Last year, quirion saved its clients €7 million in fees. This saving flows directly into our clients’ wealth building. Is €7 million a lot? Yes, if you compare it with the figures from our early years. No, if we look ahead to the years to come. In the following article, we explain how our fee policy and our company’s development affect our clients’ accounts.
Fees our clients have already saved:
Fees already saved (in € millions)
Do you remember 1976? That was the year the death of Mao Zedong brought the Cultural Revolution in China to an end, Jimmy Carter was elected President in the US, and Czechoslovakia became European football champions.
For investors, though, 1976 matters for a different reason: a certain John Bogle invented the index fund in the US, firing the starting gun for low-cost – and therefore investor-friendly – investing. Passive fund management – today usually in the form of ETFs – has grown steadily more popular ever since and has made Vanguard, the fund company Bogle founded, one of the largest fund providers in the world. What is little known today: Bogle started small, and his index fund initially proved to be a flop. It would take decades for his idea to gain momentum. Today, by contrast, the “Vanguard effect” is forcing the entire fund industry to lower its costs. Analysts estimate that, over the course of his career, John Bogle saved investors.
Do you remember 2013? For the first time in over 700 years a Pope resigned, the FDP was voted out of the Bundestag, and the world was debating the NSA revelations of whistleblower Edward Snowden.
We at quirion remember this year for an entirely different reason, because it is the year we were founded as a brand of Quirin Privatbank. As the first robo-advisor in Germany, we started small. In 2013 we won 25 clients who are still with us today.
From the very beginning, however, our vision was ambitious: with our investment model, we want to make Germany a better place for investors. What John Bogle achieved with Vanguard in the fund industry, we want to establish in Germany for asset management: good investing, easy to understand, digital and at low fees. We share our progress along this path publicly.
It took until 2016 to reach the milestone of 1,000 clients. By then, savings of around one million euros had accumulated compared with a conventional fund investment.
Today we are moving at a different pace. We now achieve in a single month the client growth that took us the first four years. And instead of one million in four years, our 20,000 clients together now save more than seven million euros every year (which, incidentally, works out to €14 per minute). All told, the fee-savings counter stands at €12 million – about half of which accumulated in the last six months.
The savings effect is driven by the fact that quirion has cut its fees in recent years (“the first €10,000 free of charge”) and that, by regularly swapping out ETFs, we have been able to reduce product costs in clients’ portfolios. But above all, the savings grow ever faster because our number of clients is increasing – and with it the assets we manage.
The following calculation shows just how worthwhile it is for you personally to keep an eye on the costs of your investment: anyone who invests €10,000 at an assumed market return of 7% will have €76,123 in their account after 30 years. But deduct just 0.5% in costs and only €66,144 is left. The difference comes to almost €10,000 – that’s the entire original amount invested! quirion clients save considerably more than 0.5%: while a conventional fund investment can easily cost more than 2% per year, quirion clients pay – depending on the amount invested and the service package chosen – between 0.21% and 1.09%.
€12 million in total savings may finally sound like “real money”, but in the fund industry it counts as a rounding error. Measured against John Bogle’s life’s work, too – one trillion dollars – we are still very much at the beginning of our journey. But you shouldn’t underestimate growth processes: if we keep doubling the client assets under management each year, we would reach the Bogle milestone in 16 years. And even if that may sound more than ambitious – we are ready to keep growing together with you and to save fees on your behalf.
