Making disruption the core of the business: An interview with Phillip Capital’s ED
PhillipCapital launched a new online portfolio management platform in March, known as the Phillip Smart Portfolio, which provides discretionary portfolio management services to customers at a low starting investment amount of $5000.
The platform is designed to make Phillip’s portfolio management business more accessible to retail investors, particular for investors who are internet savvy and do not want the hassle of heading to an investor centre to opt for portfolio services.
Phillip SMART Portfolio invests largely in Exchange-Traded Funds that are listed on major stock exchanges. However, it may also invest in unit trusts, closed-end funds, investment trusts, business trusts and exchange traded notes.
When signing up for the SMART Portfolio, the platform would first require you to answer 12 questions that would help it to gauge your risk appetite. At the end of the survey, it would show you your risk profile, and present you with a recommended Phillip SMART Portfolio that matches your risk profile.
For instance, a person with a low risk tolerance and high liquidity need may see a 60% to 80% portfolio allocation in bonds, and allocations in US, Europe, and emerging market equities, as well as commodities.
On the other hand, someone with a high risk tolerance may have a 30% portfolio asset allocation in bonds, and a 20% portfolio allocation in each of US, Europe, and emerging market equities. The remaining 10% will go to commodities.
No stranger to disruption
To be sure, PhillipCapital has always been a disruptor, even before the term was coined.
PhillipCapital had tapped into the overseas trend of brokerages moving online when it launched its stock trading online platform, POEMS, in the 1990s. That made PhillipCapital the pioneer in Singapore, at a time when few other local brokerages were exploring the internet space.
According to Phillip’s executive director Lisa Lee (pictured above), the development of Phillip SMART Portfolio was a natural extension of the financial institution’s existing capabilities in portfolio management. “We have to keep up with the times,” quipped Lee, who added that the new platform catered to the changing needs of its customers.
“We’ve been in the portfolio management business for over 15 years and it has always been a high touch business,” Lee told Zuu Online, while sitting at the Phillip Investor Centre at Raffles City Tower. “Obviously, we still continue to provide for the high touch business, but we have to stay connected to our customers and provide them with a high-tech business.”
Catering to needs of millennials
Phillip SMART Portfolio aims to do just that.
The platform offers PhillipCapital’s existing portfolio management customers an online alternative, and also appeals to new customers who may not have previously qualified for the traditional portfolio management business, or were simply not interested in meeting with fund managers to make an investment.
“Millennials want to do things themselves, in their own time, and don’t want to be bound by a physical location or timing,” said Lee. “With the online platform, everything falls into place.”
According to Lee, the platform offers a few key features. The convenience of an online platform, as well as the bite sized minimum investment amount.
”To be fair, our traditional portfolio management business has already been focused on catering to retail investors with a minimum investment amount of $25,000. That is much smaller than the $100,000 to $200,000 minimum in overseas fund houses,” she explained. “The SMART portfolio just slices that even further to start from $5,000.”
In fact, Lee believed that the platform was good enough to appeal to more than the millennials. “I challenged the team. Why must our customers be young? Why can’t they be older people who are internet savvy?” she said.
Lee was proven right. “Just based on the first two weeks of launch, we really saw a diverse group of customers, from the mid-20s all the way to the 50s.”
Simplicity is key
Part of the platform’s appeal was its simplicity of use.
Compared with a traditional portfolio management business, which requires meeting with a portfolio manager, an existing PhillipCapital customer opting for the Phillip SMART Portfolio can set up an account and be presented with a diversified portfolio in under 10 minutes.
Lee knew that the platform’s intended target audience would already know what they want, and there was no need for the platform to determine the customer’s financial investment needs. Instead, the platform focused on determining the customer’s risk profile.
To simplify things even further, the platform categorises customers into three main risk profiles. “Other companies may have 5 risk profiles or more, we keep ours simple, with just low, medium and high risk profiles. Simple as that,” said Lee. “We realise that, like online shopping, if we make it simple and as quick as possible to get to the last step, the platform will be successful.”
Even the fees are kept simple. The platform charges a 0.5% all-in fee, without any upfront fees, brokerage fees or platform fees.
“There’s no need to tell the customer that they will need to pay a fee that looks like ‘a + b + c +d’; they just need to know how much to pay at the end of it all,” said Lee. “There are transaction costs involved, but let us sort that out internally. To a customer, it has to be as simple as possible.”
Lee is keenly aware that an online platform provides a lot of efficiencies for the financial institution as a whole, but emphasised that the decision for SMART had little to do with it, since the financial institution continues to provide its high-touch portfolio management business.
“We always offer multiple touch points, so if customers want to visit us, they can go to my investor centre. If they want to call our call centre, they can do so. If they want to talk to their relationship manager, go ahead. Even after talking and they decide they want to go online, they can do that too,” explained Lee.
“It’s really for our customers who are young and have less funds to invest, and for customers who want to go into the market but were burned before, and want their investments to be professionally managed.”
A pleasant surprise
As a testament to the simplicity of the user experience and trustworthiness of the Phillip brand, Lee was surprised by the lack of phone clarifications received by their call centres after the launch.
“We wanted to provide multiple contact points with the customer, so we prepped our customer experience staff for queries from customers about the new platform. But apparently, the customers were savvy enough or confident enough that they just went directly to sign up,” Lee said with a laugh.
To ride on the success of the Phillip SMART Portfolio, PhillipCapital now plans to launch another three more smart platforms, with two of them slated to be launched within the year.
“It does not have to stop at this robo-portfolio, it could be a series of things,” said Lee, adding that they may be simple low cost products.
“Wait and see.”