Reading all your very useful commentaries I reached important (for me) insights.
In finance (and everywhere) emotions are very dangerous if ignored/unconscious.
Every time I imagine to send all my financial possessions to IB, so far away (England) and in a virtual space (do they have a physical office?) I get very anxious.
Till now all my money/securities were in banks which I could visit (and did), I knew the front men, contacted them regularly. All this felt so reassuring.
Few nights ago, some thoughts that were floating around for a long time condensed as follows.
All their nice offices, all their reassuring employees have to be payed. The number of relatively reliable banks from which to choose are so many (for me at least: I have some possessions in Italy too). So for banks: high expenses and a lot of competitors with whom to share the pie.
Also, I believe more and more people are switching to online brokers.
Swiss banks: I heard at the radio some days ago that the banks firmly declaring that they are never going to ask their smallest customers to pay negative interests are now only 35 (they were much more sometime ago). What is going to happen when they will?
Conclusion: very difficult times are awaiting banks institutions (or more dramatically: has the time of their sunset arrived?)
Online brokers and specifically IB. Obviously less expenses. Much less competition: as I wrote introducing the topic, when you search for opinions about the best online brokers (both for European and american investors) the names that pop out are always the same and IB at the top most of the time (for reliability and prices, which I think are the two most important criteria to be taken into account).
So, going back to emotions: mine tell me to stick with my banks but in reality, which is more at stake? IB or them?
(Funny story: last year I did an experiment: bought via dollar-cost averaging the same amount of ETFs in a Swiss bank and an Italian one to really find out the expenses differences - fees, taxes. Results: both cheated adding expenses not included in the initial agreement - which after long negotiations I got to be the same for both of them. I got my money back but lost my already poor remaining trust. Now I think with IB this would never happen because fees are automatically charged and they would never risk their reputation in such a stupid way. But why banks do (and they all do)? Maybe because they already navigate in murky waters?)
Finally. If you believe there is a ranking in financial institutions where you could put your possessions as regards safety, and you also believe that the first one is way better than the rest, where is the logic in putting your money also in the less safe ones just for the sake of differentiation? Wouldn’t this choice in fact be more risky? Isn’t this again an example of emotions guiding us towards bad decisions?
That was the main question that prompted me to start this topic.
Because of my above mentioned reasons now I think the opposite: that banks are less safe than online brokers and more so in the future.
Please show me if/where my arguments do not hold water.