No Money, Mo Problems

By June Ramli

The COVID-19 pandemic has wreaked havoc even among citizens in a wealthy nation like Singapore.
A recent study by Prudential Singapore found that the COVID-19 pandemic has placed further strain on Singaporeans’ financial planning, with those between 35 – 44 greatly affected.
More than half of the respondents surveyed stated that should they fall ill unexpectedly or lose their job, they would struggle or not be able to meet their financial needs.
The financial decline was greatest amongst those aged between 35 to 54.
We recently sat down with Singapore-based- BetterTradeOff CEO and Co-Founder, Laurent Bertrand to draw on his expertise to offer his thoughts about the above talking points.

1. How have the financial sentiments of consumers changed over these last two years? 

A study done by OCBC in June 2020, reveals the significant impact the pandemic has had on people’s financial outlook. Of those surveyed- 55 per cent said they were ‘worried’ about their personal financial situation, 54 per cent said they were worried about the performance of their investment portfolio, and 55 per cent regarding both their income stability and job security.
Furthermore, 40 percent of those surveyed, who have investments, said they intended to reduce those investments.
And 54 per cent said they planned to reduce their savings.
When asked to look ahead, most people surveyed were cautiously pessimistic- only 21 per cent of those surveyed felt their personal financial situation would be better in six months time, 42 per cent thought their financial situation would be the same, and 37 per cent thought the situation would get worse. 

2. How spending habits and financial awareness will change as we transition to an endemic stage of Covid-19 

While many were not financially prepared for the impact of COVID-19, happily, most Singaporeans appear to have learned from the ordeal and made changes in how they manage their money.
In a survey done amongst Singaporeans by BVA consultants- 94 per cent of households said they intend to reduce their spending.
And while 55 per cent of those said this was out of necessity, the rest said they were doing so to be better prepared for times ahead.
And figures from MAS released in April 2021 showed a 13 per cent increase in Sing Dollar deposits, the biggest jump since the market downturn in 2009.
Best of all – the study from OCBC – indicated that Singaporean’s were taking tangible steps to future-proof and invest in themselves.
Of those surveyed, 53 per cent said they were attending more online courses than before.
And amongst those in their twenties- 64 per cent are attending more online courses and 23 per cent are setting aside more funds for retirement.
Also encouraging is the fact that between April and July 2020, BetterTradeOff saw a 264 percent increase in registered users on our free, direct-to-consumer, financial planning solution Up, as compared to the previous four-month period, a testimony to the fact that the pandemic has made more people aware of the importance of sound financial planning. 

3. What can individuals do to take charge of their finances and financial planning? 

First and foremost- they need to start! A study done in Singapore by St James’s Place Financial Advisers, revealed that 41 per cent of respondents have no financial planning whatsoever.
And a study done by BetterTradeOff found that only one in three women and one in five men in Singapore have ever seen a professional financial adviser.
This, despite the fact that 56 per cent said they did not feel confident that they have enough to retire.
In the same survey, the reasons given for people’s reluctance in seeking financial advice were the feeling that advisers were too intrusive in their approach, a sense that advisers were ‘hard-selling’ policies that the customer didn’t need, or recommending a one-size-fits-all plan.
The reality is, financial planning can be confusing, and even intimidating, to many.
Which is why we started BetterTradeOff– to build technology that simplifies and demystifies financial planning; making it possible for anyone to build a sound and comprehensive financial plan.
We like to say that ‘complexity is the enemy of action’- so by simplifying the task of building a financial plan, we open the door to action and the opportunity for people to take control of their finances and the future. 

4. What are the tools individuals can tap on to see their current financial situation and how they can improve it? 

One thing for sure, there’s certainly a lot of information available online that people can access for advice concerning their finances.
The question is making sense of this overflow of information, especially when not all of it is relevant or even true.
And younger generations – The Millennials and Gen Z – are even using social platforms like TikTok as a source of financial advice.
One study showed that 39 per cent of Gen Zers learn about personal finance from TikTok, YouTube and other social media outlets, like Twitter or Instagram.
But more than just information, what people really need is clarity. How much do I need to retire comfortably?
What do I need to do to get there? And what if something unexpected happens am I covered? We look for sound advice, in part, to build up the confidence to act.
But this advice is often too simple, like that found with basic financial calculators that focus on one product or one goal and ignore the rest of the factors impacting our lives. Or too complicated, with long questionnaires that can only be managed by experts.
Our proprietary technology bridges this gap between the ‘too simple’ solutions to be credible and the ‘too complex’ and time-consuming ones- to provide a powerful and easy to use experience.
We designed our platform to provide clarity, through transparency, allowing people to see and understand for themselves what they really need.
Users can create an initial, end-to-end, financial plan in less than 15-minutes, by simply dragging and dropping specific life events or goals into their timeline- and see, and understand, immediately the impact on their yearly cash flow, net wealth, and savings projections.
Based on the information provided, the solution makes recommendations tailored to the user’s unique financial situation or a specific challenge they may face – such as having insufficient funds for retirement.
Users can customise their plan by providing additional details and exploring new financial scenarios- the more information they provide, the more comprehensive and personalised plan they get in return. And while the user focuses on planning the future, the platform works in the background on complex stuff, like local tax and property rules, and other financial regulations, to assure the calculations are sound.
Users learn by doing, and they see first-hand how powerful some basic financial strategies can be for their future- like starting early; spreading their investments out over time and across different asset types; owning property versus renting; and so on.
It’s a great place to test and try the – not always reliable – advice they get online and from more basic tools. 

5. Do most Singaporeans live paycheque to paycheque? 

According to the survey from OCBC- 2 in three working Singaporeans do not have savings to last them beyond 6 months, and one in five only have enough saved for one month.
Of those surveyed, 55 per cent indicated that their savings have fallen during the pandemic. Our solution calculates a user’s ‘emergency fund’ automatically, based on the income and expense figures they provide- and recommends that enough cash is kept on hand to cover 6-months of expenses.
Unfortunately, about 29 per cent of our users don’t meet this criteria- a number that increases to 40 per cent amongst those aged 18-24. 

6. How best to approach saving a portion of one’s salary for a rainy day or in this case, a pandemic like this? 

Pay yourself first. Make saving mandatory by putting money into a designated savings account or recurring investment every month before you pay anything else- that way you’re sure to save something each month, rather than worrying about how much savings are left.
Closely tracking and monitoring your spending habits can also help- a fancy latte as a daily pick-me-up might seem affordable, but over time, this spending habit can add up to a considerable sum.
It may surprise you where the money’s going, and you’ll likely see plenty of places where you can save with minimal sacrifice if you take a closer look.
Setting realistic goals is key as well – even if this means starting small – you don’t want to get discouraged or fall off the bandwagon if you feel like you’re unable to set aside some money each month.
Saving money can become a healthy addiction- as you see your savings accumulate, and your wealth grow, you’ll want more.
Last, but not least, go beyond saving and consider long-term investment so your money works as hard as you. Most people are still under-invested and under-protected 2 years into the COVID-19 pandemic. 

7. What are some of the things that Singaporeans must do to improve their financial health moving forward? 

Financial health is a powerful concept- our finances influence, not just our material well-being, but also our mental health.
It is about control, safety, and the ability to combine goals and aspirations with prudent strategies to secure your future and the future of your loved ones.
For starters, they should invest a portion of their savings- simply saving your money is not enough.
Stock markets do suffer from regular swings but generally, they grow over the long run.
If an investor is patient enough to stay invested and wait out the volatility, they have a good chance of coming out ahead eventually.
This is especially true for young adults, who have the added benefit of time on their side.
Another key aspect of putting a sound financial plan in place is also exploring ‘what-if scenarios. Like- ‘what if I lose my job?’ Or- ‘what if something were to happen to the family’s core breadwinner?’ Our solution allows users to simulate negative or unwanted events, to see how these may impact a family’s ability to remain financially resilient and secure.
And helps users ensure that they have the right insurance coverage in place, and that they can afford the life they are living, or spend on new ‘luxuries’. 

8. How many Singaporeans have used BetterTradeOff since its inception? 

It counts in the tens of thousands over the various platforms deployed in Singapore.
Some of them have used our solution by themselves, some with the help of financial advisors to build better plans.
What we are particularly happy about is the high proportion of users who are coming back to update their profile, evaluate new options or simply benefit from the new functionalities that we continuously bring.
In addition to deploying our solution with Standard Chartered for all their Singaporean clients under SC Goals Planners, we’ve also deployed our solution to all of Malaysia with Zurich Insurance under Up | MyZurichLife.
Other banks and insurances have successfully tested our solution with their clients and prospects in Hong Kong, the Philippines, Switzerland, and the UAE.
We localise the same technology and platform to incorporate all the relevant rules, taxes, and statistics for each country, so the results are accurate, and the experience encompasses all aspects of the user’s life- not just the products institutions are distributing.
Interestingly, this approach ends up building trust faster, delivering higher satisfaction for customers and advisers alike and resulting in much higher and faster sales.

9. Who are your competitors in Singapore? 

The first competitor, but also our best champion, is Excel!
It takes a lot of time and effort to build a plan while accounting for all the relevant aspects of your life.
Especially when your different priorities are competing with one and another for your resources.
And then maintaining it, while being able to explore all the ‘what-if’ scenarios; seeing how your life decisions influence your finances; and how your finances can help secure your future- becomes a task that very few can, or have time to, do.
While we’re not the first solution on the market in Singapore, we’re the only one providing both a consumer version and an adviser version.
And the only ones incorporating natively, different rules like CPF, income tax, property, and statistics to make planning accessible to all.
Many can now experience the power of financial planning for the first time and get the answers they’re looking for in a transparent and independent manner.
It also becomes easier for advisers to demonstrate the value of their advice in that so many of us still need to take action.
Our real competition is with other interests and applications.
It feels really strange that we can spend hours on Netflix or searching for cheap flights online and not invest the 10 minutes it takes to build a financial plan to set our finances in order.
Past the initial nervousness of not knowing – ‘how are my finances?’- there’s an immense sense of relief for most of us to discover the many solutions readily available to not only help us secure the future, but thrive financially. 

10. How does the platform monetise? 

With our institutional clients we change setup and implementation fees to cover the initial deployment of the solution, localisation to new markets and integration of the solution into their existing digital platforms when applicable.
We also have revenue sharing schemes with these institutions in some cases and licensing models built on things such as the number of active users.
Our solution for financial advisers is based on recurring licensing fees (software-as-a-service).
Our direct-to-consumer solution is 100 percent free, with monetisation coming from revenue sharing arrangements with partners who provide products and services inside the solution. 

Editor’s Note: ‘Join a free webinar from BetterTradeOff and Zurich Insurance – November 13th, 2:00-3:00pm – and learn how you can check, monitor and improve your financial health with Up | MyZurichLife- a free, do-it-yourself, online financial planning platform developed by BetterTradeOff in partnership with Zurich. Visit www.upplan.net/try-up-myzurichlife to register.’