Given our demographic context, the issue of pensions is becoming increasingly complex. How do you maintain a comfortable standard of living after reaching retirement age? Everyone asks this question. In addition to the basic services provided, it is necessary to count on other contributions. A strategy that can be a valuable addition to AVS and Pillar 2 contributions. To make it clearer, Felix Niederer, CEO of True Wealth, which specializes in automated asset management, shares his vision with us. An interview.
Le Temps: Overall, what are the main challenges for pensions in the current context?
Felix Niederer: Demography with an aging population is the first problem. In our system, the benefits associated with AVS are inevitably declining, with fewer and fewer young people able to join the collective effort to financially support our elders. Add to this very low interest rates. So the amount that sleeps in the savings account does not bring anything. Finally, we should also mention inflation, which has exacerbated this problem by rising sharply recently.
What advice would you give to supplementing your retirement plan?
Relying on an investment strategy that includes stocks is clearly a good idea in the long run. It is also a proven fact that by investing in the stock market with a diversified portfolio for a period of twenty or more years, we obtain better returns than with savings.
Is the stock market not a relatively risky investment area in terms of pension strategy?
This involves securing two main elements. As we said, you need to build a balanced portfolio. Stocks, bonds, commodities and real estate are robust and safe areas in which we invest our clients’ funds. Then, of course, duration is a central aspect. Therefore, we recommend investment strategies spread over twenty or more years.
How exactly does onboarding work in True Wealth and from what amount can we benefit from your expertise?
We have developed a fully digital solution to facilitate and democratize access to financial services. You can open an account online with just a few clicks. We also work closely with two deposit banks, BLKB or Saxo Bank (Switzerland) SA, depending on the client’s choice. The questionnaire then allows us to identify their tolerance for risk, income and purchasing power. All these parameters are then integrated into the digital management tool we have developed. Account opening is available from 8,500 francs.
How is your investment strategy different from traditional trading?
Our robo-advisor ensures that the client-defined and required balance between stocks, bonds, commodities and real estate values is constantly maintained. This is called portfolio rebalancing. No matter what exchange transactions take place, this balance is maintained at all times. Studies show that this balance has a positive effect on long-term returns. Then we passively monitor stock indices. Several studies have shown that this strategy is proving to be the most profitable in the long run. Another advantage is the maintenance of very low fees for mediation and the avoidance of fees for analysts, which in the long run have a more or less serious impact on clients’ capital. In addition, passive investment instruments (such as ETFs) are diversified in nature, which contributes to reducing portfolio risk.
What about the development of True Wealth since its launch in 2014?
Founded by Felix Niederer and Oliver Herren, co-founder of Digitec Galaxus, the company currently manages more than 750 million francs for a total of 12,000 customers. Our Truewealth.ch platform is available in French, English and German, with customer call and follow-up service available in these languages. We are also very proud to be among the most competitive companies in terms of cost control in the ranking compiled by the independent comparison service Moneyland.ch (annual management fees are 0.25 – 0.50% of the invested capital, to which must be added the annual costs of the ETF 0.1 – 0.2%). This cost control, which is made possible in particular by the automation and digitization of all our processes, allows us to rely on reliable and sensible strategies without trying to businessman increase transaction costs to the detriment of customers at all costs.