Finpension invest – a new robo-advisor for non-3a ETF investments

The comparison is for UCITS ETFs not US domicile ETFs. That’s why he is saying it’s an advantage

This is not about 3a. It’s about Finpension wealth management service which is for private wealth

Thanks for sharing. I did not realize that you can actually have a lower TER by buying multiple ETFs versus buying one ETF.
I did not quite understand your effective fee calc, but I used your TER assumptions & got following numbers for effective yield. I did not account for buy/sell fees.

S&P 500 yield is assumed to be about 1.6% , so i used that for flat credit back. Lower yield will also reduce tax credit

Basically it turns out that SQ = Neon + custody fees (capped at 200 CHF per year)
FP will cost more

World ETF portfolio SQ NEON FP
(a) Gross dividend 2% 2% 2%
(b) Witholding tax (12.5% effective) 0.25% 0.25% 0.25%
(c) Net dividend (a - b) 1.75% 1.75% 1.75%
(d) TER 0.15% 0.15% 0.085%
(e) Custody fees + management fee 0.10% 0% 0.39%
(f) US TAX credit (assuming 67% exposure to S&P 500 & Gross dividend yield of 1.6% for US portion) 0 0 0.161%
(g) Deduction for 3rd party expenses 0.30% 0.30% 0.30%
(h) Taxable income (c - g + f) 1.45% 1.45% 1.61%
Effective yield
(i) Tax @ rate 30% 0.44% 0.44% 0.48%
Effective yield (c + f - d - e - i) 1.07% 1.17% 0.95%
(j) Tax @ rate 40% 0.58% 0.58% 0.64%
Effective yield (c +f -d - e- j) 0.92% 1.02% 0.79%

One time fees -: If i assume 5000 CHF investments at a time, then buy + sell fees for SQ will be 0.4% (assuming 10 CHF ETF leader fee per trade) and Neon will be 0.5% (only at time of sales)

FP I do not know if there is any spread or not. For higher amounts NEON might become expensive at withdrawal but would depend on investment horizon and withdrawal amount tranches.

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Current dividend yield of s&p 500 is more like 1.3%. But that of course is also a historic low, due to historically high valuations.

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Ahh. It further reduces the advantage of the credit :frowning:

Great overview, thanks.

Isn’t WHT 15% instead of 12.5%?

Actually it’s 15% if US was 100% of the portfolio.
But since world portfolio includes less US stocks, I used the average calculated by Dr PI sometime back. Here

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Ah OK. Got it. Average dividend yield for the S&P 500 over the last 4 years was 1.5% according to this table.

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I calculated fees with the following assumptions:

  • 10 year investment
  • 200k lump sum investment at the start
  • 2500 monthly deposits
  • 1.5% dividend yield for US
  • values without a calculation have been done with the FV formula
  • it’s likely the free savings plan offer from neon runs out when FWRA has reached a certain AUM threshold, so I included a variant including transaction costs
finpension DM finpension World Swissquote neon (savings plan) neon (normal)
Custody fees CHF 13’803.83 CHF 13’803.83 10 years × CHF 200 + 8.1% VAT = CHF 2’162 0 0
TER CHF 2’623.06 CHF 2’973.93 CHF 5’261.04 CHF 5’261.04 CHF 5’261.04
Transaction fees 0 0 (1 lump sum + 10 years × 12 months) × (CHF 9 + 2 + 0.85) = CHF 1’433.85 CHF 200’000 × 0.5% = CHF 1000 (CHF 200’000 + 10 years × 12 months × CHF 2’500) × 0.5% = CHF 2’500
Reclaimed US WHT CHF -5’922.88 CHF -5’261.04 0 0 0
Total CHF 10’504.01 CHF 11’516.72 CHF 8’856.89 CHF 6’261.04 CHF 7’761.04
Liquidation 0 0 CHF 9 + 2 + 0.85 = CHF 11.85 (CHF 200’000 + 10 years × 12 months × CHF 2’500) × 0.5% = CHF 2’500 (CHF 200’000 + 10 years × 12 months × CHF 2’500) × 0.5% = CHF 2’500

So the the difference between the best (neon savings plan) and the worst (finpension World) offer after 10 years is CHF 5’255.68, or about CHF 500 per year. Not that much of a difference, no?

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Thanks for sharing
Will look into details

But if 500 CHF per year is a lot or not depends on the person and their comfort level. I have heard some people might change banks because one is free and other charges 50 CHF per year.

So I guess it comes down to the benefits vs extra cost. And if those benefits matter to the person involved. For example if one already have world ETf at SQ, they might not see this as a benefit to move money. But if someone already has FP account and want to consolidate , then they might see this differently.

Thing is that you also pay 0.5% (+0.15%) when selling with neon.
This applies to FWRA as well by the way.
Shouldn’t that also be included in the calculation?

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You’re right. Although you could transfer the title to another broker (i.e. SQ) where selling it is much cheaper. I included it in the above table.

The calculation is not perfect anyway, as I assumed 0% performance over 10 years, which is highly unlikely.

Good shout!

Thank you @woody :wink:

it is already possible to transfer securities out :wink:

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That is indeed what it boils down to. finpension offers:

  • very easy to use interface to set up up to 10 different portfolios from a curated list of ETFs
  • the ability to easily change asset allocations (“I’m going to add 10% REIT and reduce gold to 5%” etc.), this can be a blessing and a curse!
  • free currency exchange
  • cheaper access to private markets through insititutional-class funds
  • restricted access (you can only deposit from/withdraw to an account in your name)

Is there something on that list worth 500.–? That is a personal decision, and there’s no right or wrong answer.

For me, the last point is quite important. To be honest, I’m starting to feel uneasy when thinking about having a portfolio of half a million CHF on neon. To be sold and transferred with a few taps, with the same app you do your daily banking with, on the device you carry around with you all the time?

When it comes to these things, sleeping well at night is an underrated criteria. I’m not sure I do with neon with the current security mechanisms in place.

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