Swiss asset management service True Wealth is now offering a way to save for retirement with the pillar 3a. The new offer brings serious competition for existing retirement saving apps: Unlike most other Swiss digital retirement asset management services, True Wealth’s pillar 3a does not have an asset management fee.
Additionally, the service uses very affordable investment funds, so that the total cost of investing pillar 3a savings in ETFs and index funds through True Wealth comes to around 0.2 percent per year for a standard portfolio. By comparison: The next most affordable service provider has costs of at least 0.39 percent per year. For pillar 3a savings which you hold in cash, True Wealth pays interest at the rate of 1 percent per year.
Are the low costs permanent?
According to True Wealth, its low costs and fees are possible thanks to digitization and automation. The company is promising that it will remain this cheap for the long term, and not just for the first year. But the power to decide on fees does not lie with True Wealth alone, because it is theoretically possible for the retirement foundation that True Wealth partners with to introduce an administrative fee in the future.
However, the contract does specify that the foundation will abstain from charging a fee at least until the end of 2023, according to True Wealth. The company expects the current fee-free offer to remain unchanged after that as well. If anything were to change in this regard, customers will be informed in advance.
True Wealth hopes to onboard paying customers
The asset manager says that it is not earning money from its new pillar 3a offer. “True Wealth is hoping that new customer who come for its pillar 3a will eventually use its paid robo-advisor service to invest outside of the pillar 3a as well,” clarifies moneyland.ch CEO Benjamin Manz. But those who want to can currently sign up for just the pillar 3a solution with its very favorable conditions.
Will the new, affordable competition encourage other Swiss retirement apps to lower their prices? Only a few of the asset managers behind Swiss retirement apps can afford to cut their investment product costs or asset management fees. However, most of these digital retirement asset management services are already much cheaper than conventional retirement funds.
Tip: Many pillar 3a apps have very low entry requirements with regards to the minimum initial deposit. So you can easily try out several different apps alongside each other without having to commit a lot of money.
More on this topic:
Swiss retirement saving apps compared
Find information about True Wealth robo-advisor service here
