Investors over the age of 50 take a shine to robo-advisers

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SINGAPORE - Investors over the age of 50 are taking a greater liking to robo-advisers, which have tended to be more popular among younger folk.

It helps that these digital investment platforms are becoming more mainstream and making it easier for people to invest in higher-yield assets like equities amid the low interest rates now prevailing, Mr Kelvin Goh, head of wealth advisory at OCBC Bank, told The Straits Times.

People over 50 grew their investments by around 300 per cent on OCBC RoboInvest last year compared with 2019, with an average investment of more than $6,000.

They also tend to put their cash into industries that are expected to have strong growth, said Mr Goh. "Traditionally, when it comes to the more senior investors, the stereotype is that they are more focused on the traditional asset classes like bonds, gold and precious metals."

However, the option preferred by these investors on OCBC RoboInvest - which offers 34 portfolios across six markets - is the Future World portfolio that covers themes such as automation, cyber security and sustainable solutions.

Most older RoboInvest users are also fairly seasoned investors, with 80 per cent having at least one other investment with OCBC, said Mr Goh. "They would already have invested in traditional asset classes and could be looking at other portfolios to drive growth."

StashAway, likewise, has seen a 400 per cent surge in the number of older investors it acquires each month, compared with before the pandemic. Around 75 per cent of these customers are aged between 50 and 60, and the rest are older.

The average size of assets under management for this group exceeds that of investors below 50 by 300 per cent.

Most older investors - about 70 per cent - also have prior investing experience. But they generally have a lower risk appetite than younger investors, said Mr Michele Ferrario, chief executive and co-founder of StashAway. "Older investors are nearer to or in retirement so the risk level... will be very different."

Endowus CEO Gregory Van said investors over 50 tend to have a less aggressive risk appetite than the younger cohort, with an almost 50:50 equities to bonds ratio and the proportion of bonds rising slightly with an investor's age. "Older investors tend to take less volatility and look for more income in preparation for retirement. We see similar patterns across all their sources of wealth," he noted.

Endowus users can invest using cash or Central Provident Fund and Supplementary Retirement Scheme funds. The number of clients over 50 on the platform has doubled since the start of this year.

Mr Sebastian Sieber, a partner at Syfe, noted: "We are seeing more older investors embracing digital investing platforms as a means to grow their wealth while paying less in fees. Syfe's oldest investor is 93 years old.

"In this low interest rate environment, the older generation, in particular, are forced to look for alternatives to overcome inflation and grow their wealth."

Clients over 50 account for just 9 per cent of Syfe's client base, yet they make up 20 per cent of its assets under management, highlighting the wealth within the older generation, said Mr Sieber.

The number of investors who are 55 and older doubled year on year in May on DBS digiPortfolio and now accounts for about 20 per cent of its assets under management, said Ms Evy Wee, DBS' head of financial planning and personal investing.

Younger investors, however, are still the mainstay group of customers for most robo-advisers.

Investors aged 30 to 39 at OCBC RoboInvest have the highest number of transactions and investment amounts, making up more than 40 per cent of all investments.

Meanwhile, almost two-thirds of DBS digiPortfolio's client base is made up of younger investors such as Gen Z and millennials.

At UOBAM Invest - a robo-advisory app launched last July - investors aged between 30 and 39 make up about one-third of total users versus 14 per cent who are 50 and above.

Ms Rachel Ong, UOB Asset Management's deputy chief marketing officer and head of digital channels and sales, said more than 60 per cent of the older group are experienced investors with a moderate to high risk appetite. "They usually stay invested for more than six months as most are focused on building their nest egg."

 

Learning to enjoy the ease and independence of robo-investment

Administrative assistant Natalie Tay found investing a lot easier to deal with once she worked out how to tackle the process on her mobile phone.

Madam Tay, 54, has been putting her money into fixed deposits and funds over the years but it all started to get away from her: "I found that I lost track of my investments over time."

Things changed when she grew familiar with using her iPhone for banking services like transfers and QR cash withdrawals at ATMs via the OCBC Pay Anyone app.

Madam Tay then learnt of the bank's robo-investment platform through her family, browsed some of its portfolios on her phone and started using it last August.

She initially invested $10,000 across three portfolios on OCBC RoboInvest: Gen Z Winners, which provides exposure to sectors like video-gaming and online retail; the Future World portfolio; and Singapore Stable Reits. She reaped returns of about 20 to 30 per cent over several months.

"I'm a very small investor and I don't have access to fund managers," said Madam Tay, who has since also invested in other portfolios like Precious Metals and Mainland European Technology.

"I like that I can just select portfolios I'm interested in, top up, withdraw and monitor how my portfolio is performing at a glance."

She is not perturbed by the minimal human interaction in robo-investing, saying that it helps her to make more independent investment decisions than when consulting a financial adviser.

OCBC wealth advisory head Kelvin Goh said robo-advisers are just another option for investors: "I also see space for traditional asset classes and product providers as well."

Investors can also take precautions like reading up on a robo-adviser's track record and how their assets will be protected before using these services, he added.

 

Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.

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