Not coming out with yet another one of already 20th or so robo advisors.
I’ll reserve judgment until they publish the finalized details and am looking forward to user @finpension discussing with us why one should choose their solution.
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This is a testimony that FP is a great implementor but not an Innovation leader. Lets wait and see what Viac offers. The FP offer will probabl fail vs. The one from Findependent.
What I would have had expected was:
- Dividend Fee Offsetting: given license and as they were a wealth manager, they could have had launched institutional funds that hold „common“ ETF Building Blocks and directly deduct the Investment Fee at a fund level, this would have had allowed to reduce distributions by their fees and optimize Tax quite a bit. Like a inst fund that holds cap weighted ETF and deviations (long or short) were invested in non-optimized, directly invested ETF with separate Fee
- Inst Index Funds for European Shares as CH/LUX Index funds there (but not US, APAC or EM) beat ETF
- Market Cap weighted Japan ETF. Nikkei is a trap and opens the door for frontrunning
- Broad and Deep European ETF that go beyond EuroStoxx 50; meaning inclusion of Nordics and going further down to mid caps (like MSCI Europe ex. CH). Same story here, they expose their customers to front running upon Index changes
Lets wait what Viac will offer…
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Why would they ever intend to do that? You have to pay hundres of thousands of francs to have your own fund (legal, registration, setup fees). Let’s say it costs you 100k/y and your TER is 0.2%, then you would need 50m CHF assets under management just to break even lol. Good luck getting that much with some random “Deep European ETF” that probably performs worse than the SP500 anyway.
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Not to go too far off topic, but I’m interested. Can you expand?
Whats 50M? The market potential for Swiss Robo Advisors is 2-3B. You either dp what established players do and die given no volumes (like what others did), or you do something value add that others can’t replicate, and based on this (tax optimization and higher net return) win the market. Play real or don‘t even start playing. Thats it. Ther current offer is half way in between and doomed to go extinct as they neither have the first mover advantage nor the reputation and brand like Frankly or Viac
Quite the contrary, I suppose, if we are to believe what has been mentioned.
I mean… launching institutional funds of funds as you mention has certainly been done by many others.
Offering “reporting for the flat-rate tax credit (DA-1) of US withholding tax within selected ETFs. With a US dividend yield of around 2 % and a withholding tax of 15 %, the flat-rate tax credit generates a yield advantage of 0.30 % for you” on the other hand…
Has anyone offered that to Swiss personal investors (“consumers”) before? Sounds innovative to me.
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Totally agreed.
We should support innovation and start ups from Switzerland.
It’s already a small market and if all Swiss investors will focus on international firms then it would be tough for start ups to progress. If all of us are always going to be so picky, then it would not be good for local companies.
I am curious to see final offer from FP. Either ways I am happy to see they are growing. My question would be why the low TER funds not available for the „invest“ option as they are available for 3a. Is it regulation driven or what?
The 3a funds are the institutional funds, which a retail investor can only hold if he is a qualified investor (either a net worth of CHF 5 Mio. OR net worth of CHF 500k and sufficient education/experience in financial markets). In 3a retail investors can invest in these funds because it is the foundation of finpension that invests in the fund and not the client directly.
And why can’t FinInvest (made up name) be a foundation type institute and invest like an institution using cheap fund?
FinInvest is taken 
Ask your italian friends if they remember it 
(It belong(ed) to Berlusconi).
On a side note: why finpension isn’t translated in italian. That’s imho unprofessional in Switzerland. (I know there are many many more “Unprofessional” companies in Switzerland).
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I would expect this to be theoretically possible, however
- We don’t know how much finpension has to pay for the zero-TER funds, it might be similar to ETFs with a low TER, so I doubt there would be a big fee advantage.
- Swiss-domiciled MSCI World index funds are worse with regards to L1TW than e.g. ETFs with an Irish domicile. It’s the opposite for pension funds but investments in those are not allowed in taxable accounts.
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Only for the US
I mean they could have done a mix with ETF for the US and pension fund for Switzerland
I assume you mean mutual index fund, not pension fund.
This might have been an option but I still wouldn’t expect index fund offerings of Swiss asset managers to be significantly cheaper than ETFs. I.e., I fail to see where the big advantage would be, except for stamp duty tax, I suppose. I hope they can do pooling to reduce the net stamp duty tax but not sure whether that’s possible.
As I see it, the reason that the total 3a fees are lower than taxable assessments is simply a finpension business decision. They could have set their management fee to (0.39% - the average ETF TER) to get roughly the same operating profit as their 3a solution. I don’t expect ETF vs. mutual index fund to be a big factor with regards to fees.
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Sometimes it takes a few extra days to change the world 
We will keep you posted.
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They have updated their website again:
- Funds list (CH, IE, LU): https://finpension.ch/en/invest-2/strategies/fund-list/
- Private markets: The Partners Fund SICAV I-N CHF Cap, Schroders Capital Semi-Liquid Global Private Equity CHF C Accumulation CHF [1]
- Some more information about the fees: https://finpension.ch/app/uploads/2024/04/Fee-schedule_fp_EN.pdf - according to the document, it seems like that the 0.39% fee seems to be legit, sadly.
I guess it will be released soon-ish then…
[1] https://finpension.ch/en/invest-2/strategies/private-markets/
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I tried to compare how this will compare for cheapest TER ETF.
| S&P 500 ETF (IUSA) | |||
|---|---|---|---|
| IBKR | SQ | Finpension | |
| Costs | |||
| Management fees | 0% | 0% | 0.09% |
| Custody Fees | 0.00% | 0.10% | 0.30% |
| TER | 0.07% | 0.07% | 0.07% |
| Total cost of ownership | 0.07% | 0.17% | 0.46% |
| Income | |||
| Dividend yield (nominal) | 1.60% | 1.60% | 1.60% |
| Witholding tax loss (15% in USA) | 0.24% | 0.24% | 0.24% |
| Tax credit | 0.24% | ||
| Net dividend income | 1.36% | 1.36% | 1.60% |
| Deductions in Income (3rd party management fees) | 0.30% | 0.30% | 0.39% |
| Net taxable income | 1.06% | 1.06% | 1.21% |
| Net income post Tax (25% marginal rate) | 0.80% | 0.80% | 0.91% |
| Net income post Tax (30% marginal rate) | 0.74% | 0.74% | 0.85% |
| Net income post Tax (35% marginal rate) | 0.69% | 0.69% | 0.79% |
| Net income post Tax (40% marginal rate) | 0.64% | 0.64% | 0.73% |
| Effective yield (25% marginal rate) | 0.73% | 0.63% | 0.45% |
| Effective yield (30% marginal rate) | 0.67% | 0.57% | 0.39% |
| Effective yield (35% marginal rate) | 0.62% | 0.52% | 0.33% |
| Effective yield (40% marginal rate) | 0.57% | 0.47% | 0.27% |
I believe competition for Finpension would actually be brokerages with 0.3% custody fees (like UBS, ZKB etc). For brokerages with no custody fees or low custody fees, this 15% unrecoverable tax credit does not compensate
Now, if someone thinks about this rationally, 0.3% deduction for IB and SQ is actually more than actual costs and hence this tax credit advantage of Finpension disappears.
Did i get this right?
P.S -: There should be an added one time advantage of Stamp duties because it seems it is included in the costs. Although not sure.
P.S 2 -: Disadvtange of SQ (vs IB) starts reducing as AUM goes up because custody fees is capped to 200 CHF
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Thanks for your extensive comparison.
One correction: you’ll only be able to deduct the 0.3% custody fee (so the same as the others), they explicitly say so in their FAQ.
Ahh okay. I thought it was full 0.39% that could be deducted.
I don’t think it’s a coincidence it’s the same as the flat deduction (at least in ZH).
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One potential advantage of the finpension deduction is that it presumably wouldn’t be limited to the CHF 6’000 maximum of the flat deduction in ZH. That’s only a small advantage when considering the cost, though, and is only relevant if you hold more than 2M in taxable investments.