Endowus, Singapore’s leading digital wealth platform has announced that the firm has returned trailer fees of over SGD 2 million ($1.46 million) in cash, CPF and SRS rebates to its clients to date.
Focused on driving performance with only the clients’ best interests at heart, Endowus provides fair and transparent fees across all offerings, and is a trailblazer in providing industry-first 100% trailer fee rebates back to their clients. This is uncommon in the industry as most banks, brokers and fund platforms receive recurring revenue through trailer fees and transactional fees from churning clients. The main motivation for Endowus to introduce this best practice is to solve investors’ pain points of high cost and misaligned incentives that lead to poor returns and outcomes.
For example, a lack of transparency is still prevalent in the industry, where investors may not be aware of the full fees being charged, as different loaded fees, including trailer fees, may be presented in a complicated or hidden manner. In addition, hidden commissions may entice distributors to work in their best interests rather than making suitable recommendations based on clients’ needs or the quality of the fund. Endowus hopes to change this practice, and coupled with no investment or redemption charges, provides clients with a fair and low cost way to invest in over 200 best-in-class funds managed by over 40 leading asset managers.
There is also the missed opportunity cost that investors have to bear by paying higher fees on their investments. Trailer fees in Singapore are typically around 0.75% per annum for equity funds. If these trailer fees were returned to clients and put back to work in diversified global markets, they could have earned an additional 190% on their investments over the last 30 years. For example, a $100,000 investment would have snowballed into just over $906,000 rather than $716,000.
Gregory Van, CEO of Endowus said, "While banned in countries such as Australia and many parts of Europe, distributors collecting trailer fees from fund managers is still the norm here in Singapore. This practice is unfair to investors as it eats away returns and creates an undeniable conflict of interest as distributors are paid more to push certain funds over others. Endowus believes this has to change and we are leading by example. That is why we are so proud to have returned SGD 2 million ($1.46 million) of trailer fees back to our clients, effectively helping them to reduce overall cost, enhance returns and achieve a better investment experience”.
While trailer fee rebates occur for retail funds with loaded fees, Endowus also offers access to institutional share class or clean share class funds from our important strategic partners. Access to institutional funds at lower institutional fees to our clients removes trailer fees from the get go. Today, more than one-third of funds provided on the Endowus’ platform are institutional or clean, trailer-free funds. Endowus collaborates with more than 40 fund management companies to provide access to these funds. These companies also support in returning the trailer fees to Endowus’ clients to improve outcomes.
Gerard Lee, CEO of Lion Global Investors said, “Endowus has been at the forefront of introducing best practices with their 100% trailer fee rebates and leading innovation through its digital wealth platform. Lion Global Investors share many common values such as our fiduciary duty of always putting our client’s interest first and helping Singapore investors achieve better outcomes. This is why Lion Global has also been working collaboratively with Endowus to launch new and better low cost solutions for the Singapore market across the cash, CPF and SRS segments. We are delighted that Endowus is putting millions back into investors’ pockets and we will continue to work together to trailblaze the best practices for the industry here in Singapore”.
In the last two years, Endowus has worked with numerous leading global and local fund managers to not only negotiate for institutional share class fees, but also rebate trailer fees to its clients. Endowus is thus able to achieve the industry's lowest fees possible for various investment offerings, and the lowest cost access to more than 95% of unit trusts in Singapore. These offerings include many best-in-class funds as well as the ESG, Satellite, Income and Factor Portfolios launched in 2021 and 2022.
Samuel Rhee, chairman and CIO of Endowus said, “This is just the start, and we hope we can return tens of millions back to our clients in the future. We will stay on track to bring unbiased advice, greater access to best-in-class funds at the lowest fee achievable, so we can provide our clients with the greatest chances of success in meeting their long-term financial goals. That is our mission and this can be accelerated by the fee-only service we provide and the ability to lower cost through our proprietary technologies. We hope these global best practices introduced by Endowus can be adopted by the industry more widely and trailer fees can eventually be eradicated completely here in Singapore”.
Re-disseminated by The Asian Banker