VT/Bogleheads until death or

Investing / Portfolios
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The online-popular Bogleheads/VT like ETF buy-and-hold strategy via IBKR is unbeatable in terms of cost, simplicity, and long-term performance. However, are there situations where switching to a “low-cost” wealth management solution with a pension-fund-like investment strategy makes sense—despite higher costs?

Possible considerations:

  • Age & Withdrawal Phase: At some point, does a more stable, less volatile strategy with some wealth management make sense?
  • Wealth Level: At what point does tax/estate planning become more important than saving the last few basis points in fees? > x million CHF in assets?
  • Security vs. Returns: When does the desire for capital preservation outweigh the pursuit of market returns?
  • Time & Convenience: Is it worth delegating rebalancing and strategic decisions?

Would you always stick uncompromisingly to Index ETF + IBKR (low-cost broker), or is there a scenario where a managed solution becomes more attractive and you would consider switching?

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The hardest bit for me was taking the plunge to invest at all, and in a DIY way to boot, but the data on low-cost, broadly-diversified index funds in a reasonably priced broker were very compelling.

Edit to expand on your points @marcello:

    • Age & Withdrawal Phase: At some point, does a more stable, less volatile strategy with some wealth management make sense? - Certainly, Vanguard have the TDF/glide path ETFs that do all in one, but I feel I can still manage by myself
    • Wealth Level: At what point does tax/estate planning become more important than saving the last few basis points in fees? > x million CHF in assets? - I don’t know the point because I am not there, but for someone who made 5-1x million and in a low(er) cost country to boot (Greece, in the examples I know) estate planning and tax optimization is incredibly important, I think if I ever reached this stage I’d get a professional too, and a well-paid one at that, but fee-for-service, never % AUM-based!
  3. Security vs. Returns: When does the desire for capital preservation outweigh the pursuit of market returns? - Again no idea because I am not there! We’re talking about FIRE people who don’t even know the acronym, but they do know they’re retired early, and financially independent for 2-3 generations (ok, at least 1, first generation builds, second preserves, third burns), so I hear that capital preservation is more important than returns. If I reach a FIRE stage I’d see how much I need to set aside for capturing market volatility and returns and how much to live from, so again DYI.
  4. Time & Convenience: Is it worth delegating rebalancing and strategic decisions? - Depends, some high-flyers/UHNW individuals can’t be fucked to do that, and that’s understandable, but I don’t see the scenario where a self-made person, who has been a leader for maybe 20-30 years would delegate strategic decisions to anyone, they’d delegate the execution only.

Frankly the only people I am personally aware of who have asset managers are those who made a ton of money from other endeavours (mostly building businesses, sometimes selling them). And it’s not just asset/portfolio management, it’s also tax optimization, risk minimization, inheritance. One such person I spoke to told me that an annual average of 7% is neither here nor there for them, they’d want either higher returns or (mostly) less risk.

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Thanks for sharing your thoughts and experience! Helpful points.

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Wealth management gets more important the older you are.

When I‘m approaching 80, I‘ll very likely be delegating my finances to someone else. Either my kids, if I taught them properly/they are interested enough (dont have kids yet).

Or a full service wealth management firm like VZ.

When I‘m 70-80, I don‘t need the extra % return. I need to meet my consumption demands worry free.

The wealth management firm however would need to implement low-cost index funds themeselves. And really only the management part here is relevant.
So I would not go to UBS and be ripped off by their high fee active funds.

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Vanguard doesn’t offer TDF ETFs tailored to Swiss investors. So that wouldn’t even be an option. Swiss alternatives exist but the fees are typically much higher.