to basic investment proposal that exists in books but was not available to this segment, and is also very cost effective at 30bp,” Das told AsianInvestor, in an emailed reply to questions. “Clients in Asia are also very open to adapting to new technology.”
The company has begun by targeting its services at relatively young wealthy clients. Its first set of high net worth and ultra-high net worth individual clients (HNWIs and ultra-HNWIs) have an average age range between 40 to 60 years old, said Das.
Bento went live after several months in inception. Das joined Bento in April to work on launching the service in Singapore and she spoke about the planned launch to AsianInvestor in June, as reported.
The firm is owned by Singapore’s financial technology firm Mesitis Capital, which provides a product called Canopy that aggregates investment data from various banks.
Bento was developed out of the need to address the gap for constructing core long-term portfolios, a need that is felt by most Canopy clients, said Mesitis chief executive Tanmai Sharma in the announcement release.
The firm also cited reseach from Capgemini Wealth Report 2016, which found that almost 80% of HNWI individuals in Asia Pacific are open to having a portion of their wealth managed by an automated advisory service.
Despite only have taken fledgling steps in Singapore, Das and her colleagues have ambitions much further afield. When announcing its launch, Bento announced plans to expand into Hong Kong, the Middle East and Europe.
Das said Bento would look to grow into these markets next year, which would entail the company getting a fund management licence in each market. The first priority is building a presence in Hong Kong, the other major financial centre in the region.
"We are a licenced fund management entity and would work as per local regulatory requirements in various markets,” she noted. The expansion would also entail both gaining licences and hiring staff to fill these roles. "The hiring and relevant license in any jurisdiction will be done together," said Das.
The company launched after filling out its ranks in Singapore. On October 3, Bento hired Rae Ho as chief product officer from Bank Julius Baer, where she had been a director of discretionary mandate consulting. Ho also used to work at Bank of Singapore’s fund selection team as director of fund solutions from – where Das was once the head fund gatekeeper from November 2011 to October 2015.
The company is now working on additional hires, immediately including a business development person and other appointments in Hong Kong. Additionally, it is working on the various licencing requirements for the markets it aims to expand into.
While Bento is seeking to appeal to wealthy clients, it won’t be doing so through breadth of investment offering. For the immediate future, it intends to only offer a range of ETF products to its budding clientele.
“We may look at funds at some later stage but we feel no immediate need as the key value add is in asset allocation with an optimised and customised portfolio,” Das said.
Bento has outsourced fundamental investment research to Willis Towers Watson. In other words, the consultancy provides Bento with its views on the market and various asset classes.
Justin Ong, Asia-Pacific asset & wealth management leader at PwC, said the Bento launch was a great starting development for the digitalisation of the wealth management industry in Singapore, and eventually may pave the way across the rest of Asia.
"Asian wealth management business models are in need of change and innovation," he said.
"For far too long the wealth management industry in Asia has been slow in the uptake on digital solutions and enhancing client experience through technology, and it is encouraging and exciting to see a newcomer to the industry bring a fresh perspective and idea to service clients."
He noted that this move is very much in line with the results of the recent PwC Wealth Management survey report released a few months ago, where it was clear from research that HNWIs in Asia were much more open to digital technology as a service solution than their counterparts in Europe and Americas.
"The traditional wealth managers are however slow to respond to technological change, and this leaves them open to disruption in the short term to new technologies such as Bento.
Will robo advisory platforms such as Bento make money? "Well, this remains to be seen, and very depends on the fee model they adopt, and whether clients are prepared to change their buying and consumption pattern over the longer term," said Ong. "The danger is that this is just a fad, and if the service offering is not well differentiated and priced competitively to demonstrate value-add, this may result in a short-lived success."
Stewart Aldcroft, senior advisor for fund management industry, concurred that automated advisory platforms in Asia have an opportunity for those who can get the offering right.
"It is true to say there is likely to be a big uptake from existing clients of banks who are willing to provide additional money to whatever they may already have with their adviser, to products that they perceive offer an alternative to existing services. Asian HNWI are willing to use such services.Thus, packaging of all the elements to make a successful offering is very important," he said.
Not everybody is so optimistic. Frank Troise, head of digital distribution and communications (Asia), at Swiss fintech firm Leonteq, feels there is zero chance of independent Asian robo-advisers succeeding. In the September issue of the AsianInvestor magazine, Troise said: “I will go on the record to say that none of the existing independent robo models in Asia as we know it today will survive."
"Unlike the US and Europe where they are overbanked, the Asian market is under-banked. By consequence only firms that have large enough capital available and enormous numbers of customers will survive,” he told AsianInvestor. “The others will simply be B2B consulting firms.”
That seems like grim tidings for Bento. But the fledgling company might yet prove him wrong, given that its target clientele are HNWIs and not retail investors.