Reto Birrer - Why Most People Start Financial Planning Too Late

In this episode of From Noise to Sound, Dimitrios sits down with financial planning expert Reto Birrer to discuss one of the most important topics affecting individuals and families in Switzerland: long-term financial security.

The conversation explores how people can take control of their financial future by understanding pensions, insurance, and real estate investments. Mirto explains why many people simply follow the financial decisions of previous generations without fully understanding the available options and highlights the importance of actively planning for retirement from an early age. A key takeaway is that waiting until retirement approaches is often too late—small actions taken in your twenties, thirties, and forties can have a significant impact on your future wealth and financial flexibility.

The discussion also dives into the Swiss real estate market, addressing the challenges of rising property prices, low homeownership rates, and increasing rental costs. Despite concerns about affordability, Mirto argues that real estate remains one of the strongest long-term wealth-building assets, particularly when combined with smart pension and tax strategies. The episode examines different approaches to property ownership and investment, while encouraging listeners to think beyond traditional assumptions.

Another fascinating part of the conversation focuses on the growing role of artificial intelligence in financial planning. While AI tools can help people educate themselves and access information more easily than ever before, both Jimmy and Mirto agree that human expertise, personal networks, and practical experience remain invaluable when making major financial decisions.

Whether you're just starting your career, planning your retirement, or considering your first property investment, this episode offers practical insights on how to build a stronger financial future through informed decisions, long-term thinking, and early action.

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In each episode of From Noise to Sound, host Dr. Dimitrios Marinos, from the Department of Marketing and Communication at HSLU, dives deep with CEOs, Board Members, and industry innovators to uncover the forces reshaping our world. Through insightful conversations, he explores topics like digital transformation, consumer behavior, and sustainability, revealing strategies and innovations that are driving real change.

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Transcript

RetoAudio1

00:00:00 Speaker: Hello and welcome to the podcast From Noise to Sound. Today I have a special topic. I have someone with me which has a actually very broad space to think about the finance planning. So this is very important for all of us who's living in Switzerland, but also abroad, but especially in this country, because one side is, of course, you have to plan for your future, let's say, when you go to the pension time, but also what other options do you have? So for this today podcast, I have together with Mirto, a very close friend of mine and actually someone who is actually admired as a friend. I have to say, because he has a very broad knowledge in this finance planning, I would say thank you for being here today with us. Hi, Jimmy. Thank you for being here with you. Thanks a lot. Thank you very much. So I want to start with the first point is actually so in Switzerland we have a lot of insurances, right? So we have legal insurances, pensions, you name it. We have everything you can ensure. Absolutely. Right. So of course this becomes a burden sometimes in families on one side, but also on the other side, I mean, privately. So I mean, where you would advise someone, let's say, to invest its time, but also its money in terms of insurances. Well, the thing is that most of the people like here in Switzerland, when they go to school for one or three, two times, and then the usual part is, um, your family has someone that does insurance for you. So you get that person. So normally that person works for an insurance company and only has that view of that insurance company and will, uh, tell you what they have, but not what's in the market. So what possibilities? Yeah, of course. I mean, you were, you were just copying what others have done inside the home, right? But I would say one of the things that everyone is much more interested, let's say mostly is what is going to happen to me when I go to the pension time when I was sixty, sixty five. And I mean, in today's time we will be sixty five. Perhaps in some years it's sixty eight or seventy. You never know, right? But earlier or earlier, in the best case. In the best case. Yeah. But for that you have. Is your yourself responsible? So the case for me is like, I mean, if you are a young person, let's say in the time between twenty to thirty and let's say thirty five to forty five, what would be your best advice? Let's say in terms of pension time, where would you, let's say, put your big bet, let's say, what would you do? Well, for sure, I would start early to pay the maximum in the third pillar. You can because this is something people think, oh, it's just only for the for the old days then. But actually it's not because what can you do with your pension fund, which your employer pays part of it and yourself. And with the third pillar, you also have the possibility to buy your own home with it. So that means you have like special benefits. You get like tax benefits, you have like good, uh, well, depends where you do it and with what you do it, you get good. Um, uh, good performances mostly, um, from the banks or insurance companies. And of course you can take it out then when you want to buy your own home. And obviously one of the biggest wishes in Switzerland is that people want to buy their own home or own it once. But I mean, that's, that's a point there because in Switzerland, we have the lowest rate of owning house apartments or houses, you call it. So yes, it is a dream, let's say, which is let's say in Europe, let's say the the conversion rate. Yeah. To other countries. Yeah. We are the worst. One of the worst. Yeah. It is, is it worst in terms of, I mean, it's a bad word to say worst because still everyone is fine. You know, it's like we have a problem. But um, of course it's a wish, but it's a realistic wish and it's something that people have to do. Or it's an old days dream that is right. What you're saying? Well, um, my parents, um, here, they had like interest rates with banks from like, let's call it like six percent. Uh, the grandparents had interest rates from eight percent. And when you look at the market now, you are like below one percent to one point five. So it changed a lot. And people still have that old way of thinking. Um, and that's a bit the thing. And that's why I say like, start early to pay into your third pillar and buy yourself into the pension fund solutions you have, because this will be good for tax reasons and will help you to finance it to make the dream come true. If you don't have a plan, you always stays a dream. But if you don't work for it, that's it. Provocative here. I mean, you're in your grandfather's time with eight percent credit rates and everything. Um, the apartments was not costing over as of today, over a million, let's say. So probably, of course, the rates were different. I mean, also salaries to, to apartment was probably raised the same, but still, right. Nowadays you see more institutions coming into these markets. That's right. Right. And they of course allow me to say the word. They cannibalize the markets. I mean, it makes it very hard for private people to go into and own an apartment. So I'm questioning if this dream makes sense nowadays. Well, I think on this point. Yeah, absolutely. Because the interest rate interest rates are so slow and you have so many options to get money out, to use it, to buy it, but you have to plan it because the thing is on the other side, and this is what happens, what you see in other countries, the rents go up as well. So this is what was the difference. Like in the old days, interest rates was high. It was hard to buy something then as well because you have to pay loads of interest rate, but at the end it was worth it because price is raised. And on the other side now you can not live cheap anymore as well in Switzerland. So the rent goes up and up and up and they will continue because there is no no space to to build really. So existing rents will go up and raise. So you're cheaper owning an apartment with what you pay. And this is what I really realized when I consult customers that they think, oh my God, yeah, it's so cheap to like, of course you need to spend some money, of course. But at first I wouldn't say cheap because I think it's, I would say, I would say affordable. Yeah. Affordable. Affordable. Yeah. You're right. Because yeah, because I think that's the problem. We, we, we, we, we see, let's say the most of the cases, the apartments are not cheap. Yeah, it's very expensive actually. But they become, let's say according to to the rents more affordable. Correct. Absolutely. Right. And I think I mean, I think that's sometimes the job that you guys do let's us as, as consulting of financial planning. Let's say that you guys sometimes shift exactly this mindset of people from, from the insurance, how you save the money, but also invest in another, in another asset so that you, at the end of the day, have the most out of it. Correct. So, so do you see from your, I mean, you you consult companies, you consult private people as well. But do you see, let's say a correlation or the needs of the people there. So what the private wants and the companies do they class together, let's say strategically wise? Well, it is, to be honest, a complete different world. Yeah, of course, but in the other way, um, the companies always also want to secure their people and want to help them with the, with pension funds. So we, I do loads of, most of my business is pension fund consulting for companies for corporates. And we also then do, uh, information events for the employees, which the employer wants to help the employees to that they get their pension. Right. And this is where we have the sweet spot to connect. Um, and yeah, they definitely want to the best for their employees. And this is sometimes a thing where people think, why do I need to pay this pension fund? Yeah. I ask myself for what? Right. Yeah. So sometimes also because I mean, of course the dream I'll say, let's say I'm speaking for myself. I don't want to reach sixty five and until then be able to work. And I would also, as you mentioned in the beginning, I would like to to stop a lot earlier. So sometimes I was I asked myself why? Why do I do that, let's say, or on one side. But of course, you know, there is a little bit of safety there. Of course, you cannot neglect. So in these terms, I think it's a nice opportunity that you can you can put this perspective of real estate on one side and on one side. Okay. What are the options do you have? So actually today it becomes it became so complicated that we need people like you. I have a feeling fortunately or unfortunately, but nonetheless. Yeah, but I think it's impossible for someone like me having, let's say a complete a complicated schedule sometimes to have also the possibility to see everything. Absolutely. Yes. So you need someone, I think. Yes. It is good to have someone that helps you or gives you a bit the route. But to be honest, if you just like spend every year one or two hours, um, to spend into that by yourself and like reading with AI or whatever, compare newspapers and so on. Of course, loads of media are not really maybe the best or whatever, but at the end, if you really not because most of people that I see, they just put it away for like thirty years, they work their ass off, sorry to say that. And then they, they don't bother. And then when they get pension, they say, all right, I'll look into it. And then sorry, guys, it's too late. It is really too late. Then you have to take what you get, otherwise you have the possibility. Look into it one to two hours a year. Only that and and read a bit of stuff. But that's for the pensions. That's for the pensions. Right. Um. And you just said something. You give me a nice pass here. You said about AI. Yeah. Now, of course, we all become a little bit smarter than before. And I will be provocative. I mean, I have AI. Why do we need someone like you? I mean, I'm just becoming provocative right now. I mean, of course. No, no, I see. I see the need. I see the need because you need the interpersonal. There's no discussion. But I think if I need to spend one two hours. I mean, I cannot call you eleven o'clock. I can call you. Perhaps you can. I've done it. Other people. But but but the point is, I mean, in general you have don't have the possibility to to to call someone. You go to ChatGPT. You're happy for, for a moment. And then um, it's always to prompt GPT, right? Yeah. That's also a problem. So and to prompt it, right, you maybe need an advisor to, to help you. It doesn't mean because I have so much to do. So I'm not unhappy people using this and inform themselves that I don't have to start from scratch. I'm happy people bring a bit of knowledge and improve their knowledge, but I help them to guide and to prompt it. And some things you need to have the proof of it and ChatGPT or whatever, Gemini or whatever. AI won't find it, but I will give you or what you found. I will, um, how do you say that? Yeah. And I will, I will confirm you. That's right. Or maybe that's not right. That's the wrong information to me because you need to clarify it. That's one thing. But I think to me, you know, the biggest value here is also the connection. For example, ChatGPT will give me the information, but they will not give me the connection to the market. So if I want, for example, to find the best price for a contract in an insurance, I need the interpersonal connection where you perhaps can bring it to me. Or perhaps if I need something in real estate wise, I need someone who has seen the, the the real estate asset, or he knows about financing and so on and so forth. I get the information, but I don't get the physical world. Absolutely. I think so ChatGPT won't find you a property in the market that is under the market price and can show you the, uh, now we talk about nowadays, maybe in five years it's a different story. I think so, but we never know. You never know. But this is what we what we are here for. And, and to show you the way to make it possible as well. And, uh, bring all the tips and tricks which are not know not everybody knows. Yeah. But still, I mean, look at this real estate market. I mean, one, one thing is, I mean, a lot of people buying real estate for their pension time. Yeah. So now look at this real estate market here in Switzerland. It's somehow so overheated and healthy at the same time. I mean the prices grew and but it's as we said, it's overheated from from from the corporates. So for me it's I mean, everyone talks about it to be the background and say the prices cannot go up like that forever or it's overheated or it's a bubble. Um, so what other options do, do, do exist there? I mean, real estate is one. You mentioned Switzerland, for example. Yeah. Um, well do you mean as a buyer? As a buyer? Of course. Yeah. Right. I mean, because people, you know, they want to offset the pensions with real estate sometimes. Say I buy this real estate asset for my pension time. Usually that's what people say. So but nowadays, even that if you take the third pillar out or the second pillar and so on, everything sometimes becomes for a lot of families, very hard. Mhm. If I think it's maybe time then to stick together because there are so many options, like you don't have to buy it by yourself. You maybe can buy it with your family. Yeah. So there are a few things where you can like, um, leverage and do it. And also to that's the thing because people buy to get into pension, but they are pensioners, sorry, but they die and they have no people left behind. So things you can buy there on the market. And these are good chances. Um, but of course you need to have some knowledge, you need to do renovation and so on, and you need their help. And, and that's what, yeah. Where I can provide definitely help because of the, the network I have with people doing the renovations and so on, I can do the financing mortgage part. And, um, yeah, I think that is also where I say, you know, we was discussing about AI and I think that's the sweet spot. You say, yeah, you get the knowledge, but you don't get someone to run the project sometimes. And it's so complicated. I mean, I'm personally, for example, I'm, I'm not so handy man person, you know, I understand, but I'm not like someone who can fix everything. You're not a plumber. By the end of the day, I didn't have the chance to learn that either. Um, so so you need someone and if you need someone to supervise that, and I'm not the right person, for example, you need this, this perspective as well. But for me is also if you were I mean, I mean, you're young, but let's say if you're even younger, would you bet, let's say on these real estate markets. Absolutely. Yeah. It was it was my fault to not bet on it earlier. Much more. Everyone says that. Yeah. But that's the truth. It's honestly true. But this is also because I've been stopped from like, um, other adults in my life, which, uh, which, uh, which, uh, I grew up with or other people that said, I know it's a bubble, it will explode. Whatever. So you listen to them persons because they have an influence on you, and then you don't do it because you think, okay, it's too risky. But yeah, looking backward, I should have started earlier. I started with, uh, with twenty five years old. I bought my real my first, uh, real estate, uh, which is early. I mean, honestly, there's not so many twenty five years would do that, but at least maybe. Yeah, but it's no, it is a fact. It's a fact. Which is, which is, which is great. I mean, so yeah, it's not easy to come always into this market. It's not easy to buy this real estate. But nevertheless, I think also if, if someone can do it, it's nice. Um, and I think to me also, I think perhaps you share a bit because you did it. Twenty five I think to me is also the same. So you put pressure on yourself sometimes when you get the credit and everything and then your brain starts to work. Absolutely. Yeah. And I think that's both sides of, of the same coin sometimes. Absolutely. Yeah. And I think the crazy thing about real estate is it's just something really sustainable. And if you look into it, what the good pension funds in Switzerland, the good ones were, which pays out really much of interest rate to, to their customers is really the ones that have real real estate in it, to be honest. Yeah. Um, when you look at their asset allocation and even though by myself, um, it is the point of really, um, you, you use it if you use it, but it still becomes worth you. So, so, so the price of the real estate that increases. And even if you use it with what else is that the case? Yes. And with cars, definitely not the case. But I just a question there in the real estate. So there is this mindset sometimes if I want to live into this apartment, I rent, and if I want to invest, I buy. Do you, do you, do you, do you really believe it? Like a bit of, um, rich dad, poor dad and a bit. Yeah. I mean, there is, I mean, there's the saying sometimes and I, to be honest, that's my, my attitude on that. I mean, where I live, I rather, I mean, I rather rent because it's someone else's problem and I know the liability of it. But other investments I would buy, for example, well, I had, uh, a different way of it at some point, so I left. I bought and lived in it and, um, then I moved out. But I bought something new, moved out and rented that one out or sold it. So, uh, but I could really live cheap then. I mean, pricey, sorry, because of the interest rates are so down. So what I paid for my monthly cost of living. I could save more up to buy the next one. Sure, sure, sure. So there are different strategies for sure. And I wouldn't say that it's the correct way or not. It's always about the circumstances people live in. Yeah. Of course. Also, it's also about the deals that you have. I mean, if the rent is makes sense, if if you need the flexibility because flexibility is also costs. So yeah, so I think that's, that's the safe part to say no. But I think for me, it's, it's interesting at least as a method to have someone, I mean, who gives exactly this perspective of financing, planning and in younger times, and it's not also for middle midlife people, let's say, or not only no, no, it's for for I say it's really as early as you start, um connecting with this, uh, subjects, it's really important. So but it's for every group of HL. Absolutely. So you would definitely, as I understood you, you would definitely advise start early as possible. Yeah, absolutely. Two hundred percent. Yeah. Yeah. That is true. Yeah. Perfect. Thank you very much for being today with us. It was a breath of fresh air. Thank you very much as well. I mean, thank you. I, I just grabbed these two points. I think start very early. One thing, don't rely on only a pension. Let's say, I think perhaps also real estate. You said, is it something and it's not something something for older generation but also for youngers. I mean you are an example of that um in one side. So thank you very much for this perspective. I wish you all the best. Thank you very much. Wish you that too, man. Thank you very much. And for you. Thanks a lot for being with with us today. Stay in touch. Give us also your feedback, but also give me also some more information. Who should we invite next? And thank you very much. See you next time.