Traditional asset management in Switzerland is expensive, a recent fee analysis shows.
Wealth management clients are being heavily courted, particularly by banks. An analysis of private banking fees from the online comparison service moneyland.ch shows why traditional asset management with advice comes with a hefty price.
For this year's study, moneyland.ch examined the fees in Swiss asset management and investment advice for three different investment strategies and different amounts. The most important finding is there are large cost differences between the banks. Anyone who wants to have their money managed should first compare the fees, says Benjamin Manz, head of moneyland.ch.
Expensive Flat Fees
Traditional asset management with a pure equity strategy for an investment amount of 250,000 francs costs 3,425 francs per year in flat fees among the Swiss banks surveyed, amounting to 1.37 percent. That's not even taking into account various additional costs such as exchange rates, taxes, stock exchange, and fund fees. In particular, the funds used are often as expensive as the mandate itself.
Digital investment apps, on the other hand, are less expensive, costing on average less than half of traditional asset management, as the study shows.
More Shares, More Expense
At many banks, the more shares a mandate contains, the more expensive it becomes. For example, asset management for assets of one million francs with a pure equity strategy of 80 to 100 percent equities costs an average of 13,529 francs per year or around 1.35 percent.
With an average equity share of 40 to 60 percent, clients pay a flat rate of 1.24 percent, and only 1 percent for a strategy without equities.
Favorable Traditional Mandates
There are large differences in the flat fees between the private banking mandates examined. Sparkasse Schwyz is the cheapest, followed by various banks depending on the equity strategy and assets.
With assets of more than one million and a pure equity strategy, customers of Sparkasse Schwyz pay 6,500 francs per year with an ETF mandate. The asset management service of Basellandschaftliche Kantonalbank (BLKB) is second at 10,000 francs. In third place are Bank Cler and Migros Bank with 11,000 francs per year.
Bringing up the rear is Credit Suisse with an all-instruments mandate of 19,500 francs per year, which is three times as expensive as the cheapest.
Favorable Advisory Mandates
Many banks distinguish between asset management and investment advice. In the latter case, clients can choose between different bank recommendations, whereas with asset management, the bank decides.
For a pure equity portfolio of 500,000 francs, the investment advisory service of Sparkasse Schwyz comes out best with fees of 1,500 francs per year, followed by the Uno mandate of BLKB with fees of 1,750 francs and the Invest-Compact mandate of Credit Suisse with 2,500 francs per year.
Click here for the interactive private banking comparison
