Charles Schwab & TD Ameritrade

In Switzerland, and in Europe more broadly, we don't really have a choice when it comes to choose a broker. No matter how hard you look, you always come across the same two, and the only ones that are valid: firstly, Interactive Brokers and, to a lesser extent, Degiro. We can possibly add a local financial intermediary, such as Cornertrader in Switzerland, but that doesn't do much to diversify our assets.

Eventually, we invest more and more with those who are cheap and reliable, like IB, and less and less with the others. Finally, we end up with something like this: 50% at IB, 30% at Degiro and 20% elsewhere. I don't know about you, but I'm not too comfortable with this level of concentration.

Charles Schwab & TD Ameritrade: alternatives to Interactive Brokers?

So I've been looking for a real alternative to Interactive Brokers for a while now. Let's just say it right away: you have to get up early. Fortunately, there are two American brokers who have kindly opened their doors to foreigners: Charles Schwab and TD Ameritrade. In fact, the two have only recently become linked, since the former bought the latter three years ago, making it the leading discount broker in the USA.

On paper, the two offers are getting closer and closer. They will eventually become one and the same solution in the near future. Because I had to choose one or the other, I first turned to TD Ameritrade, probably a little titillated by its headquarters in Omaha. Having part of your savings not far from Buffett's, that's a dream, right?

TD Ameritrade: Arm yourself with patience and lots of motivation

But hey, if you're interested, I'll bring you back down to earth right away. Although I have a lot of experience opening accounts with brokers, even abroad, this is beyond belief. I'll spare you the requests for electricity bills translated into English, as well as sending documents by fax (I swear), the exchanges by post and several telephone calls (with my legendary English). After two months, still not having obtained my access, I threw in the towel. I would have done it much faster if it had been just for me, but I also wanted to share what I hoped would be a nice discovery with you.

Charles Schwab: much easier account opening

Cooled by Ameritrade, I hesitated for a while with Charles Schwab. After all, the two are very similar, even for the account opening procedure. Finally, still looking for a credible alternative to IB, I threw myself into the race. And there, nice surprise, everything went, almost, without a hitch. First, you are asked to choose your username and a password. So, at least, you are sure not to have to wait for ages for someone to send you, as with Ameritrade, an identifier by postal mail, which ultimately never arrives.

Then the whole process happens quite quickly. It's a little less simple and quick thanopen an account at Degiro, but it still works. Within an hour, I already had access to the platform, and the next day, I was already able to make a first small transfer of money to my Charles Schwab account.

Interface

After this first rather pleasant surprise, what do we discover? A basic and very sober interface. In the flashy colors genre, we'll have to come back. Well, at the same time, we're not here to admire works of art. The good side is that everything is very well laid out, clear and easy to understand. We find what we're looking for very quickly, there's everything we need, where we need it. Behind this apparent simplicity, however, hides a high-level trading service, with a plethora of possibilities. As Einstein said: "Any intelligent person can do more complicated things. But it takes genius to do simpler things". The app available on Android and on iOS is of the same ilk: simple, fast and efficient.

Only in dollars

Another observation: an account only in dollars. There, it's a little more annoying. You can transfer money to them in CHF on a Swiss IBAN or in euros on an IBAN in Germany, which is a priori a good thing, but be careful: CS applies exchange fees of 1% up to 100,000 dollars, then 0.75% up to 250,000 dollars. That's immediately off-putting.

There, already, you tell yourself that it is clearly less funny. But, as in principle, if you have read me up to here, it is because you are already at IB (or that you are going to open an account), and that you are also looking for a complementary solution to this fantastic broker. Then you have the solution before your eyes: you transfer the dollars that you already have at IB directly to CS. You don't have dollars at IB? No problem, you can change any currency into USD for almost nothing. And, since they are both American, I won't tell you the speed of the transfer. I'm talking about hours, not days. In addition, once a month, from IB, it's free. In the other direction, however, it's fifteen dollars. It's more annoying, but at the same time, it's not the kind of operation that I do often.

Transactions

Then, you move on to transactions. There, nothing to complain about. On American stocks and ETFs, not only are the orders super reliable, fast and executed in a profitable manner, like at IB, but in addition... they are free. It is generally difficult to do better than Interactive on this point, but here, they really set the bar very high. Not to mention that there are also no custody or inactivity fees. Also note, the automatic reinvestment of dividends can be activated very easily for each position when purchasing, or later, directly via the portfolio.

Instruments offered by Charles Schwab

On the other hand, and it's the only major departure from IB, the offer is limited only to US financial instruments. It's a shame, but ultimately, international (outside the US) is not what we're looking for here. We already have enough with IB and DG. Charles Schwab is not an alternative to IB, but a complement to it.. This allows us to focus on US ETFs and stocks and keep Interactive Brokers (and Degiro) mainly for Japanese and European stocks. As a result, it gives us a much more even portfolio distribution, between a third and a quarter for each major broker (CS, IB and DG) and the rest elsewhere.

Security

Authentication is two-factor, and CS is a recognized broker in the market, with 50 years of history. Like IB, assets are guaranteed by the SIPC up to $500,000, including $250,000 in cash.

Conclusion

Charles Schwab is currently the only broker available in Switzerland and Europe that almost comes close to Interactive Brokers. I have to put the "almost" because it is limited to American stocks. Otherwise, for everything else, it is very high level. It is really appreciable. I have tested a certain number of brokers. I opened quite a few accounts that I closed in the weeks that followed, disappointed by the offer that was proposed. Suffice to say that I am usually quite stingy with compliments on this subject. And yet here, I am obliged to concede: Charles Schwab convinced me. And not just a little.