StashAway Leverages Education to Help Expand its Presence in the Growing Middle East Wealth Market
When Hubbis held its first live event since early 2020, Ramzi Khleif, General Manager for MENA at StashAway joined the first panel discussion of the day, which focused on the development of the wealth management markets in the region. We have extracted some of his views for this short report, focusing on the value the platform represents, the education the firm offers to help democratise financial planning and the trust StashAway is building in order to broaden its investor penetration.
Khleif began by explaining that although in the past his career was more mainstream institutional, today he bridges into the world of FinTech as StashAway is what they describe as a digital wealth manager, or more commonly known as a robo-advisory.
“But robo-advisory was just the beginning for us,” he reported. “We began by providing diversified portfolios with risk levels segmented to different risk appetites of the customers, and of course through a digital-first platform. However, we have for some time already been evolving that to offer a more holistic suite of products across different kinds of types of portfolios, which could include general investing, ESG, thematics, and cash management.”
Upping the game
Moreover, he explained that as they had just announced in Singapore, they are now migrating also into more of the purer private banking and wealth management space, providing services for accredited investors. “We will be facilitating their investments in private equity, venture capital, angel investing, cryptos, and a variety of assets and areas not necessarily easily accessible to the mass affluent segment, which is our core market segment to date and which throughout the pandemic has enjoyed growth and dramatically more activity,” he explained.
He explained that a by-product of the pandemic had been a massive migration to digital enablers that facilitate ease of onboarding and ease of investment interface.
Ship-shape in minutes
“They can onboard in 15 minutes if they have all the documents ready, they do not need to come in to see anyone, but they can also speak to our teams if they want to, as we recognise that personal finance is still personal,” he told delegates.
“Most importantly, all this can be done at an entry cost that is far more affordable than other routes. And we want to carry this cost-effectiveness into more of the private banking space.”
Khleif explained that access to the accredited market products is only thus far to be made available in Singapore, the company’s HQ and effectively its test centre for new rollouts.
From Singapore and outwards
“But if all goes well, we will bring that and other new solutions to Dubai and the region,” he reported. “Right now, we are in five markets, and we are app-based or online-based, so we need little physical infrastructure to expand our range or our markets. And on top of that, the customers can, as I mentioned, connect to our customer engagement team or wealth advisors if they need further support.”
Nevertheless, StashAway is championing the trend to the democratisation of advice and access, bringing down entry thresholds for a variety of solutions.
Democratising the investing world
He told delegates that the business model is driven by transparency. “For us, what is extremely important is not just the level of fees but the transparency around them,” he explained. “We do not like hidden fees, or add-ons that surprise clients, or that are difficult to spot, for example, penalties on withdrawals. We believe in one simple, straightforward, transparent, affordable management fee.”
Keep things tight and fair
Those fees, he elucidated, vary depending on the product, market and service offered. The highest fee starts at 0.8% for small portfolios and then gradually decreases to 0.2% for anything over one million US dollars, though there is no minimum to get started. “As a digital platform, we can spread our fixed costs over a larger client base while maintaining this level of more personalised services for a smaller, wealthier segment.”
Khleif offered his own views on why customers migrate to StashAway, noting that there are some who prefer to be entirely self-directed and have no interface with any form of advisor or RM who might seem like they are trying to upsell or promote products that help the advisors more than the clients. “These people like to be on the platform, but unbothered by anyone at all,” he said. “Albeit, they also know that they can talk to someone if they really need some support.”
Ease and cost combined
The obvious reasons are of course also the ease of entry, the ease of access and the costs. “Everything is fully accessible and adjustable if you want to change your portfolios,” Khleif elucidated. “If you want to change your risk levels, you want to get in and out, it literally takes a few seconds with a few clicks and you can change your entire portfolio yourself without having to log into different portals or apps. The user experience is very clearly key to the model.”
Educate and engage
To expand market share, the firm employs digital channels and marketing. “Our demographic is maybe slightly younger, slightly less affluent than the private banks, and much of what we do to build centres on education,” he reported. “We engage with high-quality speakers and partners to do educational events, such as whether it's online webinars, or perhaps in person when we go into companies to also educate their workforce and the employees on the benefits and importance of kind of financial planning, of investing, of retirement planning. We don't charge for these services, and they are very content driven.”
The objective, he added, is to build trust in the brand.
“We are not sales first,” he said. “We are communication and education first, helping people of all types understand the value of effective financial planning for their lives.”
Elevating the proposition, winning more friends
He explained that the reality is that not enough people organise these things properly and said that is true in the Middle East as well, perhaps even more so.
“Nobody really gets a formal education on personal finance; they don't teach it in school, they don't really teach this in university, often not even at the higher MBA levels,” he observed. “Nobody's teaching you how to file your taxes, nobody's teaching you how to think of risk and reward, and nobody's teaching you to save every month. Nobody explains that if you put perhaps USD500 a month away from 25 years old, then you're probably a millionaire by the time you retire. Armed with greater understanding, people are more receptive to joining our platform, and that is what is happening every day.”
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