Interactive Brokers alternative for Swiss

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Stef
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Interactive Brokers alternative for Swiss

Post by Stef » Wed Oct 16, 2019 4:58 am

Dear community

I would love to invest in US ETFs (I hope that this will be still possible in 2020 and later), but IB just turns me off completely. It looks so complicated and it’s not user-friendly at all.

I’m ready to pay some fees, as long as it’s below 250USD/year (inclunding everything, CHF->USD FX and transfer fees if there are any). As long as I get a good platform (ideally a great app for Android) and a easy and cheap way to transfer my money monthly to my brokage account.

So what are to possibilities for Swiss people? Schwab looks really interesting.

Looking forward to get some feedback.

vsquid
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Re: Interactive Brokers alternative for Swiss

Post by vsquid » Wed Oct 16, 2019 7:26 am

Degiro. They are based in the Netherlands but offer “local” customer service for most European countries, very cheap prices, and an OK user interface for most parts (margin trading is quite confusing but you shouldn’t really be doing that anyways). The only negative that I can think of is that they don’t do direct tax reporting to local authorities here in Finland so I need to manually add any profits and losses to my tax statement.

imperia
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Re: Interactive Brokers alternative for Swiss

Post by imperia » Wed Oct 16, 2019 7:50 am

Why IB is turn you off?
With DeGiro you can not buy USA ETF, but with IB you still can.
Many Swiss investors use IB for USA ETF, so I do not undarstand what is your problem?

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Stef
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Re: Interactive Brokers alternative for Swiss

Post by Stef » Wed Oct 16, 2019 8:00 am

imperia wrote:
Wed Oct 16, 2019 7:50 am
Why IB is turn you off?
With DeGiro you can not buy USA ETF, but with IB you still can.
Many Swiss investors use IB for USA ETF, so I do not undarstand what is your problem?
Well it looks like I need to study machine coding before I'm able to enter an order. Interface from 1980.

I'm curently using Degiro with IE-based ETFs from Ishares. Very userfriendly, but 15% US tax lost and no US ETFs. So I'm looking for a better solution.

imperia
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Re: Interactive Brokers alternative for Swiss

Post by imperia » Wed Oct 16, 2019 8:59 am

You are wrong!
IB TWS is for professionals not for small investors like us.
So you should not use TWS.

You need to use QuickTrader, WebTarder or, IB Mobile.

QuickTrader is the most simple, but WebTrader is also ok.
IB Mobile is fantastic and simple.

You said you lose 15% tax on dividend.
You will lose 15% even with US ETF.
US goverment will take you 30%,and than you reclame back 15%(USA - Swiss tax treaty).

rich126
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Re: Interactive Brokers alternative for Swiss

Post by rich126 » Wed Oct 16, 2019 10:04 am

It has been a while (at least 3 years?) since I've been on IB and I can sympathize with the OP. I briefly had an IB account and also had an account through a local FA. Besides the seemingly over complicated interface, they were very difficult to deal with in terms of doing basic things. Just changing my address at that time required multiple sets of documentation. I finally shut down all of the accounts.

I know they do some things very well and many people give them good reviews but I certainly can understand the confusion sentiment. Maybe I also went down the wrong path but fortunately I was able to go elsewhere.

(I've used ThinkorSwim Stocks/Options/Futures, TD Ameritrade, Fidelity, Scottrade and Vanguard and none of them seemed as confusing or as difficult to deal with.)

imperia
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Re: Interactive Brokers alternative for Swiss

Post by imperia » Wed Oct 16, 2019 10:13 am

What interface did you use?
TWS is complicate but it is powerful platform for professional traders.

QuickTarder, WebTrader, and IB Mobile are very simple to use, but you all talk about TWS.

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Stef
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Re: Interactive Brokers alternative for Swiss

Post by Stef » Wed Oct 16, 2019 10:31 am

rich126 wrote:
Wed Oct 16, 2019 10:04 am
Besides the seemingly over complicated interface, they were very difficult to deal with in terms of doing basic things. Just changing my address at that time required multiple sets of documentation. I finally shut down all of the accounts.
See, that's what I expexted aswell. Heard so many stories like that, also about transfering money back to your bank or that sometimes IB is just selling stuff without any notice.

I really don't care if they are the cheapest option. I just want the most user-friendly one. Something like the Iphone before Android was good in terms of brokage account.

bgreat
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Re: Interactive Brokers alternative for Swiss

Post by bgreat » Wed Oct 16, 2019 1:32 pm

For OP: you really should persevere. There's no good alternative for currency conversion, and you'll need good currency conversion to buy US ETF's (as you already know which are optimal for taxes).
imperia wrote:
Wed Oct 16, 2019 8:59 am
You are wrong!
IB TWS is for professionals not for small investors like us.
So you should not use TWS.
TWS isn't that bad, you just need to disable most of the panes beyond portfolio and orders.

The issue with the other options is they create virtual positions when converting currency, TWS avoids that. Not a big deal, but annoying.
You said you lose 15% tax on dividend.
You will lose 15% even with US ETF.
US goverment will take you 30%,and than you reclame back 15%(USA - Swiss tax treaty).
That's 2 different things.
With IE funds, 15% is lost to the US permanently, no credit for local taxes. With US funds, 15% is lost to US, and you get a 15% credit for taxes. Ergo for IE it's a loss, for US it's tax-neutral.

Besides the seemingly over complicated interface, they were very difficult to deal with in terms of doing basic things. Just changing my address at that time required multiple sets of documentation. I finally shut down all of the accounts.
This is not unexpected: almost all non-Swiss brokers will need significant documentation these days due to KYA. It's even worse at other brokers e.g. Schwab. IB were actually the easiest to satisfy IME - I only had to submit a (redacted) bank statement (which are easily available online) and copy of ID. (Schwab wanted a utility bill which is a bit slower given I only get them 3x a year.)
See, that's what I expexted aswell. Heard so many stories like that, also about transfering money back to your bank or that sometimes IB is just selling stuff without any notice.
Sorry but this sounds like FUD or incompetence. Selling stuff without notice sounds normal for a margin account, everything else I've never heard of despite knowing lots of people using IB.

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Stef
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Re: Interactive Brokers alternative for Swiss

Post by Stef » Wed Oct 16, 2019 1:35 pm

Any news if US ETFs will be available for Swiss residents in 2020 on IB? Seems like there is a lot going on now.

bgreat
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Re: Interactive Brokers alternative for Swiss

Post by bgreat » Thu Oct 17, 2019 12:38 am

Stef wrote:
Wed Oct 16, 2019 1:35 pm
Any news if US ETFs will be available for Swiss residents in 2020 on IB? Seems like there is a lot going on now.
I don't think so (but I'm not enough of a lawyer to guarantee that).

Switzerland is introducing some consumer protection laws loosely based on PRIIPS, but they don't have a KI(I)D requirement. The lack of KI(I)D is what is blocking sales of US ETF's in the EU, but without that KI(I)D requirement it's hard to see how that would be an issue in Switzerland.

Secondly, IB (and Schwab) have to apply PRIIPS when selling to EU residents because those brokers based in the EU hence subject to EU regulations (customer relationships handled via their UK branch). They aren't subject to Swiss regulations since they don't have a physical selling presence in Switzerland. So even if Swiss brokers were to stop selling these ETF's, non-Swiss brokers should have no reason to do the same.

Just to illustrate: Swiss law requires brokers to charge stamp duty on all sales of securities in Switzerland. IB and Schwab don't do that (and interestingly, IB actually have a small office in Switzerland, but that office is purely technical and does no selling), by corollary they aren't going to have to apply other Swiss laws.

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Re: Interactive Brokers alternative for Swiss

Post by AlohaJoe » Thu Oct 17, 2019 1:21 am

bgreat wrote:
Wed Oct 16, 2019 1:32 pm
TWS isn't that bad, you just need to disable most of the panes beyond portfolio and orders.
I mostly agree with this. If you look at this video, they show how to buy & sell with TWS.

https://youtu.be/gWF8rM5GGlI?t=21

I don't really see what is complicated about it? You click buy. You click quantity. You pick an order type. If the order type needs more info (like a limit), you type that in. You select how long the order is valid for. You click submit.

Every brokerage I've used -- Vanguard, IB, Schwab, WellsFargo, CTC -- looks & works basically exactly the same for that.

That said, the other IB options -- mobile app, web order, etc -- have less of day-trader clutter that TWS comes with by default. (As you note, you can turn it all off.)

Really the only thing that I think is "not user friendly" with IB is how they handle selling of lots, which is something that a Boglehead might do when tax loss harvesting. With every other broker, you pick the lots when you are selling and it is pretty easy & straightforward. With IB you need to run a totally separate app, the Tax Optimizer. It is far more powerful but....really? A second app?

But most Bogleheads will only sell individual lots maybe once every two or three years.

bgreat
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Re: Interactive Brokers alternative for Swiss

Post by bgreat » Thu Oct 17, 2019 12:40 pm

AlohaJoe wrote:
Thu Oct 17, 2019 1:21 am
Really the only thing that I think is "not user friendly" with IB is how they handle selling of lots, which is something that a Boglehead might do when tax loss harvesting. With every other broker, you pick the lots when you are selling and it is pretty easy & straightforward. With IB you need to run a totally separate app, the Tax Optimizer. It is far more powerful but....really? A second app?
In Switzerland there's no such thing as tax loss harvesting (because there's no concept of capital gains), so for the purposes of this thread its fortunately a non issue.
Switzerland is introducing some consumer protection laws loosely based on PRIIPS, but they don't have a KI(I)D requirement. The lack of KI(I)D is what is blocking sales of US ETF's in the EU, but without that KI(I)D requirement it's hard to see how that would be an issue in Switzerland.
Turns out I was wrong, FIDLEG (the law that's coming into force) has a BIB requirement which is effectively KID, but it allows exceptions when countries offer an equivalent document. In FIDLEV (a regulation that is currently in draft form, which primarily specifies details around FIDLEG) they are explicitly recognising EU KID's as equivalent, but the US hasn't been mentioned in the draft version. Since FIDLEV isn't finalised its hard to know what the actual situation will be in 2020 yet.

The Swiss Banking association, AND Swiss funds association (SFAMA) AND UBS, have all submitted comments to request expansion of that list to include US statutory prospectuses alongside some other countries documents, so perhaps this will change by the time FIDLEG will come into force. ( https://www.admin.ch/ch/d/gg/pc/documen ... men_v2.pdf - see page 117+1050+1437) I imagine this decision will be partly political, especially since the US doesn't exactly play nice in the other direction, but at least there's significant support from major industry players.

Then there's also an opt-in exception for customers with "experience" and > 500k assets, and a second for customers with no experience and > 2M asets. It certainly looks easier than the EU opt-outs.

But fundamentally, FIDLEG still only applies to Swiss persons (natural and legal), hence this is all academic. But also highly interesting.


// Edit: and for more fun, there's a 2 year transition period. And as far as I can tell execution-only work is exempted from the whole BIB requirement in the first place, which means that even a Swiss broker should be able to sell us US ETF's as long as they don't give any advice beforehand.

saver007
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Re: Interactive Brokers alternative for Swiss

Post by saver007 » Fri Oct 18, 2019 6:47 am

IB client portal is pretty simple. Use the trade button on upper right hand corner. Mobile app is also pretty simple. TWS is not meant for retail traders.

shcnno
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Re: Interactive Brokers alternative for Swiss

Post by shcnno » Sat Oct 19, 2019 8:32 pm

Stef wrote:
Wed Oct 16, 2019 4:58 am
Dear community

I would love to invest in US ETFs (I hope that this will be still possible in 2020 and later), but IB just turns me off completely. It looks so complicated and it’s not user-friendly at all.

I’m ready to pay some fees, as long as it’s below 250USD/year (inclunding everything, CHF->USD FX and transfer fees if there are any). As long as I get a good platform (ideally a great app for Android) and a easy and cheap way to transfer my money monthly to my brokage account.

So what are to possibilities for Swiss people? Schwab looks really interesting.

Looking forward to get some feedback.
I'd recommend Schwab.
Not quite as good exchange rates as IB, but not too bad, and great interface and apps.

bgreat
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Re: Interactive Brokers alternative for Swiss

Post by bgreat » Sun Oct 20, 2019 1:15 pm

shcnno wrote:
Sat Oct 19, 2019 8:32 pm
I'd recommend Schwab.
Not quite as good exchange rates as IB, but not too bad, and great interface and apps.
Lets say you invest 50k per year (which anyone with a decent job in Switzerland should be able to do - although most people I know save much more). Schwab charge 0.5% on currency conversion. You're throwing away 250 USD/CHF per year. In my book, that's not cheap.

Now lets say you switch to e.g Transferwise for currency conversion. 0.35%, now its only 175 USD/CHF per year. Still a lot.

At some point you need to bite the bullet and learn how to use IB. It's really not that hard, there are guides on how to use TWS, and you don't even need to use TWS (mobile apps are much easier to use).

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Stef
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Re: Interactive Brokers alternative for Swiss

Post by Stef » Sun Oct 20, 2019 1:18 pm

Can you transfer USD from Revolut to Schwab?

Saving 50k/year? Maybe 2-4% are able to do that.

Henry Curtmantle
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Re: Interactive Brokers alternative for Swiss

Post by Henry Curtmantle » Sun Oct 20, 2019 4:00 pm

bgreat wrote:
Sun Oct 20, 2019 1:15 pm
shcnno wrote:
Sat Oct 19, 2019 8:32 pm
I'd recommend Schwab.
Not quite as good exchange rates as IB, but not too bad, and great interface and apps.
Lets say you invest 50k per year (which anyone with a decent job in Switzerland should be able to do - although most people I know save much more).
Median income is roughly 80k per year in CH. Most people save between 15% and 20% of their income according to the Federal office of statistics. Most Swiss people don't save 50k per year. Swiss bogleheads, it's another issue.

bgreat
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Re: Interactive Brokers alternative for Swiss

Post by bgreat » Sun Nov 10, 2019 1:57 pm

bgreat wrote:
Thu Oct 17, 2019 12:40 pm
Turns out I was wrong, FIDLEG (the law that's coming into force) has a BIB requirement which is effectively KID, but it allows exceptions when countries offer an equivalent document. In FIDLEV (a regulation that is currently in draft form, which primarily specifies details around FIDLEG) they are explicitly recognising EU KID's as equivalent, but the US hasn't been mentioned in the draft version. Since FIDLEV isn't finalised its hard to know what the actual situation will be in 2020 yet.
Bad news: the finalised version is out: it only lists EU KID's as equivalent, with the rationale that other standards aren't sufficiently equivalent.

Still a non-issue for us though because:
- Won't apply to non-Swiss brokers anyway.
- And my initial reading suggests it doesn't affect execution-only brokers (but that's handwavy, IANAL), so we could in theory even use Swiss brokers (which would be stupid given stamp duty and fees).
- Transition period of 2 years means this rule won't even apply until 2022.
Henry Curtmantle wrote:
Sun Oct 20, 2019 4:00 pm
Median income is roughly 80k per year in CH. Most people save between 15% and 20% of their income according to the Federal office of statistics. Most Swiss people don't save 50k per year. Swiss bogleheads, it's another issue.
Right, so the median person is saving 12k per year at 80k, using the 15% rate. Keeping the same standard of living you only need to earn another 38k to save 50k, so that's 120k (plus a bit more for taxes). There are plenty of 120k+ earners in switzerland, according to Blick 30-40% of workers earn that much. I'd expect Bogleheads to be saving more aggressively (as you suggest), plus they tend to have higher incomes. So in terms of people on these boards, 50k isn't that far off from realistic.

So even if we go for a more conservative 30k per year, it's only a few years of paying the IB minimum fees to suffer through. The typical beginner boglehead wouldn't actually be starting from nothing (most people are likely to have at least a chunk of cash savings before they get bit by the boglebug), which again further reduces the time below 100k. Not so unrealistic if you ask me.

anonsdca
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Re: Interactive Brokers alternative for Swiss

Post by anonsdca » Sun Nov 10, 2019 2:00 pm

Try the new Interactive Broker's Lite if you can. It is simple and has zero fees.

imperia
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Re: Interactive Brokers alternative for Swiss

Post by imperia » Mon Nov 11, 2019 12:25 am

IBKR Lite is not available in Europe.

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