True Wealth 3a Review 2024: Pros & Cons
| Updated: |(Disclosure: Some of the links below may be affiliate links)
True Wealth is a Swiss Robo-advisor that allows high customization, aggressive investing, and low fees. In November 2022, True Wealth introduced support for third pillars.
Since they are an excellent Robo-advisor, I want to check out their third pillar offer.
In this review, I will analyze the True Wealth 3a offer in detail. We will examine its fees, investment strategies, and pros and cons.
By the end of this review, you will know whether you should use True Wealth 3a.
| Total Fee | 0.18% per year |
|---|---|
| Maximum portfolios | 5 |
| Stock allocation | Up to 99% |
| Maximum foreign exposure | 99% |
| Maximum investment in cash | 100% |
| Investment Strategy | Index funds and ETFs |
| Fund providers | N/A |
| Languages | English, French, German |
| Sustainable option | Yes |
| Mobile Application | Yes |
| Web Application | Yes |
| Custodian Bank | BLKB and Saxo Bank |
| Established | 2022 |
| Foundation’s domicile | Liestal, Basel-Land |
True Wealth 3a
TrueWealth is an excellent Swiss Robo-advisor with very affordable prices, making it the best Robo-advisor for serious investors.
- Very customizable
True Wealth is a mature Swiss Robo-advisor launched publicly in 2014. As of 2024, they are managing more than 1400 million in assets. True Wealth is a major player in the investing market in Switzerland.
Their Robo-advisor service is excellent. They have low fees, allow very high investment in stocks, and let you customize your portfolio to the extreme. In short, True Wealth is one of the best Robo-advisors in Switzerland.
In November 2022, True Wealth announced a new product: True Wealth 3a, their third pillar offer.
The 3a Digital Pension Foundation holds True Wealth 3a assets, which True Wealth manages under the foundation’s regulations.
Everything is managed holistically within your account. So, you can see both your 3a and your investments from within the same interface.
It is worth mentioning that the foundation is located in Liestal, in canton Basel-Land. When withdrawing your third pillar while abroad, you will pay withholding taxes based on the location of the 3a foundation. Basel-Land is relatively cheap for withdrawal amounts lower than 500’000 CHF. Higher than this, it becomes quite expensive. Also, for amounts up to 100’000 CHF, it is significantly more expensive than the cheapest tax domicile. But overall, it is a relatively good tax domicile.
You may want to consider this tax domicile if you plan to leave Switzerland. For people retiring in Switzerland, this makes no difference.
Investing Strategy
We should look at how money is invested with True Wealth 3a. True Wealth 3a will invest in index funds (from Credit Suisse) and ETFs. I do not know any other third pillar that uses both.
They focus on passive funds, which is excellent because these funds are low-cost and should replicate the market’s performance.
You can invest up to 99% in stocks in your 3a, which is excellent. The 1% needs to stay in cash for rebalancing and fees.
Interestingly, they have a 1.00% interest on cash (as of November 2024) which may be interesting if you need to temporarily keep your 3a in cash.
When they started, they were limited to a minimum of 35% Swiss francs. However, in June 2024, they have lifted this limitation. And you can now have 99% foreign currency exposure.
True Will will propose a well-diversified portfolio (diversification is critical). As an example, here is the portfolio True Wealth 3a proposed for the maximum risk profile:
We can see that there are six instruments:
- 47% in US stocks as a pension fund
- 18% in Europe stocks as an ETF
- 12% in Asian stocks (developed only and no Japan) as an ETF
- 10% in Emerging markets as an ETF
- 7% in real estate hedged to CHF, as a pension fund
- 6% in real estate unhedged, as a pension fund
Overall, it is a decent portfolio. The currency exposure is quite aggressive, with only 8% in CHF and the rest in various currencies (51% in USD). I find it weird there are no Swiss stocks and all the real estate is outside of Switzerland as well.
Even though they have improved it already a lot, I believe there is still too little US stocks. When I generated the portfolio, the US represented 62% of the world stock market and not 54% (47/86). But this is not a huge difference.
I think there is also too much real estate for an aggressive investor. But that may be more of a personal preference.
While not my favorite portfolio, it remains a good portfolio.
As a Robo-advisor, True Wealth has excellent customization. However, this is not the case for the 3a account. Indeed, you can only have a single global portfolio shared by the untied assets and the 3a. There is no way to tune the 3a to your needs without changing the free assets portfolio. We should be able to customize both independently. I was expecting better from True Wealth.
In fact, when I configured a 3a for my personal True Wealth account, it made my untied assets worse. Before, I could invest 99% in US stocks, but since the addition of the 3a (empty), I am limited.
Investing Fees
If you want maximum returns over the years and use passive investing, it is important to reduce the fees. The fees are the best lever for passive investors.
Currently, there is no management fee on True Wealth 3a. This fact is amazing.
In addition, there are a few fees. First, you will pay the TER of the ETFs and index funds. This fee depends on your portfolio. The fees vary from 0.13% for global portfolios to 0.21% for sustainable portfolios. So, we can take 0.18% as a base fee.
Then, you also have to pay stamp duty taxes when shares are bought and sold. This tax is only for ETFs, not for index funds. It should not make a huge difference since it only applies to operations. This can be reduced by netting and pooling.
There is also a small markup of 0.10% for foreign currency exchanges. Again, this can also be reduced with pooling and netting, so it should not be too significant. Given the high amount of CHF in the portfolio, this fee should not pose an important issue.
You will pay an overall 0.18% fee on your True Wealth 3a asset. This fee is incredibly low, almost twice lower than the cheapest available third pillar.
So how does True Wealth make money? Usually, commission-free services make money in a way that is detrimental to users. However, I do not see this with True Wealth.
The reason they are making it free is two-fold:
- They offer a new service to their existing clients at a very low cost for True Wealth
- They hope to bring in new customers for their Robo-advisor service, which is not free (but very affordable).
Since True Wealth uses pension funds for US stocks, it does not suffer from any tax inefficiency from US dividends. This is great because when it started, it used ETFs which incurred a hidden fee of about 0.14% per year. Fortunately, this hidden fee has been removed.
For an aggressive investor, we get a total fee of 0.18% per year (on average). With the extra 0.225%, the total fee would only be 0.405% which is still a good fee.
So, overall, True Wealth 3a fees are excellent! If a management fee is introduced later, it will become fairly priced but not excellent any more.
Investing with True Wealth 3a
If you already have an account with True Wealth, you can open your True Wealth 3a in a few minutes. Everything is included in the web application.
If you do not have True Wealth, you will need to open an investment account, and then you will be able to open a 3a. The minimum for the 3a is 1 CHF. If you want to also invest in their free assets, you will need a minimum of 8500 CHF.
True Wealth has an interesting feature for contributing to your True Wealth 3a account: auto top-up. With this feature, every time you contribute to your True Wealth account, the money will go to your 3a until the maximum is reached. And then, the rest of the money will go to your regular Robo-advisor account.
Also, True Wealth will automatically create five third pillar accounts. True Wealth will fund one account each year until there are five accounts. Once there are five, the deposits will be spread over the five accounts. Having five retirement accounts is optimal since you can stagger the withdrawals over five years to reduce the taxes you will pay.
On the other hand, if you do a transfer from another foundation, this will go into an extra account. This means that you will have more than 5 accounts if you do any external transfer. This is a major disadvantage because it will make it much more difficult to balance the different accounts.
You can also transfer money directly from your free assets. True Wealth made it very easy to fund their 3a.
On the other hand, you have to be careful that adding a 3a to your account can change your free portfolio! When I added a 3a to my account for testing, True Wealth added some real estate to my free portfolio.
I strongly dislike this, and adding a 3a should not change my custom portfolio because I added a 3a. You can change it back, but you must notice it first! I may have missed the notice, but if there is a notice, it is not very visible.
So, be careful about your free portfolio changing without enough notice. And be careful that transfers from other third pillars will lead to unbalanced accounts.
Alternatives
We should quickly compare True Wealth 3a against two alternatives.
True Wealth 3a vs Finpension 3a
Finpension 3a is the best third pillar in Switzerland.
Use the FEYKV5 code to get a fee credit of 25 CHF!
- Invest 99% in stocks
I am currently using Finpension 3a for my third pillar accounts. Finpension 3a is currently the best third pillar in Switzerland. So, we should compare True Wealth 3a and Finpension 3a.
The investing strategies are relatively similar. However, Finpension 3a uses only index funds, while True Wealth 3a uses a mix of ETFs and index funds. Both services let you invest 99% in stocks and both have no limit for foreign currency exposure.
The customization is much better with Finpension 3a. True Wealth only lets you have a global portfolio shared between your free assets and your 3a. On the other hand, with Finpension 3a, you can have a different portfolio for each account, and everything is highly customizable.
True Wealth 3a has the unique feature of automatically creating five accounts and balancing them. I wish Finpension 3a could implement something like this.
Regarding fees, Finpension 3a costs about 0.39%, while True Wealth 3a costs about 0.18%. True Wealth will incur more stamp duty taxes, and its currency conversion fee is higher than Finpension’s. Overall, True Wealth 3a is cheaper than Finpension 3a.
On the other hand, the default portfolios by Finpension are better diversified than those by True Wealth 3a.
Both services let you hold five different accounts. However, Finpension has a major advantage in that external transfers will go the portfolio of your choice. As a result, you can do better balancing with Finpension 3a than with True Wealth 3a.
With the updates from 2024, True Wealth 3a is now cheaper than Finpension 3a. The advantages in customization of Finpension tips the scale in favor of Finpension 3a for me. However, the difference is slight, and it would be difficult to go wrong with any of them.
If you are interested, I can write an entire comparison between these two products.
True Wealth 3a vs VIAC
VIAC is another great third pillar provider. So, we can also quickly compare VIAC and True Wealth 3a.
VIAC uses only index funds, while True Wealth 3a uses a mix of ETFs and index funds.
VIAC fees are at 0.40%, while True Wealth 3a is at 0.18%. So, True Wealth 3a is much cheaper than VIAC. The stamp duty taxes may add a little to the fees of True Wealth 3a since they use some ETFs.
Both services let their users invest aggressively with maximum foreign exposure limit.
True Wealth 3a is better than VIAC! The fees are lower, and you can invest more aggressively.
FAQ
What is True Wealth 3a auto top-up?
Auto top-up allows you to automatically send money to your True Wealth 3a account in priority and spread the balances over five different third pillar accounts.
Will True Wealth 3a remain free forever?
True Wealth 3a hopes to keep the prices low forever.
How much foreign currency can you have with True Wealth 3a?
The foreign exposure is limited to 99% with True Wealth 3a. This is the best that a 3a can achieve!
What is the minimum to invest in True Wealth 3a?
You can invest as little as 1 CHF in your True Wealth 3a.
Can you customize your True Wealth 3a portfolio?
Not really, True Wealth 3a is tied to a global portfolio in the account, shared between free assets and the 3a. Therefore, changing your portfolio results in changing it for both your untied and 3a assets.
Can you use a different portfolio for each 3a account?
No, each 3a is tied to the same global portfolio.
How many third pillars can you have with True Wealth?
You can have up to five (optimal!) third pillars with True Wealth 3a.
Who is True Wealth 3a good for?
True Wealth 3a is good for users of True Wealth that want a good 3a and do not want to use two different providers.
Who is True Wealth 3a not good for?
True Wealth 3a is not good if you do not want to invest with True Wealth.
True Wealth 3a Summary
True Wealth 3a
True Wealth 3a is a robo-advisor third pillar, created by True Wealth. They allow aggressive investing at a very low price.
Product Brand: True Wealth
4
Pros
- You can invest 99% in stocks
- You can invest 99% in foreign currencies
- No management fees
Cons
- Transfers from another 3a will lead to unbalanced portfolios
- Impossible to change the portfolio of the 3a independently
- Cannot have a different portfolio for each 3a
- Use some ETFs
- Adding a 3a can change your global portfolio
Conclusion
TrueWealth is an excellent Swiss Robo-advisor with very affordable prices, making it the best Robo-advisor for serious investors.
- Very customizable
I am impressed by True Wealth 3a fees. I was not expecting them to cut down fees to zero. Generally, commission-free has a big catch, but that does not seem to be the case here. Since the latest changes in June 2024, the 3a is even better, with tax-efficient pension funds for US stocks and 99% foreign currency exposure.
My main issue with True Wealth 3a is that customization is limited since the portfolio is shared between the free and 3a assets. And you cannot have different allocations for different portfolios.
Nevertheless, if you already have a True Wealth account, having a 3a with them makes sense.
I still recommend Finpension 3a as the best third pillar available in Switzerland. True Wealth 3a is currently cheaper, but the extra customization of Finpension 3a is quite nice. Moreover, Finpension 3a is really leading the innovation (99% foreign currency exposure for instance) while others are just following.
To learn more, read about the best third pillar in Switzerland.
What about you? What do you think about True Wealth 3a?
Recommended reading
Learn easy ways to optimize your finances and save thousands in Switzerland with our exclusive e-book. Learn about the most cost-effective financial services tailored for savvy residents and expats!
Get Your FREE Swiss Money-Saving Guide
Hi there,
I am about to open a 3a (after not doing it for 2 years since getting here).
I would love a: “If you are interested, I can write an entire comparison between these two products.”
In addition, I got lost with: Transfers from another 3a will lead to unbalanced portfolios
And also, I am a True Wealth customer and then I got confused with your statment about your “Free Account” changing. What is the free account?
At the moment my investment mix on my account is 99% stocks and I could pick my makeup. You are saying that as soon as you open a 3a it automatically changes my investment strategy, adds real-estate and I can’t change it back?
Thank you!
Hi Remigi
Well done for opening a 3a. If you can get the tax benefits, it’s really worth it.
* I will consider doing a full comparison in the future, then.
* If you transfer from another 3a (not your case since you have no other), TW will create a sixth 3a and it will not be part of the auto top-up feature, which will lead to unbalanced portfolios.
* If you are already a TW user, your free assets are everything that are not 3a (should be everything in your case).
* I do not know exactly what will change. In my case, it screwed my portfolio and I could not fully cancel the changes. Before, I had 99% in US stocks and now I need to add 1% extra cash and 3% extra in CH stocks.
One thing I like that they apparently support is that you can transfer your investments into you private depot when retired. Something I saw that VZ advertised as well. Wasn’t able to find out if Finpension also supports.
It would be great if you can keep it invested instead of selling your investment. Especially if the market is down.
Hi Ralph
Being able to transfer from investments to free assets without having to sell is a great advantage indeed.
I would have to check with Finpension if this is possible. But since they use retirement funds for the 3a, this seems unlikely.
Good news: somebody at mustachianpost forum noticed that True Wealth adjusted their fee regulations in a good way by end of the year: they removed the theoretical fees of 0.225% to 0%. That is IMO a very nice statement.
Hi Swen
That’s indeed a good news! They wrote about it here: https://www.truewealth.ch/en/faq/pillar-3a/cost-regulations-mention-fee-despite-offer-free-of-charge
I will update my articles to reflect that!
Note that you can now turn off „optimized currency hedging“ with True Wealth as well. I just did and am waiting to see what it does to my portfolio.
Yes, I have already updated the article for that.