2018 has been another roller-coaster ride for investors. Trade wars, the easing of unconventional monetary policy, Brexit and generally volatile markets are some of the crosswinds that market participants have been navigating.
As we reflect on the year, and look ahead to 2019, there are some important themes underpinning the day-to-day volatility that remain as relevant today as they were at the start of the year.
Warren Buffett’s mentor Benjamin Graham famously described the markets as a short-term voting machine and a long-term weighing machine. As we mentioned in our last post, in volatile markets, it can be hard to block out the noise when it comes to something as emotive as investing our own money. Yet to be successful at investing, it is critical to take a long-term view.
We decided very early in the development of CONNECT that our portfolios would be goals-based. That means that CONNECT portfolios are designed based on your investment objectives, risk appetites and timeframes.
Our goals-based approach to investing keeps things simple and straightforward. Instinctively in volatile markets, many of us can be forgiven for wanting to put our money under the mattress. As we said in a post earlier this year , with volatility comes opportunity – you may be able to find bargains that will pay dividends over the duration of your investment.
By picking a goal, risk parameters and a clear time-frame, investors can focus on what they want to achieve and not be distracted by fluctuations in benchmarks and short-term volatility.
2018 marks the 10-year anniversary since the launch of the first robo-advisor in the United States. It is perhaps not surprising that early adopters turned to technology straight after the financial crisis when faith in the financial system was at its lowest.
Today, billions of dollars are invested in robo-advisory platforms around the world. It’s easy to see why. Good robo-advisors provide an intuitive interface for investors to access portfolios without the high and opaque fees buried in a lot of traditional financial products. As we have mentioned before, the impact of high fees on a portfolio accumulate over time and they can be dramatic. At CONNECT, we are committed to transparency and efficiency, and will never charge any hidden fees.
This year, CONNECT made a series of enhancements to create a seamless experience for our clients in every stage of the investment process. These included functions such as our Walk of Life function, which tracks life goals visually on a timeline and gives you an instant overview of the status and health of your financial plan. This year we also became the first pure-play robo-advisor in Singapore to integrate MyInfo to make it even easier to authenticate and validate personal information. Both were firsts for the Singapore market, and because we believe that digital is the future, we will continue to strive for new enhancements in 2019.
As we mentioned in our August blog post, millennials will make up half of the workforce and control a large amount of wealth by 2020. They are digital-savvy and will demand a greater say over their finances, which means there is a growing need for the most flexible, efficient and price-friendly options to guide their investment strategies.
The power of the millennials will make the wealth management industry rethink their service offerings. Their intimate relationship with technology makes robo-advisory platforms the perfect option. At the same time, their need for control makes the goals-based approach even more important. With CONNECT you’re getting the best of both worlds – a highly intuitive digital platform that not only optimises your return, but also gives you complete control of the risk you’re willing to take on to achieve your goals. If this generation of investors are committed to getting what they want, then CONNECT will help them get there.
Amid increasing demand for digital interfaces, let’s not forget that wealth management can be complex and there will be times where you need to speak to an expert. A strong personal touch remains an integral part of the wealth management experience, and customers still appreciate opportunities to speak to their wealth managers for financial advice.
A recent report found that 68% of high net worth individuals in Asia-Pacific (excluding Japan) prefer the hybrid model in 2018, an increase from about 50% in 2017. 1 The hybrid approach has always been our model, in part because of our heritage advising ultra-high net worth clients on complex financial needs. Much as we believe that technology can democratise wealth management, and bring better investment choices to the market, we understand the power of the human touch. The combination of technology and expert advice is compelling as we touched on in August.
Additionally, accredited investors who are keen on private banking level choices can also opt for CONNECT Prime, our new premium digital wealth management offering.
We’re expecting a very interesting 2019. Investors will have some difficult decisions to make depending on the opportunities and threats in the market. But always remember that volatility brings opportunities, and investors can ride the storm by keeping an eye on their goals and managing their wealth for the long-term through a diversified, risk-adjusted, balanced portfolio.