Closure of a Robo-advisory firm

Sadly the CEO of MoneyOwl announced that it is winding down its financial advisory business and that all commercial activities will cease by 31st Dec 2023 after 5 years in operation. It took me a while to pen this article as I try to consolidate my thoughts on the operation and closure of MoneyOwl.

First of all, this is not a feeling of schadenfreude over the failure of MoneyOwl. As mentioned, I had wished MoneyOwl could somehow be a disruptor in the financial advisory space and proved financial adviser representative is redundant.

We shall learn a few lessons here…

“While many recognised the importance of financial planning, most did not take further action and far fewer were inclined to pay planning fees or purchase investment or insurance products through which MoneyOwl earned revenue.”, said the CEO of MoneyOwl.

Most of us, financial adviser representatives(FARs), know that only a handful of individuals will take pro-active approach towards financial planning. In most situation, most individuals will procrastinate even to meet a FARs, let alone taking action even when they recognised there is a protection or financial gap in their plans because they think time is on their side and FARs just want to sell something. Very often, FARs will have the urgency to push for the action to be taken ASAP. So, point one, we need the irritating FAR to persistently bother the individual to take action. We also learnt that while we can have cutting-edge technology and hardware to engage a client, this business is one that the FAR needs to sit down face-to-face, heart-to-heart and engage them with heartware.

Next, fee-based structure is a good alternate remuneration model for FARs but the consumer may not be ready for it yet.

The CEO of MoneyOwl also said, “In addition, many of our fit-for-purpose solutions were designed with low fees to benefit mass market clients. This, coupled with the high costs associated with client acquisition, technology development, and a fully salaried workforce made it challenging to achieve commercial viability”

Being an social enterprise doesn’t mean they cannot make any profit. For example, Eighteen Chef, is an social enterprise too. Eighteen Chef has been serving its social cause of hiring ex-offenders and troubled youths since they started their business in 2007 and still remain profitable. In my humble opinion, a financial advisory firm that operates on social enterprise model could still be profitable and channel the profit back to the society by creating more financial awareness to the local community or reach out to the underprivileged regarding financial planning matters.

Even for a Non-Profit Organisation or charity organisation, they cannot run the organisation on loss because there are overheads to keep the business going. May it be a financial institution or FAR, the best service that we can give to our clients is not about giving them cheapest fee, lowest premium or best products. In my humble opinion, the best service we can give to our clients is to be sustainable so that we can continue to provide service to them as long as we can. Personally, I think leaving the industry is one of the worst service to clients who trusted and engaged us especially if it is we had become financially unsustainable instead of redundant.

After spending 8 years in an insurance tied agency, I moved to an independent financial advisory firm in 2005. There were only around 12 financial advisory(FA) firms in those days. One of the criteria in selecting a firm to join was that it must have be at least 5 years in business and there was only a handful literally. The reason for doing so is to ensure it is not a fly by night company. By today’s standard, that would mean a good benchmark is a financial advisory firm with more than 20 years in business. I choose 20 years because the firm would had witness and survived the major financial crisis over the last two decades. These firms may not be the best firm in the industry but there must be something they did right to survive these period with all the changes in the financial industry, financial crisis and of course not forgetting the pandemic.

Lastly, if you are a consumer or knows someone who is affected by this unfortunate closure, feel free to conduct my colleagues or myself and we will be glad to offer our services. If you are a a staff looking for new opportunity or a financial adviser representative wanting to continue your practice, drop me an email and we can discuss how we can grow together professionally.