Bank clients in Switzerland are not keen to move to another company, which keeps the costs high in the wealth management industry, a study showed. UBS is more expensive than others.
The high fees charged by Swiss banks affect both «ordinary» people as well as the rich. The fees charged by Swiss wealth managers remain elevated, according to a study compiled by Moneyland.ch. And the level of fees in Swiss banking stands in close correlation with clients’ reluctance to change their bank: only 12 percent of wealth management clients polled by Moneyland.ch deemed a move to another provider likely in coming years.
The study looked into costs of Swiss wealth management – both in relation to mandates at wealth managers as well as for investment advisory services. The authors included all the major Swiss universal and cantonal banks.
Extra Costs Not Even Included
A wealth management mandate for half a million Swiss francs ($500,000), with the highest proportion of equities in the portfolio, on average costs 7,000 francs, or about 1.4 percent per year. For one million francs, clients are charged an average 13,700 francs or 1.37 percent.
The mandate doesn't even include all the costs: taxes, foreign currency fees as well as stock exchange and product fees normally are added on top of the mandate fee. Here, the annual fees charged for funds are the main cost factor – with 1 percent extra being no exception.
The Expensive Choice
UBS, Switzerland’s largest bank, and its «Manage Advanced» package is among the most expensive in Swiss wealth management, according to the study. Clients are charged 4,375 francs for the management of 250,000 francs with a medium stock exposure. For a mandate with a higher stock exposure, clients have to fork out 5,000 francs.
For one million francs in assets and a high stock exposure, UBS clients pay 18,500 francs per year. The cheapest competitor charges about 5,000 francs, less than a third.
Private Banking Fees
A more conservative mandate covering 250,000 francs without an equity component costs the most at Basler Kantonalbank, which charges 3,250 francs per year, followed by Migros Bank and Bank Cler with 3,000 francs per year.
Private banks, which weren’t covered by the survey, usually charge even more than the universal and cantonal banks. They tend not to publish their fees.
The Cheapest Choice: a Robo Adviser
A cheaper choice would be a so-called robo adviser. This form of automated online wealth management typically does away with human advise. They normally invest in so-called exchange traded funds, which are cheaper than actively managed funds. The cheapest providers in Switzerland are True Wealth with a flat fee of 0.5 percent and ELVIA e-invest with a flat fee of 0.55 percent.
