Why a Swiss broker?

[benferr2136]

Swiss brokers such as swissquote are usually more expensive than other non-Swiss commonly used brokers like IB and DEGIRO. Moreover, investing with a Swiss broker has an additional 0.15%/year for stamp duty. I am then wondering if there is any pros in investing with Swiss brokers, as many in Switzerland seem to be more comfortable investing with them. Is there any additional guarantee or higher level of safety that can justify the higher cost? Thank you for sharing your thoughts/ information

 

[reveddie]

@benferr2136 It doesn't matter where your broker is. It matters where your stocks/funds are.

Kleingedrucktes von Banken - Aktien liegen bei Dritten «auf eigene Gefahr» – wie bitte? - Kassensturz Espresso - SRF - https://www.srf.ch/sendungen/kassen...iegen-bei-dritten-auf-eigene-gefahr-wie-bitte

Broker Bankruptcy: What Happens To Your Investments? - The Poor Swiss - https://thepoorswiss.com/broker-bankruptcy/

 

[mark65]

@reveddie Nice ! Thx for the English website I did not know about it ! Precious !

 

[mythicangel516]

@benferr2136 I’m invested primarily with IBKR, but I can give you plenty of reasons:

• Starting off with 100k investment guarantee scheme as compared to 20k, in the case of negligence / fraud by the broker, if it goes under
• Being in the same jurisdiction as you makes it easier to resolve legal conflicts if they ever arise
• At the end of the day, governments historically have and do screw private people. In an exaggerated scenario, e.g, the US could decide to seize your stock from IBKR. Less likely to happen by your own government.
• Swiss brokers are indeed safer than IBKR & Degiro. That’s because even the cheapish ones (Swissqiote, Cornertrader, Swiss saxo branch, Flow, etc), happen to be banks as well. As such they are have to adhere to stricter requirements (e.g, having better capital reserves). Not to mention I trust FINMA way more than the german reg. authority.
• Swiss bank secrecy: foreign brokers automatically report your investments to the federal government via a pan-european anti tax-evasion sharing scheme. Swiss brokers don’t do that. Obviously some bad actors can abuse that to evade taxes, but you could also just want to mind your own business and the gov. to not be involved in any trade you make.
• Swiss brokers for the most part are brokers. IBKR is also a broker. But there are also a bunch of uptrendy apps (e.g, Revolut, Trading212, to a lesser extent Degiro, etc) that are just “apps” pretending to be brokers. They don’t have direct access to exchanges but depend on market makers to buy and sell stock, which is just a shitty business model and prone to problems and breaks.

Is all of that worth it the stamp duty / higher fees? For me no, but I can see the appeal, and the Swiss in general don’t always go for the “cheapest” like e.g, people from Germany or the rest of Europe that are all over the hip trading apps.

 

[smta276603]

@mythicangel516 Your second and third point (in a way) are currently my concern.

I have my investments with a US broker. I am slightly concerned that the broker could at some point play some curved ball and apply some weird logic that can freeze my money, and it would be a mess to fight.

I had in the past a US credit card canceled because their dumb identity verification over the phone asked me what county I live in and I had no idea (lived in the US for less than a year). There was no way to make them change their mind. Even talking to an agent they would just reply with boiler plate sentences. Imagine if you end up in such a nightmare with your investments.

 

[hard_to_get_by_right_now]

@smta276603 If you have your money with a US Broker and you try to get a mortgage or want to do an investment at a swiss bank, you need to declare it that you have money in the us. They will not do business with you or you need to fill out a lot of paperwork

 

[smta276603]

@hard_to_get_by_right_now Good point. I have only been asked whether I am a “US person”, and having bank/trading accounts there wouldn’t count, but they could be stricter than that.

 

[lawrencejonish]

@mythicangel516

Starting off with 100k investment guarantee scheme as compared to 20k, in the case of negligence / fraud by the broker, if it goes under

Where do you get 20k from? Ibkr for swiss investors is UK based, so covered by the £85k by FCA.

ETA and how are the US authorities seizing your assets from a UK entity?

 

[untouchable562]

@lawrencejonish Also AIUI any investments held for you on behalf of IB UK by IB US are separately covered by the SIPC 500k guarantee.

 

[onewayjesus]

@mythicangel516 IB has a residence in CH - so they dont auto report your holdings to authorities. We still have no auto reporting within Switzerland between authorities and banks/brokers. IB falls also under that.

If your scc is with IB in the US - then yeah, they d report it to swiss authorities and you d be screwed.

 

[bygracealone]

@benferr2136 Doesn't having a Swiss broker simplify your tax reporting as well as they can issue a summary that can be accepted the tax authority ?

 

[mizchristine]

@bygracealone My IB summary works just as well

 

[ducmessi3792]

@mizchristine Depotauszug? Does it cost anything?

 

[mizchristine]

@ducmessi3792

1. Activity report for the year has all the info you need.

Update I can generate a whole bumch of reports om the fly but for taxes I use the activity report.

Interactive brokers also has Portfolio analyst included which gives you nice stats about your portfolio.

I dont get why id pay for a bank to let me get a report of what stocks I have and how much div I got. Seems so simple to do

 

[lily7]

@benferr2136 I don‘t know how european brokers handle this but with Swiss brokers you can register shares in your name. This is relevant if you want to make use of your sharing rights. Some companies also give out small presents to their Shareholders. Another thing is that Corporate Actions like Capital Increase run pretty smooth typically.

 

[lifeword]

@benferr2136 Saxo Bank offers really good conditions nowadays. 0.22% yearly fee and a trade starts at 1 USD for American stocks and ETF and 3 CHF for Swiss stocks and ETF.
I think this offer is good enough to rather have your assets in CH than somewhere else.

 

[alger]

@benferr2136 DEGIRO is cheap because it lends out your stocks by default and you cannot opt out of anymore.

 

[nicokk]

@benferr2136 Why does Swissquote give you a warning that VT investing is only for professional Investors?

 

[untouchable562]

@nicokk Because of MIFID II and its requirement that ordinary investors only be allowed by brokers to invest in investments that have MIFID-compliant KIIDs. US ETFs don't bother to make these, since it's extra cost and the big funds have separate EU-targeted funds that already have KIIDs (and also higher TERs ). Switzerland was obliged to implement this paternalistic regulation, but luckily our implementation is a lot weaker than the EU countries'.

 

[nicokk]

@untouchable562 So technically its not legal or compliant to invest in VT from Switzerland?