You’re surprised that people want to have their cake and eat it too?
3 Likes
I think we are talking about different things here.
I am not talking about protectionism
I am simply saying things cost higher in Switzerland versus other countries and salaries are also high. But I often see people complaining that prices are higher in Switzerland ( haircut, taxi, groceries, shopping, etc) while they never complain that their own salaries are much higher than other countries too.
However I have to admit -: none of my Swiss colleagues complain. It’s mostly expats. So maybe that could the reason.
It’s not about donating money to some financial institution. It’s about having right expectations. And if the expectation is that we would have robo advisory with 10 bps and this is somehow going to make money for the robo advisory too and be profitable, then it might be too much to ask.
3 Likes
Swiss costs are actually often but not always higher - that’s the infamous “Hochpreisinsel”. They are higher because of salaries, real estate prices and market distortations (e.g. food, medicines). How much each factor contributes to the higher prices will depend and they are not higher for everything, electronics for example are often cheaper / same price.
Market size is another factor, you simply cannot scale in the same way in a 9 million people country as you can in a 330 million country like the US. And no, the EU common market is not the same thing, much less in services, where you don’t have much of a common market anyway. That’s less relevant for some financial services (e.g. investing) and very relevant for others (e.g. pillar 3a).
Apart from that, I think Swiss providers still need to get cheaper, and can get cheaper, but they don’t need to be the cheapest. First, there are hidden costs, no one works for free. Robinhood isn’t free, it’s simply more difficult/impossible to calculate what the effective costs are for you. Second, there’s convinience, service. Not everyone can or would want to spend time on doing everything themselves. IB+VT might be the optimal solution, but setting it up and maintaining it is far more complicated than FP/Viac or the like. Just think about optimising transaction and foreign exchange costs or filling in the US tax form and DA1, many (most?) would be happy to pay a bit extra not to have to deal with that.
Especially when you are getting started, or are setting up secondary portfolios or portfolios for your kids or the like I think Swiss fintec providers are nearly there with the standard offers. And the special offers are a nearly no-regret-move. With FP you pay 0.1% if I’m not mistaken, that’s the same neighbourhood as the VT TER and might be even cheaper than TER + IB transaction costs, depending on the details.
3 Likes
That makes sense - most of them haven’t lived elsewhere probably. 
But I’m sure they enjoy the lower cost of holidays in Mediterranean etc. still.
I keep wondering why you people keep comparing fees of ETFs with fees of assets management by robo-advisors. Of course the scale is different!
And Finpension is not competing with Blackrock, they use iShares ETFs.
And Finpension waives only the assets management fees, TER of ETFs remain as they are.
6 Likes
Maybe this could be a good comparison to Swiss Robo advisors
Vanguard UK asset management fees
Account fees -: 0.15% (capped at 375 GBP and minimum of 48 GBP)
Product costs -: average 0.20%
Other fees -: one off fees
As I understand it, these are the fees for self-managed accounts, so that’s closer to a regular broker account than a robo advisor. The fees of the managed account are:
Account fee: 0.15% a year (max £375 a year)
Fund management cost: 0.17% on average (depends on your portfolio)
Management fee: 0.20%
Total fees:
Up to about CHF 280’000: 0.52% p.a.
CHF 500’000: 0.45% p.a.
CHF 1M: 0.41% p.a.
But then why there is a fees for the account if it’s just brokerage? Is it like a custody fees?
Yes, seems like it. At least it’s capped. And it seems there are no additional costs for buying or selling fund shares (except for the spread).
1 Like