Robo Advisory Services in Singapore and Southeast Asia are Increasingly Being Used to Strategically Manage Investment Portfolios: Report

Tanjong Pagar Bell Singapore AsiaRobo-advisory services in Southeast Asian countries like Singapore are increasingly being used for managing finances and investments.

Robo advisors were introduced around 2008, which was when the world was dealing with the global financial crisis. Over the years, digital transformation and the emergence of new technologies began to play a key role in everyday  life, and robo advisors also began to see steady adoption along with other automated services.

The assets under management or AUM in the robo-advisory sector is expected to reach $2.845 trillion by 2025. A research study has estimated that the Asia Pacific or APAC region will experience the most significant growth in robo-advisory financial services around 2021 to 2026.

But why are so many consumers or firms looking to work with robo advisory platforms or services? According to some analysts, these services may offer lower fees and allow users to work with fairly low investment amounts.

By lowering entry barriers, these so-called robo advisory services can make it easier for Singapore residents (and other countries in Southeast Asia) to make investments in a more accessible and more manageable way.

The risk of allowing our emotions to influence how we make trading or financial decisions can be eliminated with using robo-advisory services (provided we don’t interfere with the automated settings). People also have the ability to invest more convenienently and from almost anywhere. This helps to make these investment apps more accessible for consumers who might not have been able to use these financial services before.

As far as regulations are concerned, robo-advisors should be regulated by the Monetary Authority of Singapore (MAS) and must carry appropriate licenses, as specified by the city-state’s Securities and Futures Act (SFA) and the Financial Advisers Act (FAA).

Wealth management and related robo-advisory services are being increasingly adopted by investors and traders across the globe.

California-based Fintech firm Wealthfront recently explained how we can choose between taxable and “tax-advantaged” investment accounts. Wealthfront notes that if you’re ready to begin investing, then you need to figure out what type of account you should be opening and maintaining. You can open up a taxable investment account or a tax-advantaged account, the company added.

The main difference between them is that tax-advantaged accounts come with “special” tax benefits. However, these benefits may come at a certain cost. Investors have to make a “tradeoff between tax benefits and flexibility,” Wealthfront explained.

The company also mentions in an extensive blog post that if you aren’t sure what you are saving for, then it may be a good idea to use a taxable investment account or “a mix of taxable and tax-deferred investment accounts.”

As covered in June of last year, the Robo Advisors industry was expected to reach nearly $1 trillion valuation in 2020, according to a report. Recent Statista data shows that robo-advisors now manage nearly $1.4 trillion in assets.

As previously reported, robo investment advisors have threatened to make human advisors obsolete and the rise in passive investments may lead to less demand for active management. However, a partnership between Betterment and Dimensional Fund Advisors (DFA) indicated (in 2019) that there may still be a need for certain types of traditional investment services.

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