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Are you looking for a low-cost and reliable Robo-advisor?
True Wealth is a leading Swiss Robo-Advisor. They are the first Robo-Advisor, which started already eight years ago. And they are also the cheapest Robo-Advisor available in Switzerland.
In this in-depth review of True Wealth, I look in detail at their investment models, fees, and security.
|Not by default
|French, German, and English
|BLKB and Saxo Bank
True Wealth is a Robo-advisor founded in 2013 by Oliver Herren (the founder of Galaxus!) and Felix Niederer. And the service became available to the public in 2014. As such, it is the most mature Robo-Advisor in Switzerland. They now have more than 9000 clients in Switzerland. And they manage more than 800 million CHF (as of 2023) of assets for their clients. These are quite impressive numbers!
True Wealth has two main selling points:
- Low fees
- Simple investing
These are significant advantages for people choosing Robo-advisors. Another cool thing is that they have a virtual account. It means you can open an account and test many things. And only later can you decide whether you want to transfer money. You can convert your virtual demo account into a real one anytime.
You can use their investment services from your browser. You can also use their mobile apps on iPhone and Android if you prefer. The mobile application has all the features of the web application.
True Wealth is available in English, French, and German! This choice of languages is great since most Robo-advisors are only available in one language.
So, we will analyze True Wealth in detail!
First, we see how True Wealth invests your money.
True Wealth follows a passive investing strategy. True Wealth is only investing in index funds. Specifically, they are investing in Exchange Traded Funds (ETFs).
Using passive index funds is great news! Passive investing is the best way to invest for most people.
With True Wealth, you can invest up to 99% in stocks. This is the highest Robo-advisors are going. It is good to keep a little cash to pay the fees without liquidating the shares, which would be less efficient.
You cannot choose the ETFs directly you invest in. Instead, the Robo-Advisor will decide on a portfolio for you. Based on several questions the tool will ask you, a portfolio will be designed based on your needs. But do not worry, you will have your say in it!
They will ask many questions to evaluate your risk tolerance. For instance:
- How long and how much do you plan to invest?
- How long and how much do you plan to divest?
- What would you do if your assets lost 10% of their value?
- And so on.
Once you answer these questions (it will take you two or three minutes), you will get your portfolio. For instance, here is mine after answering them:
It is an interesting portfolio. It makes quite a lot of sense to the general public. Based on my answers, I can understand why they would choose this portfolio. However, for me, it is not aggressive enough.
However, the default portfolio is not an issue because you can customize the portfolio! Customization is a great thing about True Wealth! You have great freedom in customizing your investment portfolio!
First, you can configure each of the asset classes. For instance, you can remove all the bonds, real estate, and natural resources. Or you can increase the allocation of bonds or have more cash.
In my case, I set the portfolio to the maximum amount of stocks (99%). You can choose the portfolio that suits your needs the most. They always keep 1% cash at a minimum to help rebalance and pay fees.
The optimization can go even further. You can customize the composition of each of the asset classes per region. For natural resources, you can choose between metals and diversified natural resources.
For me, this is an excellent level of customization. Some people would like to go one step further by choosing ETFs directly. But, I would argue that if you want to select your own ETFs, you should not invest with a Robo-Advisor in the first place. You should invest by yourself with a broker account.
Overall, I think that the investment system of True Wealth is excellent. You will invest only in low-cost ETFs. And you can customize your portfolio up to the details.
Now, we look at the fees. If you are investing for the long term, investing fees are extremely important.
With True Wealth, you pay two fees:
- The fees of the ETFs depend on your portfolio.
- The management fees depend on the size of your account.
Together, these two fees are what you will lose to fees every year.
The fees of the ETFs will depend on your portfolio. I have seen that it will vary from 0.13% to 0.2%. The most expensive ETF is the Real Estate ETF. If you do not invest much in Real Estate, you are unlikely to go higher than 0.2%. My very aggressive portfolio has only 0.13% fees!
Together, the total fees of True Wealth will be between 0.63% and 0.70%, on average. These fees are excellent.
The default management is 0.50% per year. If you have an extensive portfolio, it can go down even lower. From a 500’000 CHF portfolio to an 8’000’000 CHF portfolio, the fees will decrease from 0.50% to 0.25%! For instance, a 1’000’000 CHF portfolio will only cost 0.39%. These low fees are a great result. You can find the details on their website. If you plan to retire early and invest with a Robo-Advisor, it is terrific for your future.
There is an extra fee on top of this: the stamp duty tax. If you want details about this, I have an article about the Swiss Stamp Tax. This fee is paid on each purchase and sale of ETFs. It will cost you 0.15% for a foreign ETF and 0.075% for a Swiss ETF.
It is difficult to say how much this will cost in the percentage of your portfolio since it is also based on the purchase price and sale price. Also, it is not due each year. Overall, it should add up to less than 0.05% per year. It is a pity that True Wealth does not include this in their total fees! It would make things simpler.
Finally, you will also pay a 0.10% fee for each currency conversion done by True Wealth. This fee is the best currency conversion fee of all Swiss Robo-advisors.
Overall, the fees of True Wealth are excellent! When you compare with other Swiss Robo-Advisors, they have significantly lower fees! In total, you can invest for a minimum of 0.63% TER!
Robo-Advisors are a tradeoff of simplicity versus cost. You can save on fees if you do not mind the hassle of investing alone. Of course, the fees are higher than for DIY investing. But if DIY investing is not for you, Robo-Advisors are the next best thing.
If you are not convinced that fees are important, I urge you to consider what investing fees do to your retirement money.
Opening a True Wealth account
Opening an account with True Wealth is very simple and can be done entirely online. I will not describe each step since you only have to follow the workflow; there is nothing special about it.
Once you have created your base account, you must go through a risk assessment. This is the way each Robo-advisor works in Switzerland. By asking you a few questions, they will establish your risk profile.
From your risk profile, they will propose a portfolio for you. You can change it, but you will be warned that if you go higher, you may be outside of your risk tolerance.
Deposit and Withdrawals
We can also take a look at how funding and withdrawing work.
First, I need to mention a downside: True Wealth has a minimum of 8500 CHF to invest with them. 8500 CHF is too much of an entry point for many people who want to get started. And many people would probably like to try the service without investing that much money. On the other hand, you can test the service by creating a virtual account.
To fund your account, you can deposit money by transferring money to a personal IBAN. Your cash is held in your name at the custodian bank account, so you get a personal IBAN.
Interestingly, you can deposit CHF, EUR, USD, and GBP! This is an excellent feature.
You can also do so from the interface to withdraw your money. You can only do the transfer to an account in your name. You must close your account to go lower than 8500 CHF.
Withdrawing and depositing money into your True Wealth account is quite standard. There are no surprises here.
Is it safe to invest with True Wealth?
You must consider its safety if you invest significant money in an online service.
First, we look at how assets are stored. Your assets are not held by True Wealth itself. Instead, a custodian bank holds your assets. True Wealth uses two custodian banks:
- Basellandschaftliche Kantonalbank (BLKB)
- Saxo Bank Switzerland
You can choose which one you prefer. In both cases, your shares are protected from the bankruptcy of True Wealth since they are held in your name. With BLKB, you have unlimited protection for your cash. With Saxo Bank, your cash is protected up to 100’000 CHF. In most cases, your cash will be safe since you should not hold that much cash.
In the case of both custodian banks, they cannot lend your securities to other investors. Not allowing securities lending improves the safety of your assets. And this is a nice guarantee provided by True Wealth.
So, you are very well protected against bankruptcy or a takeover of True Wealth.
Is True Wealth Secure?
Now, we can also take a look at technical security. We do not want a hacker to steal all our assets!
For that, all communication with True Wealth will be encrypted. And you can use Second Factor Authentication (2FA) to add an extra layer of security. I highly recommend that you do so for each online service you use. They are offering support for the most used 2FA platforms. So this is great!
On top of that, you can only transfer your assets to an account in your name. This limitation is very good for security! If a hacker took hold of your account, they would also have to hack your bank account to get your funds. This security makes it unlikely to lose your assets!
Overall, I think that the technical security of True Wealth is as good as it can be. It seems that True Wealth is very security-aware. And this is excellent news for its investors.
Do not forget that the most significant security problem is the human factor. So, you need to take online security seriously.
Sustainable Investing with True Wealth
Sustainable investing is very popular these days.
And fortunately for investors that are motivated by this, True Wealth also lets you invest sustainably.
When you design your portfolio from True Wealth, you can choose between two investment universes:
- Global: All stocks for each asset class
- Sustainable: Only stocks from sustainable companies for each asset class
So, you only have to change a single thing, and your entire portfolio becomes focused on sustainable investing.
When you choose the sustainable universe, True Wealth will use Socially Responsible Investing (SRI) ETFs from MSCI. So, all the ETFs will be replaced by their SRI equivalents.
These ETFs are more expensive than the base ones. So, the total fees of your portfolio will be higher if you choose sustainable investing. For instance, the portfolio I selected for me had total fees of 0.63% and went up to 0.80% with the sustainable universe.
I think that the True Wealth system for Sustainable Investing is quite good. I wish that the ETFs were cheaper. But that is not something that True Wealth has much control over. Their approach to sustainable investing is similar to that of most other Robo-Advisors.
If you are not clear about that, read what is Sustainable Investing, ESG, and SRI.
Investing for your children with True Wealth
As of 2023, you can open accounts for your children with True Wealth.
With that, the legal representative can open an account for the child in the child’s name. This account is then managed by the representative until the child is 18.
Once the child is 18, the account can be transferred to his management directly.
This feature is great because there are few options to do that in Switzerland.
True Wealth Reputation
It is important to look at the reputation of any financial service before using it.
Overall, the reputation of True Wealth is quite good. They have 4.9 stars out of 5 on their Google Reviews (out of 31 reviews). Reading the reviews, people are really happy about multiple points:
- The service is very easy to use;
- The performance is good;
- True Wealth is very transparent;
On the negative side, I could only find two complaints:
- The lack of a mobile application. But this is now addressed since True Wealth has mobile applications as well.
- The lack of proper phone support.
I also looked at some reviews on TrustPilot, but there are only 15 of them. Some people complained about the performance being lower than the S&P500’s performance. I wanted to mention that review because many people misunderstand ETF Robo-advisors.
True Wealth manages a fixed index ETF portfolio for you. They will not perform any magic to perform better than the market. You can get S&P500 performance (minus fees) at True Wealth by only holding this index in your portfolio. The main advantage of a Robo-advisor is ease of use, not performance.
So, overall, the reputation of True Wealth is really good, and customers seem very happy.
We should quickly compare True Wealth with some alternatives.
True Wealth vs Selma
Selma is another well-known Robo-advisor from Switzerland. Both are quite similar in their investment strategy.
There are two main differences between these Robo-advisors:
- Selma is simpler to use if you know nothing about investing
- True Wealth can be significantly cheaper
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 a beginner-friendly Robo-advisor, you should go with Selma.
For more information, you should read my in-depth comparison of True Wealth vs Selma.
What is the minimum you can invest with True Wealth?
You need at least 8500 CHF to start investing with True Wealth.
How much will you pay in fees for True Wealth?
You will pay a management fee of 0.5%. On top of that, you will have to pay the fees of the funds. The total should amount to about 0.65% to 0.70% per year. If you have more than 500’000 CHF, you will pay lower fees, all the way to a minimum of 0.25%.
Who can invest with True Wealth?
All legal residents of Switzerland that are at least 18 years old can invest with True Wealth. True Wealth is planning to have children’s portfolios in the future, to invest for your children.
What happens if True Wealth bankrupts?
If they go bankrupt, your assets are safely stored in a custodian bank. Your cash will be protected by up to 100’000 CHF in case of bankruptcy of the custodian bank.
Can we use a TrueWealth account to invest for children?
Yes, True Wealth offers portfolios for children and young people. The portfolio can be open by the legal representative. And once the children are of age, the account can be transferred fully.
Can we open a True Wealth account from abroad?
No, True Wealth is only open to Swiss residents.
Who is True Wealth good for?
True Wealth is great for advanced investors that want to use a Robo-advisor and minimize their fees.
Who is True Wealth not good for?
True Wealth is not the best to beginners, being a bit more complicated than some other alternatives.
True Wealth Summary
TrueWealth is an excellent Swiss Robo-advisor with very affordable prices, making it the best Robo-advisor for serious investors.
Product Brand: True Wealth
True Wealth Pros
Let's summarize the main advantages of True Wealth:
- Fees are significantly lower than other Swiss Robo-Advisors.
- Great investing strategy with passive investing.
- Can deposit money in several currencies.
- Excellent customization of your portfolio.
- You can invest sustainably with True Wealth.
- True Wealth has good security.
- Your assets are well protected in case of bankruptcy.
- Very transparent information.
- Relatively simple to use.
- Free demo account that you can use directly.
- Fully featured mobile application.
True Wealth Cons
Let's summarize the main disadvantages of True Wealth:
- You need at least 8500 CHF to invest with True Wealth
- Stamp Duty is not included in the management fees.
Overall, I am impressed by True Wealth. They are proposing a great investment system at a very low cost. And on top of that, the freedom to choose your portfolio is high! You can decide on your exact portfolio. In the long term, True Wealth is a great service for a serious investor.
If I had to choose a Robo-Advisor, I would invest with True Wealth. They are the cheapest Robo-Advisor in Switzerland. And these low fees will make a significant difference in your returns in the long term. Also, the fact that you can tune the portfolio to your needs will make it good for most people.
However, I would prefer if they had a lower minimum. The minimum of 8500 CHF for investing is steep for many people who want to get started.
Other than that, it is an excellent service!
Keep in mind that I do not use a Robo-Advisor myself. I invest in stocks by myself in a broker account. DIY investing is more complicated. But I pay much lower fees than with a Robo-Advisor. Ultimately, it is a tradeoff, whether paying an advisor or doing it yourself.
It is also worth mentioning that True Wealth also offers a third pillar account. This offer is directly integrated into the main application, and you can manage all your assets holistically. You can find more information in my True Wealth 3a review.
If you want to know how it compares with other alternatives, read my comparison of True Wealth and Selma. Or, if you want more information about True Wealth, read my interview with Felix Niederer, the CEO.
What about you? What do you think about True Wealth?
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