Why use robo-advisors?
There are many reasons – Swiss Robo-Advisors are a cheap, accessible and a simple way to get started with investing.
They require very little investing knowledge, remove a lot of the financial jargon and have a low CHF barrier to entry to start using – For example, Selma require just 2K CHF to open a live account.
Using a robo-advisor means you can let the software do the work with looking after your investing account, with buying and selling of shares and assets happening on autopilot.
The two leaders in Switzerland, Selma Finance and True Wealth, both offer free demo accounts in order to get a feel for the platform before you commit to the live account.
How should you choose a robo-advisor?
Ultimately, it’s your decision to decide what is important for you.
This blog isn’t here to tell you which robo-advisor is best for you, but there are some general guidelines to remember before making your decision.
1. Overall reputation and standing of the business
Do they have good reviews, and enough social proof to make you confident you are in safe hands?
Look them up on Google Maps, read about the company founders and see what is in the press. You don’t need to become a financial nerd, just spend some time testing demos and doing your research.
2. Look at the fees
Robo-Advisors are a great way for many of us to start investing cheaply.
And you will typically find they are drastically cheaper than alternatives offered by mainstream swiss banks.
However, that doesn’t mean you shouldn’t check the numbers.
Look for custody fees, entry and exit fees, transaction fees, stamp duty tax and cost for creating the tax documents.
The table above does some of that work for you – and in particular with Selma and True Wealth, the management fee and product costs are all you will ever pay. That’s clear and certain.
However, with the others double check the figures in the small print on their websites.
Fee example 1 – Simplewealth
For example the management fee, as in the case of Simplewealth, the minimum account opening deposit of 6K CHF has a yearly fee of 240 CHF, which equates to a 4% management fee. High even by banking standards!
Fee example 2 – VermogensZentrum
And VermogensZentrum has a wide range of product costs, up to an eye watering 0.74%, so keep an eye on the type of portfolio being created and your final investing product costs.
Fee example 3 – Yova
And finally with Yova, the fee is based on the amount invested and not the value of your account. The fee only reduces as you deposit more money, it doesn’t take into account your return on your investment to move you into the next pricing tier.
So as you can see, it is worth checking the details of each platform fees before committing.
3. Security and your portfolio
The majority of robo-advisors will use a partner bank to look after your money, in the case of Selma Finance that’s Saxo Bank Switzerland.
For the roboadvisors above, excluding SimpleWealth, your money stays in Switzerland with FINMA regulated banks.
Your investments should be in your name, and regardless of what happens to the robo-advisor (e.g. goes bust) you still have the underlying investments and can transfer them to another provider.
What are the best robo-advisors in Switzerland?
Switzerland has a good choice of robo-advisors, however each have their own pros and cons.
This blog was setup to review the best swiss robo-advisors, and while I haven’t covered everyone yet, I do have a couple of extensive reviews on the market leaders Selma Finance and Truewealth. Check them out for yourself and give the free demo accounts a try.
Reader Tip: If you are considering investing you might want to consider reading our Selma Finance review, which offers free portfolio management.
In my opinion, Selma is a fantastic product and a great all rounder. Their marketing messaging is slightly more suited for newcomers to investing. The lower account minimum (2K CHF) enables newcomers to gain confidence with the platform before contributing further, and the holistic view Selma takes of your budget and financial picture is a great feature. The recent addition in supporting the Pillar 3A is also a nice value add, and enables you to have everything under one roof.
Truewealth is another leading swiss robo-advisor, and I also rated them very highly. Despite the higher account minimum they are a tried and tested platform with a great reputation and one of the market leaders in Switzerland. Despite the lack of Pillar 3A support you have great control over your investment portfolio and the platform is simple to use.
Swiss robo-advisors are a great way to start investing if you don’t want to buy and sell individual stocks and be too hands on with your portfolio. While it is cheaper to invest on your own (e.g. through a broker like DEGIRO) using a robo-advisor is the next best thing and much cheaper than a bank.
If the choice is investing with a robo-advisor vs. not investing and letting your money sit in a bank account, something such as Selma Finance make a lot of sense for newcomers.