David Fergusson, CEO of Hugo recently went on Money FM 89.3’s “Your Money with Michelle Martin”! Play the widget above to learn about what inspired the Hugo app, how Hugo will impact the way people approach money, and it works to help everyone achieve Wealthcare®.
We’ve added the transcript below for your reading.
Transcript
Michelle: What do you download an app so that you could save in both cash and gold? I know you’re thinking, “Michelle, there are so many apps out there. So what are some of the features that could serve you, and will this app really help you build your wealth?” Let’s find out with CEO of Hugo, it’s a Wealthcare® app and a digital account. David Fergusson, joining us live.
Good morning, David. So you’re co-founder of Hugo. Can you give us an overview of how it works? And, you know, I think the basic problem with savings, sometimes, is we’re all cued for immediate gratification. So, is Hugo trying to make things fun and simple when it comes to good money habits, like saving and investing?
David: Yes. I mean that’s, in the crux of it, exactly what we’re trying to do. Money fears are most people’s principal cause of stress, and we talk about Wealthcare® as being the antidote to money fears. So Hugo is aiming to create a very simple user interface, a very simple engagement method for getting people to, basically, look after their money as they spend it, look after their money as they budget with it, and look after their money as they save with it.
Michelle: All right. So basic overview: I have to transfer money into Hugo, and then it’s going to track what I do with that money in that app. Is that basically how it works?
David: Yeah, I mean it works exactly like a bank account. So there is an IBAN—international bank account number—that’s attached to the account. You can transfer money in as you do for any bank account. Alternatively, you can have your salary paid partially into it or fully paid into it, depending on what you’re looking for. And then from there, there’s a debit card as per any normal bank account. There’s a whole load of other functions—the Roundups function, the Money Pot function, and the various savings functions that we have there.
Michelle: All right, we’re going to go through some of those features. But first up, I think what’s interesting is you’re encouraging gold as part of the savings plan. So why do that? Why encourage a start with accumulating gold in a savings plan?
David: Well, there’re a few answers to that and there are some very boring answers and some quite fun, exciting answers. Well, for the boring ones, I’ll get over quickly.
There is a user interface that we created to buy and sell gold, and that involves quite a lot of backend infrastructure built. It’s a little bit like buying and selling a stock or buying and selling a mutual fund or buying or selling a currency. You need all of that infrastructure. So we needed to build that anyway, and then we were looking for something that, frankly, the people didn’t really have. And one of the things that came out of our market research, because we did a lot of market research before we built the product, was that gold was something that people had an interest in. It was seen as a more traditional asset in Singapore. But it was sort of either for the very rich, I mean, the VERY rich, or for people of my “parents’ generation”. And so, we thought this is kind of interesting. As a result of the positioning that gold has had in Singapore, no one has much of it. We thought, “Well, let’s see, what we can do to address that.” So we built a user interface, we tested it with consumers and they all loved it. So we thought this is a good way to start.
But obviously from a savings concept, what I would say is that there’s a very strong economic reason for gold because gold is the highest form of money. It doesn’t have a counterparty, you can’t print it so it can’t be debased away by inflation, and it’s a very long-term stable store of value. It’s literally the most traditional and most stable form of long-term savings.
Michelle: Yeah, traditionally very trusted form of savings, especially in Asia. What price would I be paying for the gold if I bought it through Hugo and would I be buying it in US dollars?
David: No, you pay for it in Singapore dollars on a per gram basis, and that’s largely because people are more familiar with that pricing terminology here: Singapore dollars per gram. If you go into any of the old traditional ways of buying gold in Singapore, you’ll be familiar with that pricing mechanism. Obviously, the price is an international market price. So gold trade is still frankly the second or third largest liquid market in the world and trades 24 hours, six days a week. So we take that international market price and you get that price.
Michelle: So how much would I have to spend to get the first deposit in my Gold Vault? Because that’s what you’re offering people on this wealth, their own Gold Vaults, right?
David: Yes, absolutely. Well, that’s the thing that’s very exciting about what we’ve done; it is, you do get your own actual gold here, so it’s fractionalised gold, but it’s physical gold. This isn’t a paper contract in any way. It’s not a derivative. You’re getting this gold and you can do it for as little as a cent. I mean, you can even do it in very, very small amounts. And this is a complete change for what’s available in the market here. I mean, traditionally, you want to buy some gold, you get $2,000 or so, you go down to a bank counter and you buy an ounce of gold and it’ll cost you a 5% premium. So of course, we don’t have anything like that degree of freedom. It’s about half a percent when we are not running our reward scheme. At the moment, we’re doing it for free so that anyone who signs up in the next six months gets gold trading for free. But ultimately, it’ll be half a percent. So it becomes a very, very, very inexpensive way to build up your gold positions.
Michelle: So I’m paying the live gold price per ounce.
David: Yes, absolutely.
Michelle: And can I buy and sell my gold at any time?
David: Any time you like.
Michelle: And are there fees associated with it?
David: Well, like I said, for the first six months, it’s fee-free, but thereafter it will be about half a percent, which is an incredibly competitive rate.
Michelle: All right. David Fergusson, CEO of Hugo—they’re an app—joining us live. It’s a Wealthcare® app. David, tell us about the backstory of how you came to found Hugo.
David: Well, me and a couple of other founders were involved in another company and we looked at the way that company was developing and we thought, “You know what? We can do an awful lot more with an awful lot less and we can provide a much more extensive savings product for consumers.” So about 18 months ago, 19 months ago, we sat down and we drew up plans to build Hugo. And it was all about creating a very safe, engaging, fun way of looking after your financial wellbeing. And that’s how we coined the term Wealthcare®.
Michelle: There’s a cute little guy on your webpage, I suppose it’s a personification of Hugo. Tell us a little bit about the name “Hugo”.
David: The name comes from the fact that it comes a little bit from my family. We are a European Singaporean family. So we’ve been here for a thousand years. We wanted something that reflected both that European and Singaporean heritage. So we came up with “Hugo” because “Hugo” stands for 互相 (hu xiang, mutual)—I’m going to butcher the pronunciation in Mandarin—but that’s a sort of mutual benefit. And then, Go, sort of, go together, sort of the sense of progression together in a positive way. And that’s where Hugo came from. And of course, the added benefit was that everyone can pronounce Hugo.
Michelle: That is true, yeah. Two syllables. And you did really well with the Chinese pronunciation, David, I have to say. I like the many different features of the app, including this idea of a honey pot. So again, really difficult for people to reach their saving goals sometimes because maybe they write it down, they forget about it, but here you have it all in an app, you can create a honey pot, you can destroy a honey pot as well. Tell us more about these.
David: Actually, you know, I think you might have come up with a better name for this—we call them Money Pots. But I actually quite like “honey pot”. So watch this space, we might change the name.
Michelle: I haven’t got my coffee yet!
David: I like it! I really do! I like “honey pot”. So we call them Money Pots, and Money Pots are there to represent an activity that you do in real life, but in the digital world. And so you think about when you’re saving for a specific event, you’ll put money aside, you’ll put money aside on an ad hoc basis, you’ll put money aside on a scheduled basis. And it’ll all be either kept in an envelope or in a box that prepared you, that stores the money for a holiday or for whatever, your pair of shoes or whatever you want to buy. And we do that all within the app and it makes it a very easy way to keep track of all the things you’re trying to budget for, which means that a lot of things don’t fall between the cracks. And we, sort of, gamify it a little bit so that you see a progress bar and there’s a picture that motivates you for your little activity. So it’s all aimed at making it a sort of fun, approachable activity.
Michelle: Fantastic. We’re speaking with David Fergusson, CEO of a Wealthcare® app called Hugo. All right, we covered the Money Pots or “honeypots”. What are the Roundups functions? How do they work, David?
David: So the Roundups function is, again, a reflection of what you do in the real world. So imagine when you go home at the end of each day, you’ve got sort of 2 or 3 dollars in your pocket worth of change, and you tuck it into a bowl or a tin or something like that for dealing with later. Well, these days, we’re using cash less and less so we’re using the card more and more. And when we use the (Hugo) Card, ultimately what we’re doing is rounding up to the nearest dollar and putting that into savings.
So, whether it’s savings now into gold or into our future savings products, ultimately what we’re doing is we’re creating that sense of deliberate savings as you spend on an ongoing basis. So if you buy a beer in Singapore for $8++, you think of it as a third plus and that surplus is your future savings.
Michelle: Okay, so how does it know that I bought that beer? Do I have to manually add that in? Or is this somehow linked to that Visa debit card that you offer as well?
David: Yeah, it’s linked to the Visa debit card. And when we have access to some of the other things in Singapore, we will be able to run this over people’s other cards as well. We’ve got a very exciting product development pipeline, because, I mean, I’m not sure that the listeners will know this, Michelle, but there is a trend called open banking that’s floating across the world, which means that, candidly, the existing financial system is going to change very, very dramatically. And it allows for the innovation of products like this that makes people’s lives a lot easier.
Michelle: Eventually, you’re going to be able to collate information from different credit cards all in one place?
David: Yes, absolutely.
Michelle: All right. Terrific. So what are the benefits, David, of right now having a numberless Visa debit card associated with this account?
David: Well, that’s principally security-related. So, on the card itself, there’s only your name, so there’s nothing else there and you can sort of tap it, use it like a card as normal. And it means no one can copy the number. If you want the number in order to buy something online or something like that, go into the app, you click on a button, the number becomes apparent. And then you use it on that basis—it’s a security feature.
Michelle: Okay. Got it. And I suppose it also integrates spending with the app making it easier because everybody wants to tap and spend these days, right?
David: Yeah, absolutely. We’ve got that contactless function like everybody else these days.
Michelle: Right, and for listeners who are tuning in right now thinking, “All right. You know, I live here in Singapore, but I’m not from Singapore.” Will they have to pay capital gains tax if they’re foreigners and they want to use a Hugo account
David: Possibly. I mean, we honestly tell people like most other financial services and businesses that their taxes are sadly a necessity, but really a personal thing. So, if you’ve made a massive capital gain on something within our app, it’s your responsibility to deal with your tax authority in the same way as your sins, between you and your God. We can’t really help on that front, but what we’ll say is in Singapore, mercifully, our government has spared us from some of these evil taxes, like capital gains (taxes).
Michelle: Is there a maximum amount of gold that I can buy, fractional gold on your app?
David: No, you can own anything from 1 cent to a million dollars.
Michelle: Okay. Terrific. I’m parking my million dollars with you immediately. Now, David, is there a minimum fall-under amount though? That’s probably the number I have to pay attention to.
David: Well, as in, what’s the minimum amount you can have in the account?
Michelle: Yes, a fall-under amount. Will I have to pay to maintain my account under this?
David: No, absolutely not. You can actually hold it empty if you like. But we would say that we’d like people to hold more than a cent in it, but we’re certainly not gonna charge them for it. You know, we just hope to help them in the safeguarding process. We are very different from the banks in this regard, you know what I mean? You talked earlier about my motivation for doing this and our motivation for founding it, we’ve all have this experience where we looked at our bank account statements and have gone, “Ugh, what’s that -$100 there? Where’s that come from? Or what’s that -$2.50? And, you know, it’s just exhausting because they’re constantly inventing new charges for made-up services, the banks. And so we don’t do any of that. It’s very simple—your money, it stays there. We charge very, very transparent fees on very specific activities, but otherwise, it’s free.
So for example, you use your card with your traveling up to Bangkok and you buy a coffee in Bangkok, the FX rate is, I think it’ll be 18 basis points or less than a fifth of a percent. You know, if you did that with another bank card, it’s normally three and a half percent. So we’re not looking to surprise anybody. We’re looking to reassure them that we’re on their side.
Michelle: Well, speaking of reassurance, I went to your website and it says Hugo Accounts are SGD accounts held with DBS. So how are you affiliated with DBS?
David: Well, we’re not. They’re a wholesale service provider to us via someone else. So this comes back to the concept of open banking. Think of it a little bit like an MVNO (mobile virtual network operator). So these telecom operators in Singapore don’t have their own underlying network. People like Circles.Life, whom I am using and they’re fabulous and do a great job, they don’t have their own underlying network. They rent space on someone else’s network and they provide that to the consumer. Well, we do the same with the banking system now, and that’s what open banking is all about.
Michelle: Really interesting. Can you give us a sense of what else is coming up for the app or some future plans that you’re working towards?
David: Oh, we’ve got some really cool things happening. I’m really excited by this. So we’ll put in some mutual funds, we’ll put in some life insurance products on the long-term savings plans, but the functions are the things which we’re really excited about; how we play around with Roundups so that people can round up a more bespoke Roundup each time. So whether people want to round up one, two, three times what the ordinary Roundups would be, or whether they want to round up on a percentage basis, we’re looking at that. We’re looking at Money Pots that involve family members that allow four or five family members to save towards a common purpose. For example, a grandchild’s university fees or something like that. These things are all about Wealthcare®, and they’re all about creating a sense of community in finance again.
So when family members can share together for a common or save together for a common purpose again, you know, it takes a lot of the fear out of finance, that we’ve all grown used to. But you go back 50 years, if a family wanted to send someone off to university, they’d sit around a table and they try and work out how they could afford to do it. And this is again taking that activity into the digital world. So, there’s a whole load of things that we’re looking to do that is very exciting. And of course, I don’t want to alert our competition to try to copy us!
Michelle: Well, terrific speaking with you! They’re “taking the fear out of finance.” Well said, David. Thanks for joining us live here. David Fergusson is CEO of Hugo. They’re a Wealthcare® app. You can download Hugo from the Apple iOS store or the Google Play store!