Bank, broker: which ones to choose for investing?

Bank or broker, when it comes to investing in the financial markets these days, you're spoilt for choice. There are so many parameters to take into account that the final decision can be quite difficult. Most of the time, individuals focus on brokerage fees, which are also the No. 1 argument put forward by many financial organizations.

When you're just starting out, with little money to your name, you want your transaction fees to remain reasonable in relation to the modest sums involved. It makes sense. However, as your capital begins to grow, you may soon be surprised by the rising custodian fees charged by some institutions. As the latter also charge prohibitive transfer fees, you become a captive of the system. One of the only solutions is to gradually sell positions and transfer the cash once the entire portfolio has been liquidated.

That's why you need to consider all the important parameters before opening a securities account with a bank or broker. You need to consider not only the immediate context and needs, but also the reality of the future: a growing portfolio, reaching the withdrawal phase and the need to withdraw money from your account.

Important points to consider before opening a deposit with a bank or broker

Here are the most important criteria to consider when making your choice:

- brokerage fees: for frequent transactions;
- custodian fees: for large portfolios, in other words, in all cases;
- securities transfer fees: the higher they are, the more captive you are to your bank/broker;
- deposits and cash withdrawals (in/out): deposits are normally free of charge, but check what happens if they are debited; how quickly are deposits and cash withdrawals processed? is a Swiss IBAN available for foreign brokers?
- available markets: it's essential to have access to developed countries (USA, Canada, Switzerland, France, Germany, Belgium, UK, Italy, Spain, Portugal, etc.). Japan is often unavailable, even though Tokyo is the world's second-largest stock market, behind the New York Stock Exchange. Here, you'll find a host of stocks that have been undervalued since the Japanese bubble burst in the 1990s;
- order execution: are orders executed simply, reliably, at the right price and quickly? The money saved by cheap brokerage fees on paper can quickly disappear if order execution leaves something to be desired.
- foreign currencies: foreign currency accounts avoid transaction costs when trading and paying dividends on foreign securities; are exchange costs and spreads between currencies correct?
- tax declaration: simplifies administrative formalities for annual taxation. Very useful for managing dividends, especially foreign dividends. For some institutions, this option is very expensive;
- asset security: which bank are your assets invested with (securities and cash)? Is it a solid, reliable and experienced organization? What guarantees are there in the event of bankruptcy (securities and cash)? Note that these are different if the bank is abroad. Is the user account well protected?
- user interface: is it easy to perform operations without having to go through several steps/screens? Is the interface intuitive, user-friendly and fast? Is there a smartphone application?

Beware: financial intermediaries may change their terms and conditions along the way, which can be problematic if you're a captive investor (high securities transfer fees).

Leveraging individual strengths and diversifying risks

Banks and brokers are rarely good at everything. It is often useful and necessary to use several financial organizations. With one, for example, you're likely to take large buy & hold positions in local equities, because transaction fees are fairly high and custody fees very low. At another, you'll be trading smaller positions in foreign equities with shorter maturities, because transaction fees are very low. It's also a good way to diversify risk.

Bank, broker: comparison

Moneyland provides a comprehensive comparison of Swiss online banks and brokers. It's a good starting point for making an initial choice. That said, this site ignores international platforms such as Interactive Brokers, whose fees are out of all proportion to their Swiss competitors.

What's more, Moneyland focuses primarily on fees. While these are obviously important in the choice, they are not the only ones. There are also hidden costs that are not covered in this comparison, such as the costs incurred by certain currency conversions (exchange fees and spread). The quality of the financial intermediary and the range of markets and instruments it offers should also be taken into account.

Analysis on paper is good, but experimentation is better. Sometimes, a platform ticks all the boxes a priori, but proves disappointing once you're using it. Other times, hidden defects or costs become apparent only after several months of use.

Bank, broker: my selection

I bought my first share on the stock market in 2000. Since then, I've been through several financial intermediaries. Here are my experiences with each of them, sorted from best to worst.

Interactive Brokers

IB is the Rolls Royce of brokers at the price of a Dacia. Rates are unbeatable. You can trade positions worth tens of thousands of francs for pennies on the dollar.

There are two commission systems, one fixed, the other sliding-scale. You can easily switch from one to the other. It's worth doing a few tests. There's no ideal choice: it depends on how many shares you trade and in which markets. Personally, I've swung back and forth between the two several times. At present, I'm back on the fixed system, which is more transparent and often more advantageous to me. It's just wishful thinking, but maybe one day IB will offer to automatically select the cheapest rate... In any case, whatever you choose, you'll always be light years ahead of the competition (Charles Schwab aside).

IB also offers a share performance improvement option. In this way, you can receive additional income in exchange for loaning out your securities. Personally, I'd rather know that my shares are sitting safely in my portfolio than that they're being used for short selling.

Orders are executed super-reliably, quickly and at a consistently favourable price, even in the case of market orders (provided the stock is sufficiently liquid, of course). With Interactive Brokers, my orders are systematically placed much more cheaply than on other platforms, not only because of the low transaction costs, but also because they are executed at a better price. I should also point out that IB automatically opens a cash line in another currency as soon as necessary, i.e. as soon as I receive a dividend, sell a stock or simply exchange into that currency. This avoids unnecessary exchange costs. And, should you still need to make an exchange, IB is highly competitive in terms of fees/spread.

There are no custody fees at IB. Back in the day, they charged a small fee for accounts with very little activity and relatively little supply, but even that has been rescinded.

Deposits are free and made directly to a Swiss IBAN at lightning speed. It usually takes one working day, but sometimes I've even been able to get the funds within an hour of the transfer. Ultimately, the limiting factor is not IB but the bank from which the funds come. Withdrawals are free once a month, which is more than enough, even if you're an annuitant. Here again, it's very quick (and simple).

IB's big plus is the choice of markets and instruments available. It's hard not to find what you're looking for. It's the only financial intermediary where I can systematically find all the Japanese securities I'm looking for. The choice doesn't stop at equities, of course. There are ETFs aplenty, as well as bonds, futures, currencies and more.

IB offers a range of free reports for managing the tax aspects of dividend income and wealth ownership. You can also configure them as you wish, which is what I've done. according to this procedure. The taxman always accepted the forms I drew up myself.

When it comes to security, there's nothing to complain about. Two-factor authentication, excellent reputation, regular awards, financial solidity and distribution of assets across several banks. Deposits are guaranteed by SIPC up to $500,000. It should be noted that in all cases, as in Switzerland, the customer's own securities belong to him or her, and are in any case unaffected in the event of the company's bankruptcy. This guarantee therefore only applies in the event of fraud, for example if the broker has issued false transaction statements, even though no actual movement has taken place. It's very rare, but it does happen, as with B. Madoff. Thanks to SIPC, deposits are even better insured than in Switzerland. It's also worth noting that if you live as a couple, you can accumulate this guarantee by opening an account for your partner, as well as a joint account, for a total of 1,500,000. And you can do this for every broker in the US, so with Charles Schwab (see below), you can go up to a $3 million guarantee. Enough to see you through.

Finally, in terms of interface, you can stick to the basic, simple and user-friendly web page, which will suffice for most needs, or use the much more elaborate Trader Workstation. Personally, I do everything directly from the mobile application, which is also easy to access. So there's something for everyone, and that's just as well.

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Charles Schwab

Charles Schwab has a very basic, sober interface. Everything is well laid out, clear and easy to understand. You'll quickly find what you're looking for, with everything you need, where you need it. Behind this apparent simplicity, however, lies a top-level trading service, with a plethora of possibilities. The app is available on Android and on iOS is of the same ilk: simple, fast and efficient.

Another finding: a dollar-only account. This is a little more annoying. You can transfer money in CHF to a Swiss IBAN or in euros to a German IBAN, which is a good thing in principle, but beware: CS charges an exchange fee of 1% up to $100,000, then 0.75% up to $250,000. That's an immediate turn-off. But if you're already with IB (or that you are going to open an account), then you have the solution right in front of you: you transfer the dollars you already have at IB directly to CS. Since they're both American, the transfer only takes a few hours. What's more, once a month, from IB, it's free. In the other direction, on the other hand, it's fifteen dollars. It's more of a hassle, but at the same time, it's not the kind of operation I do often.

From a trading point of view, there's nothing to complain about. On US equities and ETFs, not only are orders hyper-reliable, fast and favorably executed, just like at IB, but what's more... they're free. It's generally hard to beat Interactive on this score, but they really set the bar here. What's more, there are no custody or inactivity fees. There's also automatic reinvestment of dividends, which can be easily activated for each position at the time of purchase, or later, directly via the portfolio.

On the other hand, and it's the only major departure from IBThe offer is limited to US financial instruments only (you can apply for a "global account", but the transaction and exchange fees are prohibitive). It's a pity, but in the end, international business (outside the USA) is not what we're looking for here. We've already got enough with IB. Charles Schwab is not an alternative to IB, but a complement to it.. 

From a security point of view, CS uses two-factor authentication, and is an established broker with a 50-year history. Like IB, assets are guaranteed by SIPC up to $500,000, which can be combined with other accounts (joint accounts, spousal accounts and accounts with other institutions, like IB).

Charles Schwab is currently the only broker available in Switzerland and Europe that is almost on a par with Interactive Brokers. I have to use the "almost" because it's limited to US stocks. Otherwise, everything else is top-notch.

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Saxo Bank

In the past, SaxoBank charged a combination of custody and inactivity fees, making their offer a total deterrent. However, they have completely overhauled their pricing policy since 2024, which means that today it has become a very attractive broker for Switzerland. Those who, like me, know Corner Trader (see below), won't be confused by their interface, which is pretty much identical. So it won't take long to get the hang of things. For the rest of us, there's no need to worry either, as the platform is clear, intuitive and, despite everything, very complete. A well-designed mobile application is also available.

Brokerage fees are among the lowest in Switzerland (even cheaper than Corner), and can become particularly attractive as the assets deposited with Saxo grow. The inactivity fee has been abolished, leaving only the custody fee, which is limited to a maximum of CHF 10 per month. It's worth noting that these fees can be waived by activating the "securities lending" option. Personally, I've never been a fan of this practice (also available on IB). I prefer to know that my shares are safe and sound in my portfolio rather than on loan. The risk is theoretically low, but it does exist.

Exchange fees are also quite reasonable compared to what is usually charged in Switzerland.

A big plus for Saxo is its wide choice of stocks, including Japanese ones. Unless I'm mistaken, it's the only Swiss broker to do so, with Swissquote (but the latter is much more expensive, see below). What's more, it's possible to transact US ETFs, which is impossible with most Swiss financial institutions.

A tax statement is available online for around CHF 100.

From a security point of view, authentication is two-factor. Financially, Saxo has been profitable and active since 1992. As with other Swiss financial institutions, cash assets are guaranteed up to CHF 100,000. Securities, on the other hand, are the property of the customer, and are therefore deducted from the company's assets in the event of bankruptcy. As explained above, this does not apply in the event of fraud (issue of false transaction records).

There's one point that's not a deal-breaker, but it's quite annoying: Saxo's customer service. It's practically impossible to reach them. The chat is handled by a chatbot which, like all bots, answers you completely out of the question. When you ask it to put you in touch with an advisor, it asks you to wait, but nobody answers, even after a very long waiting time. The same goes for the telephone: you can't reach them. And if you try to write them a message, good luck getting an answer. So it's true that we manage to get by without them, but given all the other generally very positive points, it's a bit of a letdown. With Saxo, you're left to your own devices, unlike Corner, whose customer service is beyond reproach.

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Cornèrtrader

Corner has recently revised its pricing policy, certainly in response to increased competition from Saxo. Fees are still slightly higher than those charged by Saxo, but they are still very attractive compared to Swiss rates, especially if you have a substantial capital. Especially since, unlike its direct competitor, Corner does not charge custody fees (or inactivity fees, for that matter). As with Saxo, exchange fees are very low, which is appreciated when trading foreign securities.

Stock market orders are very well executed. Certainly not as good as IB or CS, but I've never had a bad experience like with Degiro (see below).

For the proposed markets, on the other hand, it's a bit of a cold shower. Corner claims to offer the Japanese market, but in fact only certain big caps. No American ETFs either. What a shame.

A tax statement is available for just 20 francs.

As with other Swiss financial institutions, cash assets are guaranteed up to CHF 100,000. Securities, on the other hand, are the property of the customer, and are therefore deducted from the company's assets in the event of bankruptcy. As explained above, this does not apply in the event of fraud (issue of false transaction records).

Another big plus for Corner is its customer service. They're always at the top of their game, very attentive to customer needs and available (just the opposite of Saxo!).

Last but not least, I think the user interface is really well designed, simple and user-friendly, but also complete and clear. You can find exactly what you're looking for. There's everything you need, but not too much. In short, it's perfect.

Degiro

I opened my account with Degiro because I was attracted by the relatively low rates offered by this broker, as well as by the fact that it was also possible to trade Japanese stocks. I have to say that my first impressions, after opening the account, were rather mixed. The user interface is certainly sufficient in terms of needs, but it projects the image of something that's been cobbled together a bit hastily, both in terms of aesthetics and user-friendliness. It's sometimes confusing.

As far as fees are concerned, even though Degiro has recently changed its communication around "zero commission", the truth is that costs - all-inclusive - are still higher than those of IB. On the whole, however, they remain fairly reasonable, at least compared with the Swiss market.

On the other hand, when it comes to placing orders, the situation is much worse. There are restrictions on the amount of market orders that can be placed. There are also restrictions on setting limit orders. These various obstacles mean that orders very often fail to be executed.

Sometimes even the transaction doesn't happen for no apparent reason. This is very unfortunate, and forces us to constantly monitor the correct execution of orders placed via this platform. Fortunately, when the order is placed, it is executed at the correct price. Maybe not as good as IB, but overall not too bad.

There's nothing to complain about when it comes to custodial fees. There are none either. As for deposits and withdrawals, they're free. Degiro also has a Swiss IBAN. It's a little slower than IB, but very correct (allow 2 working days).

It's also worth noting that you used to be able to choose between a custody account, in which DG could not lend your shares, and a basic account, in which Degiro could borrow your shares. Now, unfortunately, new customers no longer have a choice: the custody account is no longer available, and shares can automatically be borrowed. I personally opted for the deposit account at the time, for the same reasons that led me to forego IB's yield enhancement program. With the deposit account option, previously offered, DG applied a fee when dividends were distributed! Yes, you read that right! It's quite incredible, but every time we received a dividend, Degiro collected 1 euro + 3% of the dividend. The question no longer arises for new customers, who automatically escape this rapture, but in return they have to lend their shares. I don't know which is better...

Among Degiro's other disappointing points, in addition to order placement and the interface, is the impossibility of trading many stocks. This is the case for American ETFs and certain small caps, particularly Japanese. This is really detrimental, not to say eliminatory....

The other fly in the ointment is the absence of foreign currency accounts by default. This means that every transaction (purchase/sale/dividend) of a security in a foreign currency involves exchange charges. To get around this problem, you need to go to the settings and modify the foreign exchange operations by switching them to manual.

Managing reports for the tax authorities is just as easy as for IB. No worries there.

In terms of IT security, this is also correct, with two-factor authentication.

Financial security, on the other hand, is a little more problematic. The reputation is obviously not as solid as that of IB, as Degiro is much younger and smaller. On the positive side, cash assets are guaranteed up to 100,000 euros and securities are segregated in a separate Degiro entity (SPV). If Degiro were to run into difficulties, the assets could not be used to repay any debts. But we can't totally rule out the possibility that the separate entity might also run into difficulties... and in that case your assets are guaranteed for just 20,000 euros. In other words, not much. The examples of Lehmann Brothers, Silicon Valley Bank, Signature Bank and Crédit Suisse remind us of the importance of proper collateralization of our assets.

At one time, Degiro was my second most important broker, behind IB. But now, for the reasons given above, I've closed all my accounts there.

TradeDirect

TradeDirectBanque Cantonale Vaudoise, was my second broker at the time, in the early 2000s. It was then called e-sider. I started out with Crédit Suisse's Direct Net, but the transaction fees weren't at all competitive with the solution offered by TradeDirect's ancestor. I closed my e-sider account a few years later because, after the washout from technology stocks, I had changed my approach, becoming more and more buy&hold. However, e-sider, although attractive in terms of transaction fees, charged custodian fees. At the same time, Postfinance (see below) didn't charge any, so I switched again.

So I can't comment on TradeDirect, but from the looks of it, there's not much difference from the old name.

I remember a very simple interface, with free basic advice (via technical and fundamental analysis provided by theScreener - apparently still up to date). There were cash accounts in the other main currencies as standard.

As with other Swiss financial institutions, cash assets are guaranteed up to CHF 100,000. As for securities, they are the property of the customer and are therefore deducted from the company's assets in the event of bankruptcy.

In short, a decent platform, relatively inexpensive compared to the Swiss offering, especially at the time, but all in all, something pretty basic.

Postfinance

Postfinance was my 3rd financial intermediary for investing in the stock market, after Direct Net and e-sider. Of these three, it's the only one I still use today.

Postfinance appealed to me at the time because, as I mentioned, there were no custodian fees and I was more of a buy-and-hold investor. Today, they charge 90.00 / year, which can be recovered in the form of trading credits. So it's still fair. What's not so good are the brokerage fees, which are particularly high. Admittedly, it is possible to recoup some of these in the form of bonuses (up to 20%, depending on the number of transactions), but this is still fairly expensive. To be avoided if you're particularly active.

As far as orders were concerned, in addition to the high brokerage fees, I often had the feeling that they were executed in a rather unfavorable manner. I noticed this with market orders and limit orders. So, between the fees and the price differential, the total transaction costs hurt quite a bit. All the more reason to limit Postfinance to buy-and-hold.

There are no charges for deposits or withdrawals, but to transfer money from your account to another platform, you always have to wait until the next day, or pay 5.00 for an express payment. It's a shame.

As far as markets and instruments are concerned, we're sticking to the basic, generalist approach, with the usual options. No Japanese stocks, of course. Accounts in major currencies are automatically opened. For some currencies, however, no account is available, so everything goes through the CHF, with the associated fees. Please note that the exchange rate at Postfinance is not particularly advantageous.

In terms of taxation, PF offers a well-done tax statement for 100.00 euros.

Nothing to complain about in terms of security either. Two-factor authentication, and a subsidiary of Swiss Post owned by the Swiss Confederation. As with other Swiss financial institutions, cash assets are guaranteed up to CHF 100,000. Securities, meanwhile, are the property of the customer, and are therefore excluded from the company's assets in the event of bankruptcy.

The interface is correct. However, it is sometimes a little difficult to find what you want. You get the feeling that two systems (payments on the one hand and trading on the other) have been designed separately.

Other brokers and banks

Below is a brief review of other financial intermediaries.

Swissquote

• Recognized historical broker in Switzerland
• It includes many Japanese stocks, even microcaps.
• Discouraging brokerage fees, almost as high as Postfinance

UBS

• Very large-calibre global bank
• It's hard to beat this price for all expenses: avoid it!

Bank, broker: conclusion

Things are starting to move a little in Switzerland, thanks to Saxo and Corner. It's about time. We're still a long way from what's happening in the USA, but it's finally becoming acceptable. It's astonishing that the land of banks is having so much trouble getting up to speed when it comes to trading. Not to mention the fact that Swiss stamp duty weighs heavily on transaction costs. Even though the two brokers mentioned above have significantly lowered their commissions, buying and selling securities in Switzerland is still very expensive, because the state is happily taking the lion's share.

Interactive Brokers is still, of course, the best choice. I now put Saxo on a par with Charles Schwab. Corner is no longer on the podium, but remains a very good choice if you want to stick with a Swiss intermediary. As for Degiro, as I mentioned above, I've definitely thrown in the towel. The players mentioned earlier have proved that it's possible to offer quality at modest prices. Degiro does the latter, but not the former.