'Robo' adviser helps clients make investment decisions

Infinity senior vice-president Frank Troise (above).
Infinity senior vice-president Frank Troise (above).PHOTO: COURTESY OF FRANK TROISE
The technology for Infinity's robo wealth adviser uses automated algorithm-based portfolio management software. Infinity says the advantages of a robo adviser are that it is cheaper than a human one and is on call 24/7.
The technology for Infinity's robo wealth adviser uses automated algorithm-based portfolio management software. Infinity says the advantages of a robo adviser are that it is cheaper than a human one and is on call 24/7.ST FILE PHOTO

Financial adviser Infinity Partners to offer service to US expatriates before expanding it

A high-end Singapore financial advisory outfit is about to launch a "robo" wealth adviser for its wealthy clients - the first working virtual wealth assistant here.

The firm, Infinity Partners, says it will start by offering the service to American expatriates working here and eventually offer the robotic adviser to other wealthy clients.

Infinity, a type of private bank known as a multi-family office, said the advantages of a robo adviser are that it is cheaper than a human one and is on call 24/7.

The initial market of 70,000 Americans are accredited investors with investible assets of $2 million each, opening up a potential market of more than $1 billion.

The robo adviser has been in test mode but is ready to go. Infinity senior vice-president Frank Troise said: "Infinity has a capital market licence so we can begin to offer the service. But we do want to ensure that the authorities understand how we provide this service."

Once the service goes live, the expatriates will be able to buy exchange-traded funds (ETFs) in the United States. ETFs are investment funds traded on stock exchanges.

By next year, Infinity hopes to offer a robo service for local accredited investors. The robo service will be customised so that a broad array of ETFs are available here for all investors, said Infinity senior vice-president Frank Troise.

The technology uses automated algorithm-based portfolio management software. It has been in use in the US for several years. Infinity bought the technology from the US.

Managing director Jennifer Jern said the investment firm decided on the robo as it enables the firm to open a new market of American expats, who are underserved here.

Apart from the potential market, it is also the cost of providing the service that is attractive to Infinity.

With robos, the cost of getting and servicing a customer is much cheaper. Typically a relationship manager at a private bank would have to spend US$3,000 (S$4,250) to US$7,000 on a variety of activities from wining and dining to golfing to win over a new customer.

Mr Troise said with the robo, it costs only several hundred dollars for each new customer. The costs go down as the software is depreciated.

Lower costs also mean customers pay lower fees for private banking.

He said: "We charge about 1 per cent of assets versus 3 to 5 per cent charged by private banks. That's a lot of savings for customers."

Clients are attracted by the lower service costs as well as the 24/7 service. Those interested start by going online to get investment reports from research companies.

They include the Pension Benefit Guarantee Corporation in the US and public research from institutional consultants such as Frank Russell, data from California Public Employees Retirement System and GIC.

Mr Troise said the research provides potential customers with free reports on topics of interest such as university planning for their children and retirement analysis.

"Armed with the information they can begin to think about going online to make investments."

Customers also get financial tools to evaluate their financial situation. For example, they can get a retirement calculator for free.

"They receive a lot of value without paying anything. Once they have done their analysis, they can open an account with us."

He said similar services in the US show that three to five out of every 100 people who use research services will use the robo service.

By next year, Infinity hopes to offer a robo service to local accredited investors. It will be customised so that a broad array of ETFs are available for all investors, he added.

The service will be extended to Hong Kong and Japan next year .

A version of this article appeared in the print edition of The Straits Times on September 23, 2015, with the headline ''Robo' adviser helps clients make investment decisions'. Print Edition | Subscribe