Generation Start-up: How one man's investing experience led to him to create robo-adviser StashAway

As an expatriate living and employed in Singapore in 2016, Michele Ferrario was earning a decent salary and saving well. Even so, the Italian indigenous had a difficulty: his cost savings were in cash.

With a background in financing, Mr Ferrario wanted to create a diversified investment portfolio that centered on low-fee exchange-traded funds and his first step was to approach several Singapore’s premium banks.

However, there were few alternatives for what he wanted to do; the banks were offering to sell him high-fee goods such as mutual funds. Shortly after, Mr Ferrario learned all about the climb in attractiveness of robo-advisers in the US - and that’s when he previously his lightbulb moment.

Robo-advisers are digital expenditure platforms that calculate an investor’s risk tolerance predicated on a series of problems. Using automated algorithms, then they assign shareholders a tailored purchase portfolio of ETFs or index cash. Typically, they fee lower fees weighed against traditional fiscal advisers and riches managers.

“I Googled robo-adviser Singapore and couldn’t find anything. I learned a fresh term for the digital low-cost ETF … [and] this is exactly what I wanted to accomplish,” Mr Ferrario, the former chief executive of Singapore-based e-commerce platform Zelora, tells The National.

But instead of simply investing his cost savings in a good robo-adviser, Mr Ferrario took his lightbulb moment a stage further and established StashAway in 2016, developing it into among South-East Asia’s greatest digital riches managers with $1 billion in assets under administration.

Along with co-founders Freddy Lim, StashAway's chief technology officer, and Nino Ulsamer, chief investment officer, the 3 partners rolled away the robo-advisory company in July 2017 after 9 months of creating the platform and receiving a license to use from the Monetary Authority of Singapore.

While the US is the leading marketplace for robo-advisers, they are growing in popularity all over the world, the World Bank said in its 2019 Robo-Advisers: Investing through Machines report.

“Emerging economies also have witnessed the emergence of their own robo-advisors. For example, the quantity of robo-advisers is growing quickly in Asia, influenced by an emerging middle income and high technological connection,” the Washington-based loan company said in the statement.

In the US alone, the World Bank jobs the robo-advisory sector to grow at an average gross annual rate of 31 per cent to attain almost $1.5 trillion by 2023 from more than $400bn in 2018.

StashAway has capitalised in the boom and has expanded to Malaysia, North Africa and Hong Kong since its release.

Previous November, the digital wealth manager secured an asset management permit from the Dubai Personal Services Authority to use in the UAE within its plan utilize the region's growing segment of affluent investors searching for low-cost ways to build their wealth.

StashAway’s expansion in to the UAE was good timed. Because the outbreak of the Covid-19 pandemic, bored novice investors all over the world include embraced digital trading platforms, including the loves of Robinhood, eToro, Interactive Agents and the UAE’s robo-advisory Sarwa.

“I think in the centre East, you will find a clear gap available in the market similar from what we experienced in Singapore when we launched five years back … their experience with banking institutions and financial advisers,” Mr Ferrario, StashAway's leader, says.

“The other thing is financial advisers are very prevalent [in the UAE] and quite aggressive and that creates a … sense of mistrust. I think we brought to the table a brand new perspective and a platform that is easy to understand, extremely transparent, low costs - things people understand.

“We are seeing quite strong traction, positive development [in the UAE] and persons are starting with significant amounts regarding their initial deposit,” Mr Ferrario adds without giving specific quantities.

Unlike different trading platforms, StashAway doesn't have a minimum investment need, Mr Ferrario says.

“The reason we have a $0 minimum amount is that people want people to be able to try whatever they feel safe with. So there's likely to be persons who believe that $100 will do to kind of try and people who feel that $100,000 is normally a small sum. It's all relative,” he says.

“The beauty of the platform is that because you can expect fractional shares, even if you try with $100, or $500, or $1,000, you truly should be able to get yourself a diversified portfolio.

“So you know, in the event that you invest any other thing more than $10, we'll manage to actually invest it in a diversified manner.”

Last month, StashAway elevated $25 million in a series D funding spherical led by venture capital company Sequola Capital India. The funding round brings the company’s total paid-up capital to $61.4m and can accelerate investment merchandise and feature developments across its five market segments, Mr Ferrario says.

“This vote of confidence by the most successful venture capital organizations affirms that we’ve been taking the right approach by expanding early into high-opportunity markets, continuing to deepen our product offering, and creating a lean and mission-motivated team. These measures have translated into rapid AUM expansion since our start,” Mr Ferrario said about the funding rounded in a declaration on April 26.

StashAway plans to utilize the latest funding circular to continue improving the client experience.

“This means continuing to hear feedback and respond to that with the addition of a few new features, potentially investment products,” he adds.

“Beginning with Singapore, we’re adding a handful of wealth operations tools that are not specifically investment goods and then getting the products to an increasing number of persons … [as] we are actually in five countries.”

In the long run, Mr Ferrario says the purpose of StashAway is to greatly help as many people as possible to build financial peace of mind.

“You want to empower persons to build and protect wealth for the future. It’s an extended journey that you start by construction trust, enabling persons to build their portfolios as time passes,” he says.

“Hopefully, a decade from now, we'll have the ability to say, ‘Wow, we actually changed the lives of tens or hundreds of thousands of people … to be drastically more wealthy than they would have done ... because of lower fees, more diligence and getting more systematic within their approach to investing on a regular monthly basis’.”