Interview with Sarah Seyr from Smolio about her startup, personal finance planning and the reform of the Swiss old-age pension system AV2020.
Sarah Seyr is co-founder of Smolio. She was previously involved in a startup which provided solutions for student finance.
As the discussion around the old-age pension reform AV2020 continues, you have gone and made a retirement savings checkup available with Smolio. What can Smolio tell me about my retirement savings?
After you enter a few key pieces of information, Smolio shows you how your retirement savings are developing and how much money you can expect to receive over your retirement. It also shows you whether or not your retirement savings fall short and whether you will gain or lose through the old-age pension reform. The Smolio retirement savings checkup is the only tool which shows how the old-age pension reform affects you individually.
Your retirement savings fall short when your retirement income is less than 80% of your pre-retirement income. Of course income requirements vary between individuals, which makes it even more important to know where your retirement plan stands and to consider whether you are okay with the way things are or whether you want more.
Who gains and who loses from the pension reform AV2020?
In principle the reform is a step in the right direction. With life expectancy on the rise and ongoing low interest rates, the current pension schemes are being pushed to their limits. In other words, the estimates used by Swiss social security and pension funds will not apply in the future. This means that something has to change.
The primary losers in the AV2020 pension reform are young adults, while long-term pensioners will gain from the reform. On the one hand they benefit from a 70-franc increase in their social security pension above what their contributions entitle them to. On the other hand, adults above the age of 45 profit from being the “crossover generation” by receiving guaranteed pensions from their occupational pension funds at pre-reform rates.
Young adults are affected by higher pension fund contributions and a lower conversion rate. They also have to deal with the increase in value added tax for a longer period. These negative affects are particularly relevant to low-income and middle-income individuals. With that in mind, the controversy surrounding the AV2020 reform is understandable. We feel it is important that each individual gets a clear picture of their retirement savings in order to actively work on their retirement plan. On Smolio you can find more details about the AV2020 reform and its future impact.
Will financial planning change in the future?
Personal financial planning will become more important – not only because of the current pension reform, but also because the number of financial markets and financial products available is increasing exponentially. As ever more investment opportunities become available, it becomes more difficult for individuals to fully understand all their options. moneyland.ch already lets consumers compare products from Swiss financial services providers. We have noticed, however, that many Swiss don’t even know what they should be looking for to begin with.
What are the biggest obstacles to creating the right financial and retirement plan?
Many people are insecure, overwhelmed – or simply disinterested. The result is that valuable time which could be spent investing in the right retirement plan is lost. We know that in principle, there is a lot of information about retirement planning out there. At the same time it is clear that individuals are cautious about creating personal retirement plans.
Mistrust of retirement schemes is a major obstacle, which is why it is important to us that we and our partners operate independently without any bias. At the same time we want to make financial planning easier by saving our users time and not overwhelming them with too many different options.
What exactly does Smolio bring to the table?
Smolio supports users by providing them the opportunity to get an overview of their personal financial situation, making important information available and encouraging them to optimize their finances in a targeted way. Smolio automatically informs users when changes in financial planning are required. By using Smolio, individuals can take advantage of the ever-increasing options available and make informed decisions.
There are other service providers which offer PFM Tools for personal finance management. What sets Smolio apart from its competitors?
The PFM tools available in Switzerland are primarily offered by financial institutions to their customers which can use them to manage the products offered by that institution. By offering these tools, banks hope to gain insights into the financial life of their customers in order to more effectively sell additional products to those customers.
There are also independent portals which make their PFM software available to banks. Experience shows that consumers prefer not to let their banks or insurers know which other financial services providers they invest their wealth through. On the other end of the spectrum are consumers who work with just one or two banks and do not need to track their finances on a daily basis.
Smolio, on the other hand, is a smart alternative to the spreadsheets and lists which many people use to track their finances. Smolio takes the work out of keeping track of your assets.
Some users want to track interest earned on their third pillar accounts. Others want to track the value of real estate investments, their total wealth, or the amortization of their mortgages. Smolio lets you do all of this and provides unbiased tips on how to optimize your finances. We make offering solutions which match the needs of users our priority.
What are your plans for the further development of Smolio?
After the launch of our retirement planning tool, we will take it a step further and give users an overview of their full financial situation. Users with more complex requests will have the option of contacting asset managers directly through the portal.
How does Smolio earn revenues as an independent service provider?
Smolio’s basic functions are provided free of charge and always will be. Premium functions and a subscription model will finance the service. We are also considering partnerships with independent asset managers which can offer their expertise through Smolio. We do not sell financial products.
Where do you expect Smolio to be in five years?
Within five years Smolio should take the complexity out of personal finance. Users should enjoy participating in financial markets and benefiting from new opportunities. The Smolio chatbot is still under development, but it is learning fast and should be able to offer tips in many different financial situations. In addition to broadening the scope of our services, we will also offer direct investment opportunities like peer to peer lending and alternative investments. Most importantly, our users should play an active role in deciding what Smolio will look like in five years time.
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