Brokers with and without customer bank account

Hey guys

I have been reading for a while now, but there are still a few things I can’t wrap my head around. One thing I’m wondering is why CornerTrader is the suggested swiss broker. As far as I can tell, opening a trader account with them does not result in a new bank account for the customer. Instead, the customer is going to use the corner trade bank account and has to entrust them with his/her money. That’s the only way how they can offer a 0.0% maintenance fee.

There are brokers that cost a bit more, but where the customer will receive a personal bank account in his/her name. The broker will then “only” receive authorization to perform trades in the customer’s name. But the money, securities and everything legally belong to the customer at all times.

How do you feel about that? What would happen in the case of a crazy economic crisis like 2008, where many financial institutions and insurances went bankrupt? I have the feeling, that the investment is better protected in a personal account rather than a broker’s account. But I have no arguments. Feels like I’m missing something, since the entire MP community swears on CornerTrade and IB.

For example, I have been looking at the strateo bank/broker with their 0.02% fee. The FAQ are not really clear about it, but I guess the customer would have a private bank account. This would sound like a great deal to me and 0.02% would still be perfectly acceptable in my opinion.

Looking forward to your arguments. Please prove me wrong.

Hi. I’m not sure I understand you right. You’re suggesting that cash ownership is handled differently at CT, compared to, say SwissQuote or PostFinance? (not securities)

I guess if you don’t keep too much cash with them, then there is no need to worry, but if they really don’t provide the guarantee, then it would be a valid point. However, in a major crash I would even speculate if this guarantee is worth anything. How much money do people have in their accounts, and how much is in the emergency fund? Huge disproportion.

Yeah this is basically what I’m asking. Is one more secure than the other…

With SwissQuote, PostFinance etc. I feel more like actually owning something, opposed to IB and CT where it feels like we have to trust the broker more to get our money back 10 or 20 years down the road… I know that from a legal standpoint there is probably not a big difference. But does a bankrupt company care about legal matters?

1 Like