frankly vested benefits is a relatively new product from ZKB. frankly has long been established for pillar 3a. Now ZKB wants to grow in another market with frankly Vested Benefits. Find out whether the offer is worthwhile for you.
frankly freedom of movement at a glance
frankly is an offer from Zürcher Kantonalbank (ZKB). They launched frankly pillar 3a a few years ago. We have already reviewed it in detail in another article.
A frankly vested benefits solution has also been available since June 2023. You can find everything you need to know about vested benefits solutions on this topic page, including a comparison of providers and tips on tax optimization when drawing your vested benefits.
But now to the review of frankly permissiveness. You can choose between a frankly vested benefits account in cash (“FZ Cash”) and a frankly vested benefits solution with securities.
- With the frankly vested benefits account, you currently (August 1, 2024) receive interest of 0.3 %. Account management is free of charge. And this is how you get it: open frankly and select the risk level “0 = No risk” in the “Account opening” step in assisted mode.
- The frankly vested benefits solution can be based on active or passive investment products. You can choose a minimum equity allocation of 15% and a maximum of 75% as your investment strategy. These are the same investment products as the pillar 3a solution described in this article.
Benefit from a 35 franc discount on fees with frankly voucher code SMOLIO
Simply use the code SMOLIO for your welcome bonus of 35 francs when you open your account. Only redeemable for frankly new customers when opening their first account within 48 hours. There is no all-in fee for Cash. Code cannot be combined with other voucher codes. Valid until 31.12.2024. Information on the competition at frankly.ch/gws.
Notice
Wir sind dir dankbar, wenn du bei einer Kontoeröffnung unseren Code nutzt. Wir erhalten dann eine kleine Vergütung. Für dich wird es dadurch nicht teurer und wir können die Kosten für den Betrieb der Plattform decken. Wir freuen uns auch, wenn du uns einen Kaffee spendierst ☕️.
Advantages of frankly freedom of movement
Very high security of your vested benefits
The vested benefits foundation of ZKB Kantonalbank and you with your frankly vested benefits benefit from a very high level of protection and the very high security of ZKB. This is because the frankly Vested Benefits Foundation places your pension assets with ZKB, which is considered a systemically important financial institution in Switzerland, in technical jargon “too big to fail”. In addition, ZKB has a state guarantee from the Canton of Zurich and an excellent rating on the financial market (“triple A”). It is therefore extremely unlikely that the bank will go bankrupt. This means that your money is very safe in your vested benefits account – it doesn’t get any better than that. This sets the frankly vested benefits account apart from competitors such as VIAC or finpension.
In addition, securities investments from the vested benefits foundation of Zürcher Kantonalbank are invested in investment products of Swisscanto, a subsidiary of ZKB.
As special assets, the securities would not be affected by any bankruptcy of ZKB.
You can find out more about the security of vested benefits assets in this specialist article.
Favorable flat fee
frankly offers attractive conditions: no fees for the frankly vested benefits account (“frankly FZ Cash”) and a flat fee of 0.44 % for frankly with securities. This applies to all investment strategies, regardless of whether you choose active or passive investment products. However, the fee does not include everything. More on this in a moment.
Independent investment mode possible
In principle, frankly is set up so that your money is automatically invested in securities. Rationally, this makes sense, because uninvested capital brings no return – after all, “time, not timing” determines investment success. However, you can change the investment mode to “independent”. Then you decide when to invest. With this option, you can also hold your assets in cash instead of securities.
Disadvantages of frankly free movement
Flat-rate fee does not include everything
It is a pity that the all-in fee does not include all fees. frankly Freizügigkeit points out as follows: “The all-in fee does not include any issue and redemption fees for indexed investment products or any fees and ancillary costs that are charged directly to the investment product (such as bid/ask spreads, commissions, taxes, duties and the total expense ratio (TER) of exchange-traded real estate funds).”
How high the issue and redemption fees are depends on the supply and demand situation at the time of trading. In order to achieve a fair balance between long-term investors and buyers and sellers of units, the so-called crossing spread method is used. This allocates the transaction costs for subscriptions and redemptions to the originators and thus avoids trading costs being charged to the fund assets and thus to existing investors. In extreme cases, for example, the target fund “Strong 75 Index” may incur maximum issue fees of 0.14 % and redemption fees of 0.08 % if there is no counterparty for sale or purchase at the time of trading.
Maximum equity ratio of 75%
Over a long investment horizon, high equity ratios have delivered high returns – with corresponding fluctuations – in the past. The foundation supervisory authority permits a maximum equity ratio of 85% for vested benefits foundations domiciled in the Canton of Zurich. Unfortunately, frankly Freizügigkeit has a maximum equity ratio of 75%. This is unfavorable for risk-averse investors. Competitors offer equity ratios of 85 %.
Little transparency about the Swisscanto target funds
As with pillar 3a, frankly Freizügigkeit uses target funds from Swisscanto. Unfortunately, for you as an investor, it remains unclear what you are investing in with nice-sounding names such as the “Strong 75 Index”. The fact sheet states that the target fund in question is the “Swisscanto (CH) IPF III Vorsorgefonds 75 Passiv NT CHF”, whose investments are “mainly made via Swisscanto’s indexed investment funds, which comprise thousands of individual investments”. Well, I would like to know what benchmark my retirement assets are running against and how the product is performing.
Forced hedging of foreign currency risks
The fact sheet also states: “The foreign currency positions are partially hedged in CHF, so that the proportion of unhedged foreign currency positions can reach a maximum of 30%.” Auso: Swisscanto hedges the exchange rate fluctuation of foreign currency positions against Swiss francs. That makes sense in the short term. But for long-term investors who are building up their pension provision, the forced foreign currency hedging costs valuable returns in my view.
No tax-optimized domicile of the foundation
frankly Vested Benefits is a product of Zürcher Kantonalbank, which is owned by the Canton of Zurich. So it is somehow logical that the vested benefits foundation is also registered in the canton of Zurich? That’s right. However, this does not matter to most Swiss people. But for people who later obtain their vested benefits solution from abroad.
You need to know that if you withdraw your vested benefits and live abroad, the domicile of the foundation is important. This is because the withholding tax due is based on the domicile of the foundation where your vested benefits are held. This means that if you move away from Switzerland and want to withdraw your vested benefits from abroad, there are providers where you will have to pay less tax on the withdrawal than with a foundation in the canton of Zurich. You can find out more in this article. You should therefore transfer your FC assets to a tax-efficient FCS no later than 12 months before emigrating.
frankly open up freedom of movement
If you already have a pillar 3a solution with frankly, you can simply add a vested benefits solution via the web interface. This has also been possible via the mobile app since November 2024. The video shows you how to transfer an existing vested benefits balance to frankly.
If you don’t have a frankly account yet, you can register for one in just a few minutes. You can open the account online with your cell phone and ID without any paperwork or bank visits. The process is self-explanatory and simple.
Summary and review frankly Free movement experiences 2024
The frankly vested benefits account is an attractive and, above all, secure solution. frankly Vested Benefits with Securities scores highly with its low and uniform flat fee for all strategies. Unfortunately, the commissions on the issue and redemption of funds are not included in the flat fee, and it is a pity that the investment products are not very transparent. If you would like to obtain your freedom of movement later with a foreign residence, there are better solutions. Both are easy to use and particularly convenient for you if you already have the pillar 3a solution with frankly.
Benefit from a 35 franc discount on fees with frankly voucher code SMOLIO
Simply use the code SMOLIO for your welcome bonus of 35 francs when you open your account. Only redeemable for frankly new customers when opening their first account within 48 hours. There is no all-in fee for Cash. Code cannot be combined with other voucher codes. Valid until 31.12.2024. Information on the competition at frankly.ch/gws.
Disclaimer
We have taken great care in compiling the content of this article. Nevertheless, we cannot rule out errors and cannot guarantee that the content is correct, up-to-date or complete. This article does not replace tax advice. We do not offer investment or tax advice and recommend that tax issues are always clarified with a tax expert and/or the relevant cantonal tax authorities. Any liability is rejected.
Last update: 08.12.2024 14:56
