In private investment, costs play an important role. Without a competitive comparison, unnegotiated asset management costs of around 1.5% to 3% of the invested assets per year in total are not unusual.
If you achieve, for example, a return of 5% before costs on your securities custody account, only a net return of around 2% to 4% remains after deducting the asset management costs, depending on the provider. The taxes on capital income are not yet taken into account here. Comparing different providers is clearly worthwhile: depending on the investment product, the costs can be lower. Even small cost differences can add up, through compound interest, to considerable differences in assets over many years.
As with any important purchase, it pays to compare offers in asset management too. Anyone who examines offers from different providers can often improve the conditions considerably. Without comparison or negotiation, total costs of 1.5% to 3% of the invested assets per year are not unusual for asset management and advisory mandates.
If you take the principles of transparency and competition into account and compare several offers, you will find asset management solutions with costs of less than 0.5% per year already for invested assets of CHF 50’000. Such cost differences can have a considerable influence over many years on how your assets build up and on your financial leeway in retirement.
Even small differences in the annual asset management costs can considerably influence how assets develop in the long term. Over the years, even small cost differences add up to substantial differences in the investment result.
What costs arise with an investment?
The frequently cited asset management costs of 1.5% to 3% per year refer to the ongoing, annually recurring costs. These include the asset management or advisory fee (customary and unnegotiated between 0.5% and 1.5%), custody account fees, and the costs of the investment products used, for example investment funds or structured products.
For investment funds you find these costs in the fund factsheet, mostly under the designation «Total Expense Ratio» (TER). For structured products they are often shown as «Ongoing Charges» in the key information document.
If you want to estimate the ongoing costs of your securities custody account yourself, add up the asset management or advisory fee, the custody account fees and the costs of the individual investment products. You will find the relevant information in your bank’s documents (custody account regulations or general terms and conditions) and in the product information of the investments used (TER or ongoing charges). The individual investment products are listed in your custody account statement.
This calculation captures a substantial part of the costs of your investment. Not taken into account, however, are further components such as transaction fees, transaction taxes on securities purchases and sales, and the taxes on capital income.