Nino Ulsamer, Co-Founder and CTO, expounds StashAway’s new approach to investment based on customer-centricity, data and automation...
Digital technology has the capability to democratise the instruments of financial services in previously inconceivable ways; what used to be tools reserved for professionals are now being made available to the general public on intuitively designed, tech-enhanced platforms. Headquartered in Singapore, StashAway was founded in 2016 upon the principles of providing bespoke, affordable and high-quality digital solutions for wealth management, and it’s a mission that continues to this day. Nino Ulsamer, Co-Founder and Chief Technology Officer, spoke with us about how the company started and its goals in the APAC (Asia-Pacific) market.
“It was more than five years ago that I met Michele (Ferrario, CEO and Co-Founder), who, at the time, was looking for a business partner to start a new company,” recounts Ulsamer. Ferrario, a successful and experienced entrepreneur with established businesses in North America, Europe and Asia, was dissatisfied with investment products offered to him by banks in the latter and wanted to develop something comparable to those in other regions. He immediately went to Ulsamer as his first port of call. A seasoned veteran of the European robo-advisory market, he too shared an interest in a different investment model because of his own experiences. “I didn't know much about investing at the time, but the idea of having a digital wealth manager that acts as a guide for your investing journey and isn’t incentivised by commissions or trying to sell you random products was very attractive.” Bringing on board Freddy Lim, Co-Founder and Chief Investment Officer, provided the final piece of the puzzle, and StashAway was created.
The company calls its platform “wealth management, like it should be” and offers customers a superior investing experience via five key factors:
One low, variable and transparent management fee (calculated by the size of investment)
Knowledgeable customer service agents
Decision-making guided by data insights
Unlimited and free money transfers and withdrawals
An intuitively designed mobile app (currently rated 4.5+ stars)
Having founded several tech companies prior to StashAway, Ulsamer states that his primary concern was to achieve “simplicity” in the overall user experience, “Ultimately, what our product does is not actually that simple, but, for the customer, it’s extremely intuitive.” Next, he introduced automated processes to boost cost-efficiencies and keep expenditures low, savings which subsequently benefit users in the form of very low fees. These highly customer-centric priorities demonstrate the StashAway executives’ decades of experience in the tech sector investment; they know what matters most to the end user, and this is what gives the company its edge. “Our team is now around 150 people strong and that depth of experience translates into our results,” states Ulsamer. Firstly, StashAway now holds a CMS license for retail fund management from the Monetary Authority of Singapore (MAS), which recognises its compliance with the “highest regulatory compliance standards” regarding audits, capital requirements and more. “Secondly, we’ve built a proprietary investment strategy called ERAA.”
Economic regime-based asset allocation (ERAA) is a sophisticated investment strategy that Ulsamer claims was previously only available to high-net-worth individuals. StashAway’s innovation has been to introduce this previously unattainable system to retail customers. “ERAA is our proprietary investments strategy that powers all portfolios,” he explains. “It's based on the observation that the economy moves through different cycles, and asset classes don’t behave consistently across different economic regions.” Gold, for example, will behave differently during periods of growth than when the economy is in recession. StashAway will monitor the performance of every asset class and then consider value adjustments, comparing the ‘fair value’ of a certain asset and its current price and looking for any harnessable differences. “Out of all this information, we create an optimised portfolio that attempts to maximise medium-term returns while minimising risk. Our customers are extremely satisfied with the returns that they've achieved so far.”
Maintaining the company’s individual vision requires specialised technology, therefore StashAway develops the majority of its technology in-house. “It also means that we can provide a very coherent experience for our customers as they go through the various stages of the onboarding process,” says Ulsamer. Available online, the process for signing up can be done easily from a smartphone in less than 15 minutes. The user is asked a series of questions in order for StashAway to understand them and their “risk appetite”. Following standard KYC (know your customer) practices, new customers can expect to be fully onboarded within 24 to 48 working hours. “Using CRM (customer relationship management), we leverage data to understand customer behavior and present the most ideal experience or content to them at any given point in time.” The objective, he continues, is not simply to convert the customer but actually to educate them on their investment journey.
“We've always tried to stay at the forefront of technological innovation in general, and that’s helped us build a very strong engineering team. By keeping our processes very agile and fast, we’re able to react to customer feedback quickly and therefore able to continuously innovate.” Despite this, however, Ulsamer is clear that there are still challenges to operating in the APAC region. With myriad local regulatory requirements to consider in each area it operates in, the company has to maintain a close working relationship with regulators in each territory. “Also, if you look at a customer in Singapore and compare them to a customer elsewhere, they're going to be very different and have separate expectations about the product,” he adds. Therefore, StashAway is careful to conduct market research and interviews with potential customers from the very beginning. Doing so allows it to adjust its product and messaging to cater for those variances. In a clear display of transparency and customer focused innovation, StashAway even helps its customers comprehend complicated clauses in its terms and conditions by adding a ‘translator’ for legal jargon.
Despite the difficulties of 2020, success has followed swiftly in StashAway’s wake and 2021 is off to a remarkable start. The company recently announced that it is now managing over US$1bn (SG$1.35bn) in assets, achieved through StashAway’s ability to generate strong returns in a volatile market. In total, its portfolios have generated annualised USD returns ranging from 17.1% (for its highest risk portfolio) to 5.3% (for its lowest risk portfolio) since its launch in July 2017. In 2020 alone, the USD portfolio returns ranged from 24.1% to 5.2% respectively, and consistently outperformed their same-risk benchmarks.
2021 will see StashAway exploring opportunities for further expansion within Asia, with the same careful scrutinisation of market potential and regulatory restrictions that are hallmarks of its general approach. “Typically, when we go into a new market, we try to educate clients and offer a product that previously wasn’t available to them,” Ulsamer says. “But, first and foremost, our goal is to continue to help customers navigate the ups and downs of the market.” His vision for StashAway’s development is the continued refinement of its overall wealth management experience. The world has been irreparably changed by the events of 2020, and how people invest must change with it. Focusing on data, technology and customer-centricity, StashAway will continue to leverage its approach to produce new and exciting results. “We all live in a new reality now, right? Firms need to adapt to the new normal.”