Do I have to pay stamp duty tax for buying/selling ETF at Investart since they are a Swiss broker? Or not because Tea Cup says Investart is not a broker?
You don’t have to pay stamp duty at IB because it’s not a Swiss broker, correct?
They’re not a broker, they’re just an “advisor” managing your portfolio.
Hello everyone. It is always a pleasure to see so much interest around Investart. Special thanks to our clients who have contributed to this discussion by sharing their experiences.
The main point of controversy seems to be the business model, so let me take the opportunity to comment on it.
We have a loyal and growing group of affluent clients, whom we provide tailored investment services offline. These include not only long-term ETF investing, but also trading in single stocks, bonds, listed and OTC options, FX advisory, etc. Revenues from these activities more than cover our fixed costs, and the platform trading costs are anyway very small.
We picked IB as a broker for the platform due to their low commissions, despite the fact that their account management and trading support leave lots of room for improvement. Our software accumulates client orders during the day, packs them into block orders and sends to trading once a day. As an illustration: IB commission for buying a US ETF, for example, is $1. So when 100 clients buy the same ETF, the cost comes down to $0.01 per client for such a transaction.
Of course, as our client base grows, so will the costs, as we will eventually have to hire more people to handle account opening, support, IT, etc. In anticipation of this, we are in touch with several VC companies who keep a watchful eye on investart and can potentially contribute to the next capital round. And if we feel we won’t be able to handle the workload before additional capital is raised, we will temporarily close the platform for new subscriptions (the number of new clients is already now limited).
We also do not rule out re-introducing a “reputational” fee at some point in the future. The main purpose of such a fee would be to avoid discussions like this one, as people keep doubting that a free investing service can exist in Switzerland. So, we often feel Switzerland is not ready for a free investing service yet. The new potential fee would only apply to new accounts, as we promised to the existing clients they would not have to pay fees.
Going forward we will be implementing regular improvements such as a better rebalancing algorithm, optimization algorithm, working on the design and user interface, enhancing UX where we worked hard but which is still not without flaws. Some of these changes will be implemented soon, and some would have to wait until the next capital round.
Investart is a regulated asset manager, member of VQF (see attachment) and subject to annual audits by VQF. VQF is a Finma-licensed self-regulatory organization of asset managers, which is now transitioning into a “Supervisory organization” – a new body that will keep supervising asset managers, including ourselves, on behalf of Finma from 2023.
We open segregated accounts in the name of each client at Interactive Brokers, where client assets are physically kept. IB does not allow us to transfer any client money to 3rd parties, and we often need to ask clients to log into the IB and enter / confirm their transfers themselves. So it is pretty much impossible for us to steal your money, even if we really wanted to.
Hope this clarifies some of the concerns you might have had, and welcome to try us out! At the moment it is still free of charge.
Richard (ceo of investart)
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Just to update on the subject.
I’ve just received a response to my ticket from an IB consultant, which states: “Dear Mr. X, thanks for contacting us. It is possible to maintain an IB account managed directly by you and one administered by a third party, it is not necessary to merge the two accounts. With regard, IBKR Client Services”
On the other hand, I’ve got an e-mail from IS (I think it’s part of a newsletter) with subject " Interactive Brokers (IB) consolidates logins" informing as follows:
"IB has decided that clients should not have more than one login. If you have IB accounts in addition to the IB sub-account(s) linked to Investart, you might be asked to consolidate all these under one login. No accounts will be merged as a result, they will be simply accessible to you under the same user login.
This means that when you log into IB, you will now also see the sub-account(s) linked to Investart in addition to other existing IB accounts. We on our side do not see your accounts that are not related to Investart.
Please do not make any changes to the settings of the account(s) linked to Investart, and do not attempt trading on them! If you modify the account setup, we will not be able to trade on it and will therefore have to suspend your Investart account."
So, it seems it’s not systematic or that - at least - not all IB consultants are aware of this…
Nevertheless, I wonder if as an IB customer with enough assets I have any real advantage proceeding with IS or if at this point I should just ask IB to open a sub-account and manage it by myself…
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So no stamp duty? That’s another advantage then compared to Swiss brokers.
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