Reflecting on 2024, what were your firm’s major milestones from an operational perspective and how did you achieve them? Conversely, what were the setbacks and challenges encountered along the way, and what measures were taken to surmount them?

Endowus was started to serve the wealth management needs of clients holistically across their private wealth and public pension wealth, wholly aligned with their interests. This is done by removing all fees that may influence fair advice being given, such as returning 100% of trailer commissions back to our clients, as well as removing transaction and other associated fees that encourage churning of investments.

Guiding our mission is also a focus on retirement adequacy, which is why we began our journey in Singapore prioritising a technology stack that enables our clients to invest their Central Provident Fund (CPF) – to offer low-cost and globally-diversified solutions to investors.

Strategically, we have partnered with over 80 top-tier fund managers to offer clients access to world-class investment solutions across public markets, private markets, hedge funds and alternatives.

To date, client assets have grown to over US$7 billion and we serve over 250,000 customers across Singapore and Hong Kong.

In 2024, we launched our full-service launch in Hong Kong, marking a critical step in our regional growth strategy. Since then, our local customer base has grown by 220%, reflecting the city’s appetite for user-friendly, tech-driven investment solutions. Going forward, we intend to double our headcount to support the growing operations there.

As Endowus has scaled its regional operations, we have also expanded the investment solutions on our platform to include private market strategies. Private markets represent one of our fastest-growing business segments, particularly because access to private markets has been out of reach of even most HNWIs. Our assets under advice (AUA) in alternatives now surpasses US$250 million and has continued to grow at a strong pace.

Endowus sees growth opportunities in this area, particularly as more investors become familiar with and aware of the role that private market investments can play in one’s portfolio, especially against a volatile market. There is still a lack of knowledge on private markets and alternatives, which is why we spend considerable effort on education and in providing one-on-one advisory services.

To ensure that our clients get the best available private market options, Endowus has established partnerships with the world’s leading private market GPs by AUM. These include the likes of Apollo, Blackstone, Bridgewater, Carlyle, EQT, HPS, KKR, Partners Group, Oaktree, Point72 and more.

The industry continues to face three major challenges in wealth management today:

1. Lack of transparency in how fees are charged: Fund managers and insurance companies have traditionally paid commissions to distributors. While banned in countries such as Australia and many parts of Europe, the practice of distributors collecting trailer fees from fund managers remains the norm in Asia. This practice is unfair, as it creates an undeniable conflict of interest. Distributors are incentivised to push certain funds over others because of trailer fee commissions. Moreover, some distributors charge additional fees to clients or, worse yet, churn customers by encouraging them to buy and sell different investment solutions frequently. These products are often not suitable for the clients and as a result, can significantly affect investment returns.
2. Limited access to good investment products: Retail investors tend to only get access to funds at retail share class, which come with substantially higher management fees. Typically speaking, only the wealthy and institutional investors get access to lower cost, institutional share class fees — a key differentiator for Endowus as we continually only source and negotiate for lower cost options. Lower fees are critical for investment success and can represent the difference between a comfortable retirement and a struggle to make ends meet in old age, especially over a longer term. For example, the difference between achieving an annualised return of 7% and 8% over 30 years could be a 250% difference in investor returns.
3. Lack of financial education: We observe growing anxiety and uncertainty among investors, driven by increasing market volatility. Inflation, supply chain disruptions, persistent high interest rates, as well as fears of recession, have a significant impact on the stock market’s performance. Investors are less confident in making investment decisions today and constantly desire reassurance as well as knowledge on how they can respond to make sound investing decisions themselves and not speculate or invest emotionally.

Endowus believes these practices must change, and we are leading by example. We focus on bringing unbiased advice through our fee-only digital wealth service, offering access to best-in-class funds at the lowest fee achievable, all so we can provide our clients with the greatest chances of success in meeting their long-term financial goals.

How did your firm leverage and adopt technology regionally in 2024, and what is planned for 2025? What are the key metrics employed to assess technological investments and which specific investments have had the most significant impact on revenue generation and overall client experience?

As one of the first digital wealth management platforms, our technology implementation is guided by the value it brings to customers. This includes areas such as discoverability, recommendations, and ultimately, self-enablement.

In 2024, Endowus launched WealthWise, our internal generative AI, large language model, to enhance client interactions and equip our client advisors with tools to improve efficiency and outcomes for clients. Since its launch, we have seen a 120% improvement in client satisfaction, with clients receiving faster responses to their queries. These queries typically range from account updates to more in-depth questions on a particular fund. Today, more than 30% of all incoming enquiries are handled via AI, freeing up our client advisors for more complex needs.

Endowus is also exploring an ‘advisory bot’ to help clients identify suitable portfolios for their investment goals, such as a home purchase or an education fund, and a tool to help clients self-serve on alternative investments. This initiative is in its early stages, and we are assessing the types of queries sent for goal-setting and fund searches. In the long run, this will help us track the user journey in investment discovery, improve customer retention, and measure revenue generation from specific actions made on our platform.

Given the increasing sophistication of digital channels and other client-facing innovations, how do you maintain an equilibrium between high-touch client services and cutting-edge technologies?

Since we started our business, we’ve seen the rapid digital shift of wealth management. Digitalisation will continue to shape investor independence and autonomy, as it empowers the ‘man on the street’ with the required investment tools.

According to McKinsey, more than US$700 billion is expected to transition to digital wealth platforms by 2028.

While investors are increasingly open to digital wealth platforms like ours, Endowus focuses on offering quality financial advisory services to help investors understand their investments. And it’s not only a focus on quality that has helped the business achieve its growth today. The hybrid nature of its advisory model, being fully digital and fully human, has allowed the firm to scale the quality to the needs of their clients, adaptively.

We still see advisory as a significant differentiator in how digital wealth management platforms engage their customers because the human element is still important because investing is a personal, and often emotional experience.

While Endowus is a digital-first company, we invest significantly in building our team because we recognise the importance of professional experience and the high touch.

For example, Endowus has a 13-person team that oversees the strategies of our investment portfolios ranging from fund selection, due diligence to portfolio construction. The team comprises experienced professionals hailing from some of the largest financial institutions, including investment banks and hedge funds.

The investment office is also responsible for identifying and building partnerships with leading asset management companies and GPs worldwide, enabling Endowus to offer world-class investment strategies to clients.

Endowus also invests heavily in building our client advisory team, many of who came from the private banking industry and were responsible for helping to create holistic investment portfolios for their clients.

As a result of evolving regulatory requirements, private banks/wealth managers are reviewing their compliance systems and processes. What are the current operational challenges posed by the regulations in the jurisdictions in which you operate, and what can be done to effectively address and overcome these challenges?

While major markets in the west have implemented regulations to curb misaligned incentives and encourage the independent fiduciary model, this is still not widely practised in Asia.

Closer to home, the Australian government banned fund managers from paying sales commissions to advisers and brokers in 2020, forcing them to shift to the fee-only independent model.

Trailer fees and commissions remain a traditional part of the industry in most of Asia, where distributors are paid by fund managers and insurance companies.

Asia as a region needs to speed up curbing conflicts of interest and strongly encourage the fiduciary responsibility of wealth managers. Transitioning to a fee-only model is one way of doing so, which can ultimately lead to better societal outcomes.

Endowus has taken the first step to encourage greater alignment with investors’ goals by introducing a 100% cashback on all trailer fees returned to clients.

In addition, we believe that client education will play an important role in helping clients understand how fees are charged, and how much of that affects their investment returns.

Outside of regulatory requirements, private bank and wealth managers often require high minimums, starting from US$300,000 to even US$5 million and more to access what they deem as “more sophisticated” products. Today, Endowus has broken that barrier by offering access to private equity, private credit, hedge funds and alternatives offerings starting from US$10,000, across varying risk/return profiles and liquidity needs.

Artificial intelligence (AI) has both promises and challenges for the wealth management industry. What are some of the AI use cases in your firm over the past year? How has AI been helping the firm to improve operational efficiency? What are some of the pain points wealth managers need to overcome in AI implementation? What’s your plan for AI adaptations in 2025?

Endowus’s implementation of AI is focused around two areas: improving efficiency and enhancing client experience, with goals targeted at reducing operational costs, as well as improving user experience.

For example, we introduced our WealthWise tool to assist both clients and advisors. Overall, we have seen that an AI tool like this can significantly improve client experience while freeing up our advisors’ time to engage with clients on more complex queries.

With further improvements in AI technology, we expect to offer even more hyper-personalised services to customers, more accurately catering to their diverse and nuanced needs.

However, we caution that AI as a tool cannot be used to completely manage the end-to-end aspects of investment advisory and transactions. This is why Endowus strongly advocates for hybrid advisory, where the human element is still vital in overseeing how investments are completed. We firmly believe that even with tools such as generative AI, clients should still contact advisors for more nuanced or complex scenarios.

Through WealthWise, Endowus is empowering its advisors to more effectively analyse client portfolios and identify the available options that can strengthen and solidify a portfolio.

More importantly, when using tools such as generative AI, we must ensure that customer data is of the utmost priority. This is why WealthWise operates mainly on our internal data. Wealth managers must familiarise themselves with safety protocols surrounding client data as they become more proficient in using AI tools.

Going forward, Endowus believes there is tremendous upside and the huge advances in AI allow us to enhance not only the quality of the client’s experience, but the quality and accuracy of the advice being provided as well. Over time, we are confident of fine-tuning AI models to deliver a much higher-quality output.