Hugo CEO David Fergusson was recently back on-air with Michelle Martin on MONEY FM 89.3 to talk about how we are digitalising age-old financial wisdom into Singapore’s first Wealthcare® app.
David and Michelle also talked about our latest in-principle approval from the MAS, building robust permanent portfolios with gold, and how Hugo is making gold investment accessible to everyone.
We’ve added the transcript below for your reading.
Never too young to learn about money
MICHELLE: He is the CEO and Co-founder of Hugo and we’ve spoken with him before on this show, but I thought it was really fascinating when I came across a consumer editorial piece that he penned, talking about some old school values when it comes to money, and I thought it was interesting how Hugo really builds on that value system of saving and making the best use of your money. So, who better to talk to about money than David Fergusson himself? How are you, David? Good morning!
DAVID: Good morning, Michelle. How are you?
MICHELLE: I’m doing really well. So, I like this piece you wrote where you talk about learning the value of money from both sides of the family. Did both sides have slightly different takes on money?
DAVID: Yes. My mother’s side was definitely better at spending it. My father was probably better at saving.
MICHELLE: But mum’s family was the family that built the business, right?
DAVID: Yes, actually both sides of the family did, in very, very different worlds. One was an industrial revolution family that sort of started off life as a blacksmith, banging out metals and stuff like that, that ended up as an engineer. And the other side came out to Singapore 100-120 odd years ago to build a business here.
MICHELLE: Absolutely fascinating. Before we go into the Hugo story, let’s go into the David Fergusson and Singapore story. So your family’s history stretches far back into Singapore’s history, right? Your grandfather is Sir Ewen Fergusson?
DAVID: Yes, yes. He was one of the Sir Ewen Fergussons; we had two of them, but yes, he was the first one. And he ran the Straits Trading Company for a long time and then after the war, was involved in some of the reconstruction efforts and part of the government here in Singapore.
Saving a little, often, and early to get far ahead
MICHELLE: So fascinating! So, you write in this piece how you sit around the table and talk about money, and you also very candidly note that we rarely do that anymore—sit around the table, that is, and speak over a meal, you know? I’m sure some families still make that a priority. But for you, how did that inform your personal philosophy on money?
DAVID: Well, a lot of people find it scary to talk about money or awkward or they’re just uncomfortable doing it. And the fact lies in that people, I guess, in their 30s/40s are uncomfortable talking about their feelings but, you know, as we move on, things change and people’s behaviours adapt. But the thing for me, in terms of money, is that it was always forced on us as a discussion. My father made us discuss the value of money constantly and, you know, we couldn’t go off and buy a 10-cent candy without considering the cost of it. I mean, it was sort of a hard training but useful training, you know?
MICHELLE: Fascinating. One of the best pieces of advice I got was also from an accountant and, for the listeners, your dad was an accountant, right, David? One of the best pieces of advice I got from my friend’s dad who was an accountant was he made us buy a little journal and note every single thing that we spent on. So, if we spent 50 cents on a Coke, it had to go into our journal. And, you know, that instilled this idea of tracking money early on in me, in my life.
DAVID: That is perhaps the most valuable piece of advice you can be given. One of my business partners, Braham Djidjelli, he keeps on telling everybody, “You know, saving is all about doing a little often and early,” which is great if you’re 20. But if you’re 40 already, early isn’t an option any longer. So what do you do? And the biggest, biggest, changes you can make there revolve around making sure you don’t fritter money away. And we all do it. I mean, we all just waste money left, right and centre and the sort of financial diary concept is the best way to look back over the course of a month and go, “God, do I really need to spend forty dollars at Starbucks?” Not such a smart thing.
MICHELLE: So it’s not what you earn but what you keep, would you say?
DAVID: Yes, absolutely.
MICHELLE: And does Hugo the app prioritise saving over everything else?
DAVID: Well, not everything else, but obviously, we are part of the Wealthcare® journey. We talk about people’s Wealthcare® journey. We hope to impart financial wellness as a result of that. And a big part of that is making sure that people are tracking their spending, and it’s being placed in front of them – “Wait, hold on a second. Yes last month, I spent money on three different types of storage solutions for data, be it Dropbox, G-drive, or whatever. Did I really need to do that?” And the answer is most often not. So yeah, it helps you with that. It helps you with budgeting. It helps you with, obviously, the systematic side of saving. But it’s aimed at building up that whole process of, you know, the short-term, the medium-term, and the long-term so you can really try and alter your, shall we say, immediate satisfactions to create longer-term satisfactions.
MICHELLE: Because it is very easy to get sucked into the new subscriptions that come up all the time, “Click here to subscribe to,” you know, “Be a Patreon…” And before you know it, you got multiple subscriptions that you’ve lost track of. And you’re bleeding every month, so to speak. But you know, David, when it comes to savings, so many savings accounts pay so little in regards to how much you keep with them?
DAVID: Well, I’m afraid there’s not an awful lot we can do to help that. The central bankers around the world have decided that we should all never have an interest rate, which is obviously very painful for us all. But there are other solutions; there are other savings products that help you to protect wealth for the long term. Obviously, gold tends to revalue itself in relation to the growth and the money supply, so that does tend to increase in value over time. That’s one of the reasons why we’ve got it on our platform. But there are other ways of compounding earnings—the stock market, the bond market, the property market— these are all things we are about to put on our platform actually via, what we call, the permanent portfolio—a portfolio of safe, long-term but save-able assets that will ultimately help you compound over time.
MICHELLE: Ah, so gold is the first step and then after that, you are gonna expand the portfolio to these different asset classes? Is that right?
DAVID: Yes, absolutely. It’s very much a work-in-progress. We have a very active dialogue with our customers—we call them #HugoHeroes—and these guys, sort of, write in to tell us what they’re looking for and we modify the app and we’re in the works of trying to make a major advance in the app at the moment to allow mutual funds and that type of thing on the platform.
Bringing age-old financial wisdom and technology together
MICHELLE: Well I hear you have some exciting news with regards to official approval here in Singapore. Is that a major milestone for the app Hugo?
DAVID: It’s huge actually, for us. Last week, the Monetary Authority of Singapore (MAS) gave us the Approval-in-Principle for our Major Payments Institution license—and that we’re getting into legal, technical sort of terms here for which to most people won’t mean an awful lot. But in Singapore’s case, what these Major Payments Institutions allow for is the beginnings of open banking, which is a trend that is, sort of, sweeping across Europe and the United States at the moment and is coming out to Asia, with Singapore, frankly, leading the way. So it’s very exciting, very exciting for our customers in this company.
MICHELLE: Fantastic. Well, congratulations! Well, coming back to the app, I would like this idea of taking technology and trying to embed old-world behaviours, almost, of saving and managing your money and building wealth. I wonder if you can elaborate a little on some of the features that do just that, you know, build on sort of an old-school, almost, approach to money?
DAVID: Ok, for the one that we, sort of, most like in our app is our Money Pots. And a Money Pot kind of acts more like a piggy bank or a pocketbook, or something that relates to tracking money for a specific task. So let’s say, you want to go on holiday or you want to send your son to university, or something like that, there is a specific financial target that you have to pay for. Well, the Money Pot—you can set up, you can put a photo that attaches to the Money Pot itself that reminds you, “Ok, this is what I’m saving for.” And then, you have your target and you save regularly into that little Money Pot. Safe in the knowledge that it’s safe, it’s a separate underlying bank account for that activity. And yeah, it promotes that saving behaviour by giving you always a focal point for that and it’s much easier to do than just saving generally.
MICHELLE: It’s much more exciting to save towards a goal. But is it built to be social—can both husband and wife save up for their wedding, for example, as a goal?
DAVID: “Not yet” is the answer. Within about 2 or 3 months, the answer will be yes. I shouldn’t be announcing these sorts of things. But one of the things we’ve really stumbled on is that the people are really, really keen to share their financial experiences, share their burden, right? And it’s a very lonely thing to try and save towards one’s goals by themselves but there are goals that are inherently shared by about family members, for example.
So when you’re trying to send your son off to university, for example, it’s not just the father or the mother who is sort of invested in that concept—it’s the mother, the father, the grandparents sometimes aunts and uncles and they want to get involved in their small ways. And so we’re creating these shared Money Pots that are… It’s actually quite difficult to do it legally so that one of the reasons why we haven’t done it yet but it’s we’re creating these shared Money Pots to allow people to save for these fabulous sorts of long-term kind of life-affirming events like sending your kid off to university…maybe the first time in the family’s, you know, history that someone’s gone to university. It’s a wonderful thing to do and so that’s the sort of thing we’re building into the app.
MICHELLE: Absolutely fabulous and something to look out sort of like a Kickstarter for the family, almost. But you do have community boards so people can pick up on all sorts of ideas on making their money work for them right?
DAVID: Oh, yeah, absolutely. One of the things we keep saying to people is that savings can be a lonely and frightening thing and if you find a solution to a problem, typically, someone else has got that problem, so for goodness’ sake, share it. And you know, by sharing all of our solutions to the problems, that will candidly make the community a better place. And so yeah, we, sort of, actively encourage people to say, “Hey you know, I’ve saved a fortune over the last six months by—I don’t want to single out Starbucks—by not going to Starbucks, you know, I save however much. And you know that stuff is godsend and people like to read it.
MICHELLE: That sounds good instead of surfing Reddit, why not check out the community boards on Hugo, as well. Now, you know, is there a way to keep at it? Does your app use technology at all to make sustainable saving a reality?
DAVID: We do and we have to be quite careful with this because our typical approach to nudging behaviour is literally to nudge people: we send them a message, we sort of, you know, basically highlight certain aspects of their behaviours. But we have to do that in a way that’s not intrusive. We have to do that in a way that people still feel they can trust us with their information because it’s sensitive, this stuff. And you know, one of the things we are very, sort of, definite that we want to highlight to people is that we are not one of these global tech companies that harvest data and uses it in very dark and nefarious ways. When we are using people’s data it’s to help people, genuinely suggest good uses for their money or genuinely highlight things when they can improve on their behaviours.
Making The Case for Investing In Physical Gold
MICHELLE: Glad you mention nudging, because, you know, we like being nudged but not nagged. And a lot of the times, the frequency of these notifications can tip into that area so, yeah, it’s a tough line to walk. We hear so much, David, constantly surrounded by people making small talk about whether or when physical currency is going to make way for some, sort of digitised, where the central bank-issued currency or some form of cryptocurrency. So why gold as something that Hugo has decided to allow people to invest in and people maybe are thinking, “What am I actually investing in? Am I buying gold, physical gold? Am I buying the picks and the shovels? Am I buying a gold ETF? So why gold and what are people actually buying through Hugo?
DAVID: Well, with us, they’re buying physical gold that is allocated to them so it’s their gold, it’s not a counter-party in any way. With ETF, you buy shares in an ETF, so you don’t own any gold, you own shares in an ETF. You buy derivatives, you know, gold futures contracts and you don’t own any gold. What you own is an obligation or right to buy a futures for date so there’s a counter-party risk there. In our case, you own physical gold that’s allocated to you in a segregated form and that’s a much safer solution, in our opinion, to the alternative. But often the answer to the question is not really about the form of how you hold gold but rather “Why gold at all”?
MICHELLE: And will it hold its value in this seemingly evolving financial system?
DAVID: Well, gold is a little bit like property in that respect, in the sense that God isn’t making any more of it. And the amount that we’ve got is the amount that we’ve got. Yeah, we dig a little more out of the ground each year but not very much. And so there’s a very very finite supply and that’s why one always has to compare gold as a monetary asset with money that is out there. And this becomes a very technical and quite trite subject; it’s about the quantity, the theories of money and those sorts of things I’m trying to avoid doing. But what I say to people is often… Everyone plays Monopoly right? So you’ve played Monopoly, we’ve all played Monopoly. And property prices go up in Monopoly, but hold on a second, utilities on that property isn’t changing, so why is it going up? It’s going up because every time you pass Go, 200 hundred dollars enters the game and that creates inflation.
Now everyone can understand that because they’ve all played Monopoly. Now what happens with the monetary system is that the central bankers print money left, right and centre and, candidly, the money supply doubled last year, more or less globally because of stimulus and all that kinds of stuff. Now as a result, well, there’s an inflationary effect there. Now gold tends to be impacted by that inflationary effect as well. And it, therefore, protects you in a way that simply holding a dollar bill doesn’t, right? So that is sort of the technical argument for holding gold.
I mean, as we consider, “What about all the technological advances that are being made, gold is a very old-world solution, you know? Why not a cryptocurrency? Why not a central bank digital currency?” Well, cryptocurrencies and central bank currencies have the same problem and that is you can print as many of them as you like. And so one of the things we think is exciting is the combination of gold, which you can’t print and therefore there is a finite supply which will hold its value; with technology which creates a lot of the simplicity of doing things technologically in a way that you couldn’t historically do with gold—you have to go down to a bullion dealer and buy some physical gold previously. Now you don’t have to do that and the technology enables that.
MICHELLE: And how easy is it to sell gold? I mean, a lot of listeners have written in saying, Gosh I tried to sell my crypto and then there were all these technical glitches in my exchange and I couldn’t make a sale as easily as I thought I could. How easy is it to buy and sell gold on Hugo?
DAVID: Funny that the tech the cryptocurrency doesn’t quite live up to its promises. Now on gold, what gold is still the second most and most liquid market in the world. You can sell your gold at any time the markets are open which is basically, call it 150 hours out of 168 hours a week i.e. the gold is open somewhere. Over the weekend, the spreads tend to widen a little bit, but basically you can sell gold at any time. And gold has a true, true market price you know that is traded everywhere. If you look at the size of markets, the US stock markets, number one (when compared to) all of them combined, and the next on the list is gold, in terms of the liquidity. And then the one behind that, the US treasury markets. So it’s incredibly liquid. So the idea of keeping stock out of the market is almost inconceivable for gold unless something very, very bad has gone on in the world, like a war or something like that, in which case the one thing you want to keep and not sell is your gold!
MICHELLE: Alright, we’ve been talking to Hugo’s CEO David Fergusson and he is also co-founder of the app Hugo – it’s a digital account safeguarded with DBS bank. So we’ve talked about your Gold Vaults, we talked about your Money Pots, and whenever we talk about money, savings is one side of the equation, but so is spending! So you do have a platinum Visa debit card, right?
DAVID: Yes, absolutely.
MICHELLE: Is there sort of a minimum I have to put in to use the card?
DAVID: Yeah, the minimum is one cent.
MICHELLE: Fantastic. Absolute fantastic. Wonderful. It just sounds so fancy when you hear “platinum”.
DAVID: We’ll take that on board. Honestly, we take on board people’s comments sort of very closely. Last time, when I was here, you mentioned the “Honey Pot” rather than the Money Pot. We are looking to use ‘honey’ and ‘money’ in some way in part of our marketing campaigns because we think it’s nice, it’s fun—everyone likes it!
MICHELLE: Ah, that’s fabulous, glad to hear that, David! And so wonderful to check in with you again. Thank you for being on-air with us.
DAVID: Thank you very much, Michelle, I really appreciate it.
MICHELLE: He’s David Fergusson, CEO and co-founder of Hugo!