Investment advisory platform Motley Fool will close its Singapore business due to regulatory hurdles that have made the barrier of entry too high.
The firm is classified as a financial institution with an advisory license which under Singapore regulations requires it to maintain a paid-up capital of S$150,000 ($109,000) and net assets sufficient to cover three months of expenses, subject to a minimum of S$112,500 ($82,000).
«We are a subscription service, we don't manage people's funds so it's hard to understand why we have to be regulated the same way as a financial institution,» said Motley Fool’s Singapore CEO David Kuo in a «Business Times» report.
«Unfortunately, because we have to keep all of this cash as net assets, we cannot grow the business. The more we grow, the more net asset is required.»
Asset Manager Merger? No.
One conventional method which could allow Motley Fool to scale its business is to merge with an investment fund but Kuo is adamant that the firm stands by its philosophy of self-directed investing.
«We believe that private investors should look after their own money rather than hand it over to professional money managers,» Kuo explained, underlining that two-thirds of fund managers are unable to beat benchmarks primarily due to net performance after fees and charges.
«Even though the Motley Fool Singapore may not be around, we hope the lessons of long-term investing in companies will last in the minds of our community.»
