Digital wealth platforms report growing AUM, but have yet to see profits

Wealth management platforms saw a bump in their assets under management (AUM) in 2023, as new product rollouts attracted more commitments, mainly from existing clients.

Image credit: Endowus, StashAway, and Syfe

“With every new product line over the past 12 months, we’ve seen an incremental uplift in AUM,” says Gregory Van, co-founder and CEO of fintech firm Endowus.

Michele Ferrario, co-founder and chief executive of investment platform StashAway, says that the company “saw quite significant AUM growth, particularly in the second part of 2023.”

Endowus has said it now has over US$5 billion in AUM in Singapore and Hong Kong, while rival Syfe has over US$1 billion in Singapore alone. StashAway declined to disclose its current AUM, but it crossed the US$1 billion threshold in 2021.

Current customers were the main driver of AUM growth for both Syfe and StashAway.

Flight to safety

As interest rates remained high, customers started placing money into cash management products last year, said Dhruv Arora, founder and chief executive of Syfe. The company’s Cash+ Guaranteed offering, a fixed deposit product, drew new customers.

“Our average user was somewhere between late 20s and 40s, but with the Cash+ Guaranteed, we started attracting users in their 50s and 60s as well,” Arora says.

Syfe’s Cash+ Guaranteed product / Image credit: Syfe

The flight to safety by investors has led to platforms launching new solutions. Endowus released offerings such as index funds by asset manager Amundi for Central Provident Fund savings.

All the platforms also rolled out more products for accredited investors – with financial assets exceeding S$1 million (US$745,000) or an annual income of more than S$300,000 (US$223,000) – such as hedge funds, venture capital funds, and angel investment syndicate investments.

The mass affluent, commonly defined as customers with at least S$250,000 (US$186,000) in assets, is a key segment for all wealth management platforms.

But while players say business is growing, they have yet to show profitability, according to their most recent financial filings.

Focus on existing markets