Switzerland’s third-largest banking group has launched a digital asset management service. The launch follows the PostFinance digital asset management service launch earlier this year. Here, independent online comparison service moneyland.ch answers the most important questions about Raiffeisen Rio.
1. How does Raiffeisen Rio work?
Raiffeisen Rio is a digital asset management service from Raiffeisen. You access the service via a mobile app. Raiffeisen Rio actively manages your assets. Investments in your portfolio are actively picked, monitored and rebalanced.
The process of determining risk tolerance and capacity is performed right within the mobile app. The app then proposes an investment portfolio based on the results of the questionnaire. You can make changes or adjustments to the proposed portfolio.
2. Which investment vehicles does Raiffeisen Rio use?
Raiffeisen Rio portfolios make use of structured products and actively-managed funds.
3. Which portfolios are offered?
Raiffeisen offers one of four different portfolios based on your risk tolerance and capacity: A low-risk portfolio with a 25% stock component; a balanced-risk portfolio with a 45% stock component; a growth portfolio with a 65% stock component; a stock portfolio with a 95% stock component.
4. Which investment classes are offered?
Money in core portfolios is primarily invested in stocks and bonds. The ratio of the stock component in relation to the bond component varies based on your risk profile.
Raiffeisen Rio also gives you the option of choosing additional investment focuses. Investment focuses include: digitization; entrepreneurs; dividends; and Swiss stocks. However, an investment focus can only make up a maximum of 5% of your investment portfolio.
5. How much does Raiffeisen Rio cost?
Raiffeisen Rio has a flat rate fee of 0.65% per annum. This means the fee you pay for the service is equal to 0.65% of the value of your account.
The flat fee does not cover stock exchange fees, currency exchange costs, stamp duties or product costs.
Investment vehicle costs – such as the annual TERs of funds used – add an additional cost equal to 0.25% to 0.3% of the value of your account per year. This is slightly over the average when compared to other robo advisors which primarily use passive investment vehicles.
If you choose to add an optional investment focus, the cost of products making up that portion of your portfolio is 0.6% per annum. That is significantly higher than the standard product costs.
6. Do I need to have a Raiffeisen bank account?
Yes. A Raiffeisen bank account with e-banking is required in order to use Raiffeisen Rio. You must also be a legal resident of Switzerland. If you are classified as a US person, you are not eligible to use Raiffeisen Rio.
7. Can I open a demo account?
No.
8. Which custodian bank does Raiffeisen Rio use?
Securities managed by Raiffeisen Rio are held by the custodian banking division of Raiffeisen.
9. Which additional consultation services are offered?
Raiffeisen Rio does not include any supplementary investment consultation or financial advisory services.
10. How much capital is required to use Raiffeisen Rio?
You need to entrust a minimum of 5000 Swiss francs to Raiffeisen Rio in order to use the service.
11. Is there a minimum investment term?
No there is not. You can close your Raiffeisen Rio account at any time. However, it is important to choose your timing well. The value of your account depends on the going market rates of the assets making up your portfolio. Closing your account at a time when market rates are unfavorable can result in a capital loss.
12. Are there any risks to using Raiffeisen Rio?
That depends primarily on which investment portfolio is used. The higher the stock component, the higher the risk of short-term losses. The longer the timeframe over which you hold your portfolio, the smaller the risk of stock components losing value is.
13. How does Raiffeisen Rio compare to other Swiss robo advisors?
The flat fee and investment vehicle costs are similar to those of other Swiss digital asset management services – but fall just below the average cost of Swiss robo advisors. However, there are more affordable digital asset management services. True Wealth, for example, has a 0.5% annual flat fee and lower investment vehicle costs.
The investment vehicles used are an important differentiator: Raiffeisen uses actively-managed funds and structured products, while the majority of robo advisors invest in passively-managed ETFs.
14. How will Raiffeisen Rio impact the Swiss asset management market?
So far, it has been small financial services providers like True Wealth rather than large banks which have taken the lead in digital asset management. True Wealth launched its digital asset management service back in 2013 and remains the most affordable Swiss asset management service.
“Raiffeisen is not exactly breaking new ground with its Raiffeisen Rio service,” states moneyland.ch CEO Benjamin Manz. But while Raiffeisen Rio may not bring many new ideas to the table, Raiffeisen has the advantage in that it has a huge existing customer base to which it can market its digital asset management service.
The launch of Raiffeisen Rio is also noteworthy because it is the second major bank to offer a digital asset management service. “Digital asset management in Switzerland is still in its infancy. But it will likely become the norm in the future,” says Benjamin Manz.
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