$$$ KPO and CZM $$$: Who has the lowest fees? StashAway vs Smartly vs AutoWealth

Sunday, August 13, 2017

Who has the lowest fees? StashAway vs Smartly vs AutoWealth

I previously wrote about Introduction to StashAway - Robo-Advisor/Automated Investing and my friend (lulu - not her real name. lol) asked, why do I think that StashAway has the lowest fee. She then highlighted to me that StashAway has tiered fees. OMG! Can you imagine how shocked KPO would be (especially when he started investing in StashAway)? I was under the impression that the annual fees percentages simply decrease as the portfolio value increases. So KPO went home, took a closer look at the fees involved and started crushing some numbers!

1. StashAway has tiered fees - Pricing Structure.

2. Smartly charges at 3 different rates depending on the value of your portfolio - Pricing.

3. AutoWealth has the most straightforward fees structure (0.5% + USD $18 platform fee) - Our Fees.

At one glance, which one do you think has the lowest fees?

The correct answer is "It depends". lol. However, it is pretty obvious that if your investment is large (more than $500,000) and in the long run, StashAway is easily the winner.

Note that AutoWealth requires one to start with at least $3,000. The sweet spots are somewhere around $10,000 and $400,000. Invest using StashAway if the amount is below $10,000 or above $400,000. Use AutoWealth if the amount is between $10,000 and $100,000 and Smartly for an amount between $100,000 and $400,000. You can refer to this google spreadsheet for the data and graph.

Will I continue to use StashAway? Yes! CZM has agreed to invest $500 of our KPO Investment Fund per month through StashAway. After 30 years, the projected return based on our risk profile is around $800,000 (50% chance of achieving it. lol).

We will probably increase it to $1,000 per month once we are more comfortable with it but that shall be another post for another day :)

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  1. The issue is Stashaway and Smartly have no track record as compare to AutoWealth?

    1. Hi usurper,

      In my opinion, I do not see 1 year as a valid/proven track record :)

      The reason why I am comparing the fees is because fees will hurt returns in the long run and these robo advisors are advertising their services for a low fee as compared to unit trusts/funds sold by banks.

  2. you can start with SA first, since it has the lowest comms. once hit the threshold of $10k, withdraw all the funds and move to AW. and keep doing this, till the next threshold. there is no penalty nor lock in, so hypothetically, this should work?

    1. Hi foolish chameleon,

      That would be both a yes and no. lol. Technically, the returns matter more than the costs but there is no way to know what the returns would be. Moving funds around would result in additional foreign exchange risk (SGD to USD then USD to SGD) too.

      Apart from the costs, what I like more about SA is that I was able to find more information regarding their investing/asset allocation framework on their site.

    2. thats true too.
      however, if the purpose is to track the indices, since they are mostly etfs, their performance should be similar?
      the returns are difficult to predict and not within our control, but the fees of the platform we choose are within our control. the lesser one, will have a bigger margin of safety?
      also from your table, the 10-100k range, the difference is quite big in their comms. about 100bucks.... i'd say, this 10~100k range is easy to reach for a normal investor. hence, AW seems to be more suitable? (of coz, performance issue aside)

    3. Haha. If you are looking purely from a cost/fee perspective then yes, AW might be more suitable. But you will be surprised how different the returns can be! I will be publishing another article on that but some sneak peak ;)

      Robo advisors are not new and has been around for many years. US has more than 200 of them. Even if you select similar risk profile for SA and AW, the return will be different. You can refer to these articles:
      - https://www.cnbc.com/2016/09/07/returns-vary-widely-for-robo-advisors-with-similar-risk.html
      - https://senzu.io/investing/robo-advisors

      When I have the time (this weekend is slightly busier >.<), I shall project further based on the above fees and assume that all 3 generate the same return, compound it over the years to see how much difference would that few hundred bucks matter.

    4. cool. looking fwd to that!
      thanks in adv!

  3. Good writing, badly needed for readers in the region. Did you manage to get hold of their past performance? I know all three are new ~a year operational, but it would really be interesting to see how they all perform.

    1. Hi simplylegendary,

      Thanks for the compliment! Only AutoWealth has been operating for a year, the other 2 only started few months back.

      Unfortunately, there is no way to get hold of their past performance unless they published it. I guess the closest comparison one can get is for an investor to invest equal amount in all 3 robo-advisor given the same time frame (I know Finance Smiths is doing it for StashAway and Smartly). Even so, the return would vary from investor to investor due to the difference in goal/risk profile.