A few weeks ago, I informed you that Interactive Brokers was going to become THE best broker for a Swiss investor as of 01.07.2021, no matter how much you have to invest. Indeed, as of this date, they have decided to remove the inactivity fee of CHF 10/month when you have less than CHF 100'000 with them.
Knowing that, until now, I was recommending DEGIRO for Swiss investors not expecting to reach that 100kCHF milestone for a few years, I logically received many emails asking what was the cheapest and easiest way to transfer ETFs from DEGIRO to Interactive Brokers.
Before I share my point of view with you, I remind for the newcomers on the blog that:
- DEGIRO remains the best European broker (i.e. if you don't want your money managed by a US company)
- CornèrTrader is the best Swiss broker, if it's important to you that your assets don't leave the country
As for me, I've been with Interactive Brokers for almost 5 years now, and it's the online broker I recommend to all Swiss readers no matter how much money they have to invest.
After, regarding the location in the US, everyone is free to think what they want. Personal finance is aptly named: it's personal!
Two ways to transfer ETFs from one broker to another
There are two ways to transfer your ETFs from an old broker to a new broker:
- Automatic transfer: you make an automatic transfer request between the two brokers
- Manual transfer: you sell your securities at the old broker, and buy them back at the new broker
At first sight, the automatic method is more interesting. On the one hand, because it seems easier. And on the other hand, because you don't risk to sell at a price X, and to buy back at a more expensive price Y — if the stock market has increased in the meanwhile.
Except that the ETF transfer method has a cost. And also, it's not that automatic and easy if I believe the info shared in the MP forum.
Automatic or manual transfer of positions between brokers, what to choose in the end?
As usual, let some small calculations give us the answer :)
To simplify the reading, I will speak in CHF without taking into account any exchange rate.
Let's say you have a portfolio at DEGIRO such as:
- 266x CHF 98.51 with the Vanguard FTSE All-World UCITS ETF USD Dis (aka ETF VWRL)
- 28x CHF 310.96 with the UBS ETF (CH) SMIM (CHF) A-dis
- Total portfolio: CHF 34'910.54
Costs of an automatic ETF portfolio transfer from DEGIRO to Interactive Brokers
The costs on the DEGIRO side are CHF 10 per position (1 position = the VWRL ETF, so no matter how many shares of this ETF you have, it's CHF 10).
Then, the stock exchanges also take transfer fees that are passed on to you. They vary between CHF 40 and CHF 100. I had found an image on imgur listing all these fees by stock exchange, but I couldn't find it back. So we will take a CHF 50 average to make it simple.
This is how much a portfolio transfer of ETFs of CHF 34'910.54 would cost us:
- VWRL ETF
- CHF 10 (DEGIRO fee)
- CHF 50 (Exchange Position Transfer Fee)
- CHF 0 (Interactive Brokers fee; for European securities the "Basic FOP Transfer" method is used, and FOP stands for "Free Of Payment")
- Total = CHF 60
- ETF UBS SMIM
- CHF 10 (DEGIRO fee)
- CHF 50 (exchange position transfer fee)
- CHF 0 (Interactive Brokers fees via "Basic FOP Transfer" method)
- Total = CHF 60
- Total automatic position transfer from DEGIRO to Interactive Brokers = CHF 120
In terms of the time it takes, Interactive Brokers says it takes between 4 and 8 days for the FOP transfer methode. On the other hand, stories on reddit and the MP forum of our Swiss FIRE community speak more of 4 to 8 weeks depending on the cases where DEGIRO took time to answer Interactive Brokers.
So the question now is whether this patience can pay off compared to a manual transfer, or whether there is no point in waiting.
Costs of a manual ETF portfolio transfer from DEGIRO to Interactive Brokers
I have no idea what the stock market will be like tomorrow. So I assume that we will be unlucky with the pessimistic scenario that we will sell at a certain price, and that we will have to buy back at a more expensive one, because the market will have risen in the meantime.
In order to keep it real, I took the most conservative values in the history of our two ETFs over the last few months. This gives us a scenario like this:
- ETF VWRL (266x)
- Sell on 19.07.2021 on DEGIRO = CHF 26'203.66 (=266 x CHF 98.51)
- Buy on 23.07.2021 on Interactive Brokers = CHF 27'046.88 (=266 x CHF 101.68)
- Cost of manual transfer = 27'046.88 - 26'203.66 = CHF 843.22
- ETF UBS SMIM (28x)
- Sell on 12.05.2021 on DEGIRO = CHF 8'706.88 (=28 x CHF 310.96)
- Buy on 18.05.2021 on Interactive Brokers = CHF 8'957.48 (=28 x CHF 319.91)
- Cost of manual transfer = CHF 250.60
- Total manual transfer of positions from DEGIRO to Interactive Brokers = CHF 1'093.82
Note: I am not taking into account the transaction fees on the Interactive Brokers side, as they are so minimal that it would not change my conclusion.
My recommendation to transfer your ETFs to another broker
At the beginning of the article, I thought that a manual transfer would be much easier and faster. But I didn't think there would be such a difference in a bull market.
So I recommend that you choose the automatic position transfer option if you need to switch from DEGIRO to Interactive Brokers as a Swiss investor.
Indeed, we're talking about saving CHF 933.82 by... doing nothing, except being patient, and filling out some forms :)
And yes, one could also try to do "time the market" by waiting for the right moment to buy back. Except that the right time may come in a long time (several weeks, months, or years), and that this time lapse has a potentially huge opportunity cost.
Steps for automatic transfer of positions from DEGIRO to Interactive Brokers
If you choose to switch online brokers, I summarize the optimal steps for an automatic transfer of ETFs:
- Ouvre ton compte chez Interactive Brokers
- Download an account statement from DEGIRO so that you have all the information at hand for your transfer request to Interactive Brokers (account number, number of positions, etc.)
- Go to Interactive Brokers to request a position transfer. If you are coming from DEGIRO with European ETFs as in our example above, you will need to use the "Basic FOP Transfer" method. Then IB will take care of the rest with DEGIRO
- Wait :)
- Once you have transferred your securities to Interactive Brokers, check that you have the right number of each ETF, and that they are the right ETFs. Although many things are automated these days, it's worth doing a little double check
And of course, while waiting for the process to be completed, you can continue to invest regularly, but with your new Interactive Brokers account — so you don't care if it takes a while to transfer in the end :)
And you, have you ever had to switch online brokers and transfer your positions? If so, I'm interested in hearing about your process and your views in the comments below.
N.B. I did not make my usual screenshots, because I myself did not have to transfer my children's ETF portfolio to Interactive Brokers. Indeed, after thinking about it, and considering the small amounts invested, I thought I would keep this DEGIRO brokerage account in order to continue testing myself firsthand what I recommend to Swiss investors wishing to keep a European broker.