Postfinance is using the platform of Swissquote.
To get advise from them?..)
Yes! So they can explain which new active funds are best ‘for you’ .
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Actually when I went to open my custody account they pushed fairly hard for active management. Their pitch was “While passive management has admittedly done pretty well the last few years, there is a lot of volatility and uncertainty coming up so we are confident in our experts hidden in bunkers under the Furka Pass, who will work day and night to make you money”. For 2.8% annual fees!
You are good and do the right thing. Only advice - move to ZKB, or if you want Raiffeisen and ask UbS to transfer your fund. Take a „real“ Bank that is cheaper than UBS and doesnttake 0.35% p.a.
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ZKB takes 0.30% p.a. for securities in domestic custody and 0.40% p.a. for securities held in other countries. I.e., not significantly less expensive.
Raiffeisen is a bit better with 0.25% p.a. (+ an extra 0.1% p.a. for US securities) and a commission of 0.5% for trades at SIX (minimum of CHF 40 per trade).
TL;DR: Fees matter a lot over the long term.
Advice:
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Switch to IBKR while your transfer costs are still low.
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At the very least, switch to Swissquote (or a similar lower cost Swiss broker) if you can’t shake off your sentiment that Swiss brokers are somehow “better/safer” than IBKR.
More detailed reasoning below if you are inclined.
Custody Fee
Your expected* portfolio value with your investment strategy at UBS vs IBKR and 70k invested today equally in the securities you mentioned:
| holding period | UBS | IBKR | Delta |
| 10 years | 151k | 156k | 5k |
| 20 years | 335k | 359k | 24k |
| 30 years | 758k | 842k | 84k |
Think of the custody fees not just in a linear, but in a compounding way: it’s not just substracting a seemingly modest 0.35%, it’s multiplying your assets with 0.9965 for each year you plan to hold at UBS instead of IBKR:
- 10 years: UBS = 96.6% IBKR
- 20 years: UBS = 93.2% IBKR
- 30 years UBS = 90% (!) IBKR
- …
Trading Fee
Similar arguments for the trading fees.
You are forgoing opportunity costs by sinking money into seemingly low transaction costs instead of investing it. I learnt this lesson the hard way:
I have spent about 20k at Swissquote for trades that would have cost me less than 500 bucks at IBKR … 19.5k more spent at Swissquote (and probably even a bunch more at UBS)!
Money that not only I don’t have anymore but money that I otherwise would have invested with a return.
Significantly more money than 19.5k after 10, 20, 30 years … see above illustration for the compounding effect (I would expect 20k to turn into 50k over 30 years, YMMV).
General Remarks
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Swiss Brokerage Fees are ourageous: As others have already stated, the fees for retail investors at “normal” Swiss brokers are just horrendous.
A professional investor at any of the brokers in Switzerland pays in the order of a couple of bips (bip = 0.01%) for custody and in the same or lower order of magnitude for transactions - the broker mainly makes their profit with the spread in the issue/security (bid versus ask).
A retail invester obliviously pays 10x in fees (or more) compared to the informed professional investor. -
Swissquote is relatively cheaper (for CH), but still expensive: Personally, I even regret being with Swissquote instead of just IBKR and would have already switched to IBKR if I hadn’t negotiated with Swissquote a fixed custody fee instead of the portfolio size dependent fees they introduced earlier this year.
I still grit my teeth when in comes to Swissquote transaction fees. -
Comparing fees of your custodian versus your ETF: If you expect yourself to do no further trading at UBS (no further buying of the ETFs you mentioned, i.e. ISIN IE00B6R52259 and IE00B6R52259, i.e. all trading of the underlying issues happens all inside the thesauring investment vehicles), this trading fee argument would be less of an problem (but still worth asking yourself: why can your selected investment vehicle company - iShares - manage all their fees (including trading fees) at a total of 7 or 20 bips while UBS needs to add over 100 bips just for trading the iShare ETF?
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Swissness, the label: You seem to assume that in case of the “worst case scenario” of a broker going belly up, you’re better off with a Swiss bank than with IBKR.
I would challenge that: the Swiss government might want to “save the Swiss bank” going bankrupt for all those retail clients with checkings and savings accounts at the bank in order for the Swiss companies and businesses interacting with the bank to continue functioning without much disruption. I believe that is what happed with Credit Suisse having been swallowed by UBS with some discrete or not so discrete government guarantees in the background.
The custodian part of the bank would however be treated like any other custodian bank: the securities the custodian holds for the security owners belong to the security owners, regardless of whether the custodian goes belly up.
The securities will eventually be transferred to the owners, or rather, a new custodian that will hold those securities for the owners. There’s a process for this, and it will likely takes months or years depending on how that bankruptcy case will take, but the securities will end up with the rightful owner. Will the custodian being Swiss make things faster?
Maybe. Maybe not.
I would not bet on the broker/custodian being Swiss making things smoother/faster/better, but YMMV.
* Assumptions:
- your chosen investments continue to return as they have in the past decade.
I.e. “iShares MSCI ACWI” returns about 6-7% annually and “iShares Core S&P 500” (aka accumulating S&P 500) returns about 10% annually (maybe more) - tax considerations excluded
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Simply put: No, there isn’t, in my opinion. IBKR may cover more available exchanges/markets worldwide, but you obviously don‘t care about that, as you’re sticking to standard ETFs. I also wouldn’t get too hung up about one-time trading fees or stamp taxes, if you’re a buy-and-hold investor.
For you, the drawback basically just seems that UBS is more expensive in their recurring fees - and the taxation of that U.S. dividends in fully-replicating non-U.S. funds. 
If you are OK with paying the premium, I‘d recommend you stay with UBS.
I really appreciate the time you took to write this.
Still, I have paranoia about IBKR despite them having weathered many decades.
What I can do and probably will is starting adding to my IBKR account, more baskets for eggs. The IBS stuff can stay there and do it’s thing whole I stomach a few months of investing in IBKR. More like a year as I want to do taxes with them at least once.
What I can also do is look at Postfinance after I’ve done my taxes for ‘23. I still emotionally need a brick and mortar institution. Looking at their transaction fees, they’d have cost half in Postfinance, the TER cost is also half now in CHF, but would become even smaller in the future as AUM increases - I read a flat 90CHF which sounds very small indeed. Their tax declaration documents are essentially same cost. I don’t buy exotic stuff, I am running a 1000CHF HFEA in IBKR for fun, so I think I’d be covered with access to the SIX.
…provided that these securities even exist and are somehow „associated“ with me (to avoid the term and process of „registration“) to me in the first place.
If the GameStop saga in 2021 has, if only anecdotally, demonstrated anything, it’s the pitfalls of (especially naked) short selling, margin trading and securities lending. It seems you can literally buy or sell securities that don’t exist with money you don’t have - and a broker can temporarily lend that out to someone else at no notice,
I doubt that anyone on this forum really has the insight insights of how it all works - some things just go above our heads - but I have little doubt that these shenanigans are much more prevalent in the U.S. and at U.S. brokers, rather than at some European big banks and their mundane retail custody accounts. Furthermore, in this particular case (GME), Interactive Brokers did - on their own - suspend trading - when my boring-ass European bank did not.
So yeah… how much worth is the promise that my shares really “belong” to me - and how fast (or uninterrupted) can I get access to trade, even in extreme market conditions?
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That was about collateral having to be posted before settlement. Boring (expensive) retail banks don’t have to deal with day-traders and meme stocks so indeed it won’t be an issue for them.
(that said I think the 1d settlement for US securities fixes a lot of this – but then it brings a bunch of other problems especially for us since FX settlement is still the same)
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I didn’t get into detail, but this part is as well something that’s been on my mind a lot. Without having done the research I’ve put faith in the idea that if an old Swiss bank shows a number of securities in my custody account they really do belong to me. In this respect being conservative may actually be an advantage. Say the fact that the account does not buy fractional shares gives me a perhaps naively sense of trust.
Irrelevant: there’s a lot to unpack, conceptually mutual funds make more sense to me than ETFs, but I stick to the notion of “they are basically the same thing”. When we buy an ETF we buy a share representing a larger group of shares and tied to them via its NAV. That gives me some concern too but I’ve learnt to live with it ages ago.
At that level of concerns, I’d consider having assets held in street name cause for concern too and limit myself only to shares for which I am a registered owner (which seriously limits the amount of brokers and the actual shares available, including ruling out most if not all ETFs).
I’ve been very near there, I’m now willing to take more risks for the sake of simplicity, with the understanding that my money can disappear “during the night” for a variety of reasons (a 90% market crash being one of them).
Edit: I’m not saying those concerns are not warranted, I have similar concerns that prevent me from using IBKR too (namely not wanting the US to have anything to do with my assets and IBKR UK keeping some of our securities in custody at their US subsidiary), just that following them has a cost that affects the potential rate of growth of capital and that it has to be assessed vs the alternative of a potentially riskier but quicker capital growth with the prospect of a more conservative allocation (that can include physical hard assets), either in the short term already or once a certain wealth threshold has been reached.
Hmmm the market crash idea doesn’t scare me that much because it’s always come back. I saw my 3a drop 20% in 2022 and it’s bounced back. This is to be expected and I do trust myself not freaking and bailing in the lows. Even been buying the dip from time to time!
I do keep a safety cash pillow at all times, giving me 3 month liquidity. Having read through what index ETFs are I just think I’d prefer a mutual fund, but that’s marginally safer in some respects and less flexible in others. My main concern with ETFs is what would happen if I can’t sell them when I want to. No selling now, just buying every month but at some point in the future I’d want to sell, build a fixed income position, drop on some luxury etc. No sense in dying a very rich corpse.
The best investment strategy is the one that lets you sleep at night.
Also, the broker that you choose today must not be your broker for the rest your life. Nor must it be the only one.
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This I find a bit pathetic by the issuers.
All it takes is 1 line of total assets, dividends received and WHT on those, and attaching the pdf with a bit broader details (worked with several cantons, can’t guarantee all).
And these swiss banks/brokers are charging their clients to print a bloody PDF.
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Exactly, because that’s the least likely to be messed with.
I think people in the FIRE community, which is not me, have a commendable tolerance for risk. I have some friends who’ve lived on a thread for years and did achieve FIRE very early, it’s admirable but not something I have appetite to do.
For a proper tax report they have to get the information from ICTax. The tax value may be different from the market price and also taxable dividends may not match the distributed dividends in some cases (e.g., accumulating funds, tax-free capital gain distribution, REIT tax discount).
I.e., it’s not as simple as providing the information from the regular broker statements. However, once they have automated this internally, the marginal costs for them are practically zero, of course.
If a broker without custody fees charges something for this, I can accept that. I think it’s ridiculous that a Swiss bank with custody fees doesn’t provide this for free, though.
I second this. There’s a whole lot of funny-money in this space. Even certain Swiss banks that use collective custody service providers could not give me a clear answer about what would happen to my securities if the custody provider were to go bankrupt.
Personally, I find the laws governing street name assets far too vague. For the purpose of risk-assessments, I consider shares which I have not actuall registered in the company’s shareholder register to carry around double the investment risk of non-registered shares.
I’m kind of similar. I’ve always valued tangible assets and physical relationships.
Apart from fees and use of US ETFs, the only major disadvantage of a Swiss vs. foreign stock broker, to my knowledge, is that Swiss brokers have to levy Swiss stamp duties, whereas foreign brokers like IBKR do not. For frequent trading in particular, stamp duties add a substantial expense. But for long-term investing in ETFs, the difference is less pronounced.
To add some sauce to @nabalzbhf 's comment:
It might sound counter-intuitive, but IBKR suspending option trading for GME (and AMC, BB, EXPR, and KOSS) as well as requiring increased margin for securities trading (100% margin for long positions and 300% margin in short positions) for the securities mentioned (see IBKR press release) was actually a Good Thing: it reduced risk both for IBKR and its customers, especially the ones not speculating in these meme stocks.
For those interested in looking under the hood:
DTCC (a Depository Trust & Clearing Corporation) provides settlement and clearing for the vast majority of security transactions (in the US and elsewhere). It performs the actual exchange of securites on behalf of buyers and sellers and functions as a central securities depository by providing central custody of securities.
Because settlement (money exchanged for securities) is not instant but “T+2” (trade date plus two days)* in most cases, there is a counterparty risk for two days to those involved in the trade as well as for the settlement and clearing company. The settlement and clearing company thus requires collateral from market participants (like IBKR) for its own risk management (and to ensure the buyer and seller will receive the security/money). In periods of high volatility the collateral will be high. Those collateral requirements force the market participants (like IBKR) to manage their risk as well, and they do that through restricting margin requirements for long and short positions and sometimes by suspending trading on options.** Careful market participants will perhaps restrict trading on volatile securities or options even before DTCC requires a higher collateral.
See this article for how DTC describes their approach to risk management.
* As alluded by @nabalzbhf there’s efforts to move to “T+1” settlement, but as mentioned this comes with its own challenges.
** Options come with an additional set of challenges as the contract size (for US style options) is 100 and they can be exercised at any time. This leveraged nature makes risk management, especially counter party risk, even more challenging. The CME (Chicago Mercantile Exchange) Group is the world’s largest operator of financial derivatives (including options) exchange. It runs CME Clearing, which serves as the counterparty to every cleared derivative transaction.
It will - independently of DTCC - require collateral from their counterparties (like IBKR), which in turn leads to those counterparties to require more margin from their customers or to even suspend trading for options with very volatile underlyings (which the epic short squeezes in the securities mentioned above caused).
Fun fact which I heard from a collegue with lots more experience and knowledge in the nitty gritty details of derivatives trading: CME has apparently always been able to settle all derivative contracts traded on their platform (there are examples of other exchanges that have botched this, famously the LME (London Metal Exchange) cancelling a $12 billion nickel trade.
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