By SMU School of Accountancy Social Media Team
Leaving his Investment Counsellor career at HSBC Private Bank to co-found Endowment Exchange and The InvestQuest, SMU School of Accountancy and Business Management Alumnus Peter Oh comes across as someone who is both pragmatic and passionate about what he does. We had the opportunity to sit down with Peter to hear more about why he decided to step off the beaten track to embark on his journey as an entrepreneur.
Transitioning from a corporate banking role to starting up Endowment Exchange and The InvestQuest must not have been an easy decision. Can you share more with us about what inspired you to make the career switch towards entrepreneurship?
When people enter the workplace, there’s usually a tension between four objectives: doing what you love, what you’re good at, what the world needs, and what you can be paid for. That’s what the Japanese concept “ikigai” outlines.
Whatever career you end up choosing, there tends to be some kind of imbalance between the four objectives. If you’re not getting the balance you want, there are two paths to take:
1. Work within the framework to compensate for whatever is lacking (e.g. by doing pro bono work, by finding ways to earn extra income, etc.); or
2. Carve out your own path independently.
While often idealised, carving out your own path by starting a new venture is not necessarily the “smart” or “right” thing for everyone to do. It really depends on your needs and your risk tolerance.
We started Endowment Exchange and The InvestQuest only after much deliberation on what we saw as gaps in the market.
Your first startup, Endowment Exchange is a key player when it comes to trading second-hand insurance policies in the finance industry. What were the market opportunities you saw that made you decide upon beginning this new venture?
For Endowment Exchange, we noticed that insurance firms often offer a poor cash value for policyowners who wish to terminate (surrender) their existing policies.
The poor surrender value is not a result of greed on the part of the insurance firm per se, but has more to do with significant costs already borne by the insurance firm for the policy (distribution fees, etc.).
Regardless, the end result is that those who may be in need of cash will get a low cash return, and that such policies them become great opportunities for investors who are interested in shorter-tenure endowment policies with higher returns.
“Whenever we are able to offer significantly above what the policyowner would otherwise get, we feel like we’ve made a positive impact.”
What made this problem interesting to us was the social aspect. There are always opportunities for investors at any point in time, but few are so directly tied to the welfare of someone else. In a profit-maximising world, investors would have an incentive to “low-ball” policyowners. But as my wife and I wanted to make social welfare part of our objectives, we saw a way to strike a balance—by not aiming to maximise profits but settling instead for a minimum return threshold.
As each policy is different, this adjustment is not always enough for us to make a bid substantially higher than the surrender value (or even make a bid at all). But whenever we are able to offer significantly above what the policyowner would otherwise get, we feel like we’ve made a positive impact.
The InvestQuest is your second venture, a personal investment sharing blog which aims to level the playing field for all investors with its charming 8-bit retro gaming theme. What was it about starting a finance blog that appealed to you?
For The InvestQuest, we observed that there wasn’t much high quality online content for foreign stocks and for cross-asset topics. Given my career in finance, I knew I’d be able to write on these topics with a greater degree of certainty.
At the same time, my own journey with investments has been much like an 8-bit adventure quest—upgrading, accumulating, optimising—and I wanted to share what I’d learnt with others who are also eager to improve their lives. Hence we came up with the name, The InvestQuest.
Initially, I tried to make the site look as professional as possible—with clean text, a dark blue theme, and corporate photos.
A former research analyst herself, my wife immediately vetoed the design. In fact, she said, “it looks super boring.” And upon reflection, I realised it was true. Content is only half the battle. The other half is delivery. Even with really good content, it can be difficult to capture someone’s attention if it’s delivered as a whole chunk of text.
We decided to make our website 8-bit gaming themed, since that would fit the name well. I have zero expertise in graphic design, so thankfully I have Deborah to rely on. Here are some of our favourite cover photos so far.
Using 8-bit gaming as their theme for The Invest Quest
As an SMU SOA alumnus, how has your university education guided you in your career?
The most important takeaway from my university years is the relationships formed with my peers. If you are sincere and proactive in helping others, you can count on these relationships to be there to offer help and advice.
“When you become an experienced hire, it matters a lot whether you have friends and colleagues who are willing to vouch for your character and your work ethic.”
I have made two career switches since graduating and many of my friends have made three or more. When you become an experienced hire, it matters a lot whether you have friends and colleagues who are willing to vouch for your character and your work ethic.
Also, deciding to make the transition from a corporate job to starting a new venture isn’t easy, just like it wasn’t an easy decision for us. You start doubting yourself a lot, wondering whether you made a wrong decision financially, or whether you made a miscalculation somewhere.
Our friends were integral in their support. In the early days, we even had acquaintances we hadn’t talked to in years reaching out to offer suggestions! It was very heartwarming to receive that kind of encouragement.
Peter with his wife and his business partner, Deborah
What are your principles behind personal investing, especially for university students who may want to start investing for the long term?
There are two principles I would like to highlight.
“Win more by losing less.”
The first is: “Win more by losing less”. Many investors tend to focus more about how much they can profit from a trade, and tend to underplay the worst-case downside scenarios.
In the past year, having greater flexibility to work from home has spawned a new generation of retail investors, many of whom have managed to make a quick buck given the overall market performance. For these new investors, it is important be humble and never think that you are smarter than the market.
New investors should be wary of the risk of having concentrated investment holdings. This was an invaluable lesson I learnt when I first started stock investing in SMU, after I made a sizable 30% loss on a blue-chip stock that comprised half my portfolio. Wagering all your money on a single trade and doubling it does not mean you are good, it means you are lucky.
The second principle is that “time in the market” is much more important than “timing the market”. This is especially relevant if you have a long investment horizon ahead of you.
To illustrate this, imagine two investors who invested $10,000 annually into global equities over the last twenty years. The first investor is the best market timer and managed to invest at the bottom of the market every year, while the second investor is the worst market timer and invested at the peak of the market every year. The first investor would have received an annualised 10 per cent per annum return on invested capital, and the second investor would have received 7.6 per cent per annum on invested capital. The difference is much less than what many people think!
Any advice for aspiring entrepreneurs, especially for those who intend to head into the financial products scene?
Have a good think about what’s your startup’s competitive edge against industry peers. For example, it could be exclusive access to certain suppliers or customers, knowledge or skill sets that no one else can replicate easily or access to capital (or relatively cheaper financing).
These economic moats can help to increase the likelihood that you are able to grow your market share and sustain above-market profitability.
In addition, it is important to talk to people who are familiar with your targeted business area. It is important to understand the key issues that some of the other competitors are facing, as it can help pre-empt some of the operational risks you might encounter later on.
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