This is What Swiss Asset Managers Cost

Asset management is one of the most important business sectors for Swiss banks. “Many Swiss investors have an asset management mandate at a Swiss bank, but know surprisingly little about it,” says moneyland.ch CEO Benjamin Manz. Most of them simply trust their bank consultants. That can have negative impacts on wealth, as a cost comparison by moneyland.ch reveals.

Costs of 1.37 percent per year

The average annual cost of investing 250,000 Swiss francs in a stock portfolio using conventional Swiss asset management services is 3425 francs – 1.3 percent of the assets under management. That cost only accounts for asset management fees. Other expenses like taxes, stock-exchange fees, the cost of investment funds used, and currency exchange costs come on top of that. The costs of investment funds used can be around as high as the asset management fee.

By comparison: The average asset management fee charged by asset management services which are only offered through digital channels is 0.73 percent. Most of the funds and other investment products used by these investment apps are also much cheaper than those used by most conventional asset management services. As a whole, the average cost of classical private banking mandates is around double that of digital asset management services. At the furthest extremes, the most expensive conventional asset managers can cost many times more than the cheapest available offers.

Big differences between offers

Even when only conventional offers are accounted for, the differences between banks are substantial (see the tables below). Taking a pure stock portfolio as an example, investing 1 million francs costs 6500 francs per year at Sparkasse Schwyz, and 19,500 francs per year using the Credit Suisse Invest Mandate (all instruments). “Of the services included in the analysis, the most expensive offer is three times as expensive as the cheapest one,” states Manz.

It is not just pure stock portfolios which show major cost differences. Investing the same amount in a portfolio with a stock component of 40 to 60 percent would cost 3500 francs per year at Sparkasse Schwyz, and 8750 francs using the Invest Mandate (all instruments) from Credit Suisse.

Table 1: Asset management fees for 250,000 francs of assets

Table 2: Asset management fees for 500,000 francs of assets

Table 3: Asset management fees for 1 million francs of assets

The cheapest investment advisory services

Banks differentiate between asset management and investment advisory. In the case of investment advisory, the bank only makes recommendations about what to invest in. You as the customer can decide whether or not these recommendations should be implemented.

For a pure stock portfolio worth 500,000 francs, Sparkasse Schwyz is the cheapest of the analyzed banks, with asset management fees of 1500 francs per year. Next in line are the Uno mandate from the Basellandschaftlichen Kantonalbank (1750 francs per year), and Invest Compact from Credit Suisse (2500 francs per year).

Table 4: Investment advisory fees for 500,000 francs of assets

More on this topic:
Interactive asset management comparison