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Zurich-based robo adviser: cantonal bank deal provides SRI boost

Zurich-based robo adviser: cantonal bank deal provides SRI boost

Basellandschaftliche Kantonalbank stroke a strategic partnership with a Zurich-based robo adviser TrueWealth and became its shareholder on 18th of August.

Commenting on the deal Felix Niederer, one of the founders of the firm, said BLKB can’t interfere with asset allocation decisions of the firm despite being a board member.

However, he added, when TrueWealth's offering becomes part of the BLKB’s e-banking, the firm will adjust the investment universe to include SRI products.

‘BLKB has clients who want SRI investments. In some asset classes there are already ETFs with an SRI tilt, so we will account for the cantonal bank’s customer base, which is a little bit different from what we have now.’

Niederer added that BLKB is not only an investor but also a pilot B2B client of TrueWealth.

‘We have a distribution partnership, as we offer our robo adviser services as a solution to BLKB’s clients within its e-banking structure. We joined both brands together and their clients will become ours as well, if they decide to use our services.’

He said such a set-up will make it easier for the bank’s clients to use TrueWealth services.

‘As we will be part of e-banking, the clients won't have to log in to different sites and think about security of a new counterparty.’

Niederer says another positive aspect of the deal is that BLKB encourages the firm to leverage its expertise and provide wealth management services to other banks.

‘As BLKB is a regional player it allows us to offer our services to other banks in Switzerland and internationally.'

'Plus its size is perfect, it won't be dominating us while giving us freedom to pursue our goals, for instance we want to higher six more developers to improve our services.’

The firm is not only open to new custodian banks but also to cooperation with independent asset managers.

‘We are regulated as an independent asset manager ourselves but also realise that the solution we have would make many independent investment managers' lives much easier.’

Betting on passives

The robo adviser invests in ETFs only, as Niederer thinks it provides clients with more flexibility.

‘In some Swiss banks in order to withdraw a big sum of money one has to give notice. We wanted to give our clients full freedom to take out the money when needed and that's why we limit our investment universe to liquid asset classes.’

The manager said TrueWealth invests mainly in big ETF providers like Vanguard, iShares, UBS, SPDR and ZKB for silver and gold.

Niederer said in order to start using the services the client has to invest minimum CHF 8500, but most investors start with a capital of CHF 10 000 to CHF 20 000.  

The main client base of TrueWeath are 20-30 year olds, however the robo adviser also has investors beyond this age bracket.

‘When it comes to wealth management the over 60s generally have accumulated the most. I realised this bracket will hand over management to the younger generation which probably doesn’t want to meet financial advisers in person.’

Niederer said before investing, the firm determines restraints of the clients via an online questionnaire. After the risk appetite is defined, suggested portfolio composition is presented to the client in the form of a graph.

‘Once the clients receive it, they can accept the allocation we have suggested or customise it.’

‘However you cannot have a portfolio which is too concentrated. It has to be reasonably diversified and fit the defined risk tolerance.’

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