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This article is also available in: Français (French)
Selma Finance is a Swiss Robo-Advisor in Switzerland with a different approach than other Robo-Advisors. Indeed, they offer you your own virtual personal assistant.
This assistant will guide you through investing. And through your chat with the assistant, the system will design a personalized portfolio.
It sounds quite interesting. But how does it fare in practice?
So, let’s delve into my in-depth Review of Selma Finance. By the end of the article, you will know whether Selma is a good fit for your investing. You will also see how does Selma compares with other Swiss Robo-Advisor.
Keep in mind that I am not investing with Robo-Advisors. For people willing to put the time and effort, DIY Investing is better and will save you money. But for other people, investing with Robo-Advisors is the next best thing.
Selma Finance is a Swiss Robo-Advisor. They started offering services in 2016. Since then, they have expanded their offer and are becoming more and more popular.
They now have more than 1500 clients. And they are managing assets in the 7-digit range. They have been growing quickly these last few years.
In 2019, they also started offering access to a third pillar. So, you can have your third pillar managed by Selma’s advisor. It follows the same model as their investment account.
You can start investing with Selma from 2000 CHF. 2000 CHF is an excellent minimum. It means you do not have to start with a large amount. You can test their service with a small amount to see if it suits you.
You can learn a lot more by reading the interview I did with Selma’s CEO, Patrik Schär.
Selma Finance Investments
Based on your assessment with the virtual assistant, a portfolio will be decided for you. Various investing instruments can compose your portfolio:
- International Stocks
- Swiss Stocks
- International Corporate bonds
- International Real Estate
Here is an example based on my chat with Selma Finance:
This not how I would have invested myself. I do not like corporate bonds because they have too much correlation to stocks themselves. So they do not serve the purpose of reducing the volatility as bonds could do. Given the current state of bonds in Europe, I believe that bonds should be bypassed altogether. I would also have gotten more Swiss stocks to have an edge against the currency risk in the other categories. The rest makes sense for me.
The high number of cash is because Selma uses Dollar Cost Averaging (DCA). They do this to reduce the risks of investing at the worst time. So they will initially keep some cash and invest it over time. It would be cool if they showed the target portfolio and the current portfolio.
You have access to the exact ETFs composing your portfolio:
It is excellent that you can see the ETFs that they use. That way, you will know precisely what you are investing in. I did not check all of these ETFs in detail. But they seem like good fits for their categories.
On the other hand, I think they should allow a higher level of personalization. Aside from your answers to the Selma assistant (your investor profile), there is nothing you can change in your portfolio. It would be cool to have some advanced features.
For instance, having some say over how much local stocks we want. Or whether we want or not to invest in real estate. I tried tuning my investor profile to change my portfolio. But I did not succeed in enough customization. However, for people that do not want to invest themselves, this is probably better. An investor that does not do proper research should not choose his investments himself.
Now, although it is not automated, there are other ways of making changes to your portfolio. You can request a personal check-up with a Selma expert. Based on the discussion, it could be possible to adapt your portfolio slightly. It could also be possible to do with their chat. Their employees are extremely responsive in their chat.
Also, it is important that using a Robo-Advisor means you will have less control. Less control is also an advantage. It means you cannot make bad decisions. But it means you will have to trust the portfolio made by Selma for you.
Investments at Selma Finance are not entirely passive. They use algorithms to detect when markets are cheap and buy more or when they are expensive and buy less. For me, this is getting close to market timing. They are checking whether some classes are overvalued or undervalued. This strategy may not be pure market timing. But I would prefer it if the portfolio was more passive.
Selma Finance Fees
When you invest your money, you do not want to lose your money in fees. Fees are eating up your profit and are making your losses even worse. The main problem with fees is that they do not stop if the market goes bad. So you want to minimize the fees you are paying.
Selma is in the middle of the price range for Robo-Advisors in Switzerland. You will pay 0.68% fees for them to manage your money. On top of that, you will also have to pay the TER of the ETFs in which Selma invest. This last fee will depend on your portfolio. On average, they estimate the product cost to be 0.22%.
It gives you a total fee of 0.9% per year. It is not the best in Switzerland, but this is not the most expensive, either. I guess you have to pay for the unique feature of the virtual personal assistant. The idea of Selma is to propose unique portfolios for their users. Their motto is to provide the best of Robo-Advisors with the best of personal bankers.
Here is the full breakdown of the fees:
I feel like the fees are quite expensive for the service. It is not too bad for Switzerland. But for a DIY investor, these are substantial fees. For instance, to manage my portfolio, I pay about 0.2% per year. But I have optimized them the most by using Interactive Brokers, using U.S. ETFs, and carefully researching the ETFs I am investing in. And I have to buy and sell my ETFs directly. Doing so takes time and is not a trivial task.
On the other hand, you will have nothing to do to manage your account. Simplicity is where the advantage of Robo-Advisor lies. I would understand why some people would be ready to pay the price for this service. And it is also probably less stressful.
If you compare this to investing through a bank or a personal advisor, you will save money with Selma. You can easily lose between 1% and 2% by investing through a bank when you count everything.
How to open an account with Selma Finance?
Opening an account is straightforward. It will take you no more than 10 minutes. Most of it is done through chat with Selma itself.
Go to selma.io and click the big Start For Free blue button. From there, they will ask you the standard questions. But what is interesting is that all the process will be done through chat with the personal assistant.
First, they will ask you the standard personal questions. But then, they will ask you questions about your money and your investing profile. Here is an example of questions:
Once you answered all the questions (there are not that many!), you will see your investor profile. And do not worry, you can always come back and change your answers. Many things can change in your life, and the assistant is aware of these changes. So your investor profile is not fixed.
It is interesting to note that the dashboard will present you with all your financial information. If you are already keeping track of your personal finances, this will not make a huge difference. But many people do not have a good overview of their finances. So this view could help some people see where they are.
Once you have done so, you will have to fund your account. You can transfer money directly from your bank account. After the money arrived in Selma, they will invest it according to your portfolio.
Opening an account with Selma Finance is a straightforward process. The process is made easy, even for those that are unfamiliar with investments. This is the most interesting point about Selma: you can invest without knowing much about investing. It is not possible if you want to invest yourself or with some other platforms.
Is investing with Selma Finance secure?
Yes! There are using several layers of protection to secure your money.
First, your money is not stored by Selma. Indeed, they are not a bank and cannot hold your assets. It means that if they bankrupt, your money is still safe. The shares are stored in Saxo Bank. It is something you always want in a financial company, especially if it is a young company.
It should be the same for any respectable company. But they encrypt all your data from your computer to their datacenter. For this, they are using HTTPS.
You can also use second-factor authentication to secure your account. With this, you will need a second device to unlock your account. Your password will not be enough. I greatly recommend this for any service that provides it.
There are also using high standards of physical security in their offices. They are detailing their data security standards on the website.
If you want to keep your money safe, I have a guide about securing your money against cyber risk.
With Selma Finance, you can also invest sustainably.
If you opt for this option, Selma will choose to invest only in Sustainable ETFs that invest only in sustaining instruments. For instance, this means they will not invest in oil, weapons, or nuclear energy. They will also avoid investing in harmful products such as alcohol and tobacco.
It is straightforward to choose this option with Selma. Since these ETFs are slightly more expensive, you may end up paying a little more per year (about 0.08% more). But the management fees will not change.
If you want to learn more about that, I have compared Selma and Yova for sustainable investing.
Selma Finance Pros
Let’s summarize the main advantages of Selma:
- Very easy to use
- Accounts can be created very quickly
- A very helpful virtual assistant
- Fairly priced
- Proper use of passive investing with ETFs
- Highly transparent pricing
- Ability to choose sustainable ETFs
Selma Finance Cons
Let’s summarize the main disadvantages of Selma Finance:
- Not the cheapest Robo-Advisor
- Cannot invest 100% in stocks
- You have to deposit at least 2000 CHF
- Limited ability to customization
Selma’s customer service has a very good reputation. And this is important because many digital services have very poor customer support. You can join them by chat or email very easily. You do not have to go out of the Selma web application, you can directly get a chat from your account.
Most of the time, you will not need help. Indeed, the application is all done to make it as simple as possible. And if that is not enough, they have a very large collection of information on their online FAQ.
When you are researching a service, it is always good to look at existing user reviews. You want to make sure that this service is good for other people before you invest in it.
On Google, there are now 111 reviews of Selma Finance. The average review is 4.8 stars out of 5! This score is a great result!
In the positive reviews, here are the most common points:
- Very easy to use, accessible
- Excellent communication, highly responsive
- Very professional
In the negative reviews, here are the most common points:
- Aggressive marketing (ads)
- Too many smileys
These are all the negative points I have been able to find out. It seems that people do not like the marketing campaigns of Selma. But these are not reviews of the service since these people did not use it. And I have seen a few remarks about them using too many smileys (which I agree on). But these can be easily ignored once you use the service. You will not have to use the service every day.
So, overall, people seem to like Selma Finance. I have yet to find a really negative review with strong issues.
Selma Finance vs Yova
|Investing Strategy||Best – ETF||Worse – Stock picking|
|Ease of use||Easy||Easy|
|Interface||Only web||Only web (Mobile Coming)|
|Technical Security||Good||Average (No 2FA)|
Both Selma and Yova are Robo-Advisors offering sustainable investing features.
These two Robo-Advisors are very different. Yova will invest directly in stocks, while Selma will only invest in ETFs. Selma’s strategy is more passive and more diversified.
On the other hand, Yova is much more strict about sustainable investing. Yova has strong requirements for what a company is doing to be sustainable. Also, you have much greater customization abilities with Yova.
Yova is more expensive. However, if you invest a lot of money with Yova, the fees are reduced. With a substantial amount of money, you will pay fewer fees with Yova.
Another difference is that Yova does not offer Second-Factor Authentication (2FA) while Selma does. I hope they will change that in the future because I strongly feel that it is essential.
So overall, both are good Robo-Advisors. If you are really into sustainable investing, Yova will be a better fit. If you prefer to keep it simple and diversified, Selma will be best for you.
For more information, I have a complete comparison article of Selma Finance vs Yova.
Selma Finance vs True Wealth
|Criteria||Selma Finance||True Wealth|
|Investing Strategy||Best – ETF||Best – ETF|
|Ease of use||Easy||Easy|
|Interface||Only web||Only web|
|Technical Security||Good||Average (No 2FA)|
True Wealth is another well-known Robo-Advisor from Switzerland.
Both of these Robo-Advisors will invest in ETFs directly. They are both offering passive strategies with a large amount invested in stocks.
True Wealth is significantly cheaper. Indeed, the total fees of True Wealth will range from 0.63% to 0.70%, while Selma fees will be about 0.90%. But True Wealth fee does not include Swiss Stamp Tax Duty. So this could account for a few more fees. But, in the end, True Wealth is cheaper than Selma.
You also have better customization with True Wealth. There are more things you can change. On the other hand, True Wealth is a bit more complicated to use and less beginner-friendly.
Finally, the minimum at True Wealth is 8500 CHF, whereas Selma’s minimum is 2000 CHF.
So, if you are looking for the cheapest Robo-Advisor, True Wealth is the way to go. On the other hand, if you are looking for something a little more simple, you could go with Selma.
For more information, you should read my review of True Wealth.
One good thing is that Selma is very transparent about what they are doing.
For instance, their public roadmap is on Trello. It means you can see what they are working on. Also, they are sharing many interesting things on their blog. I think it is great that they are willing to be transparent.
Selma also offers a third pillar account. It is interesting if you already have a Selma account, but it is significantly more expensive than alternatives. For more information about that, you can read my Selma 3a Review.
What is the minimum you can invest with Selma?
You need to invest at least 2000 CHF.
How much will you pay in fees for Selma?
You will pay 0.68% of your portfolio to get it managed, and you will pay an average of 0.22% for the products.
Who can invest with Selma?
Every Swiss resident that is at least 18 years old.
What happens if Selma bankrupts?
Your shares are stored in your name, in Saxo Bank. If they bankrupts, you can get back your assets.
What happens to my dividends with Selma?
All the dividends are directly reinvested.
Overall, I think Selma Finance is a good fit for people that want a Robo-Advisor with some extra assistance. The virtual personal assistant can help some people feel more at ease with investing.
Now, it is not for everybody. People that are knowledgeable about investing can find cheaper Robo-Advisors because Selma Finance is not cheap. It may not be the most expensive Robo-Advisors in Switzerland. But it is not the cheapest either.
Also, they do not offer customization of the portfolio. So you cannot tweak your portfolio to what you think will perform better (or avoid investing in something that you do not believe in).
On the other hand, Selma Finance is very easy to use. And they do everything to make you feel at home. It is very straightforward to create an account and start investing. And this is very important for new investors.
If you decide to start using Selma Finance, using my link will get you the first 5000 CHF managed for free for a year. It is a good way to start investing with low fees. And this will also help the blog.
To learn more about Robo-Advisors, read my post about Robo-Advisors in Switzerland. If you are interested in Sustainable Investing, I recommend reading my comparison of Selma and Yova on this subject.
Finally, keep in mind that I am not investing with Robo-Advisors. I am investing myself directly in ETFs. Doing so is more complicated but can save you a lot of fees. And since investing fees are significant, I believe it is entirely worth the effort or learning about investing and doing the job myself. I do not want to sacrifice my retirement to fees.
What about you? What do you think about Selma Finance?
Selma Finance Review 2020 - Pros & Cons
My Honest Review of the Selma Finance Robo-Advisor. Everything you need to know about Selma and how it compares with alternatives.
Price Currency: CHF
Operating System: Web application
Application Category: Robo-Advisor