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.
Since I had been recommending DEGIRO for Swiss investors who wouldn’t reach the 100k Swiss Francs milestone for a few years, I naturally received many emails asking about the cheapest and easiest way to transfer ETFs from DEGIRO to Interactive Brokers Switzerland.
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)
- Saxo Bank (<= CHF 200 brokerage fee refunded using this link) 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 best online broker I recommend to all Swiss and European Investors no matter how much money they have to invest. After, regarding the location of the Interactive Brokers Group in the US, everyone is free to think what they want. Personal finance is aptly named: it’s personal!
Two ways to transfer positions (like 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 (providing the new broker with the account number of your previous broker)
- Manual transfer: you sell your securities at the old broker, and buy them back at the new broker
At first glance, the automatic method seems more appealing. It appears simpler and eliminates the risk of selling at price X and having to buy stocks back at a higher price Y if the market rises in the meantime. It’s especially important if you want to manage your IB account efficiently.
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.
Transfer positions automatically or manually 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
On the DEGIRO side, the cost is CHF 10 per position. This means that whether you hold one share or multiple shares of the VWRL ETF, the fee remains CHF 10.
Additionally, stock exchanges charge transfer fees, which the brokerage firm passes on to you. These fees range between CHF 40 and CHF 100. I once found an image on Imgur listing the exact fees by stock exchange, but I couldn’t locate it again. To keep things simple, we’ll assume an average fee of CHF 50.
Note: such fees vary by broker (and sometimes by account type), so make sure to review them properly as it will impact the overall cost of transferring your assets.
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 basic FOP transfer method to process incoming transfers. On the other hand, stories on reddit and the MP forum of our Swiss FIRE (Financial Independence, Retire Early) community speak more of 4 to 8 weeks depending on the cases where DEGIRO took time to answer Interactive Brokers.
The key question now is whether it’s worth waiting for the automatic transfer or if a manual transfer is the better option. To answer questions like this, we need to compare both approaches and evaluate if the patience pays off.
Costs of a manual ETF portfolio transfer from DEGIRO to Interactive Brokers
I can’t predict how the stock market will perform tomorrow. To stay on the safe side, I’ll assume a worst-case scenario: we sell at a certain price and have to buy back at a higher price because the market has risen in the meantime. This kind of uncertainty is always a factor in trading decisions.
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 :)
Yes, one could try to time the market by waiting for the perfect moment to buy back. However, that ideal timing might not come for weeks, months, or even years. In the meantime, the delay could result in significant opportunity costs, making it a risky strategy.
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:
- Open your account with 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 of your DEGIRO account number. 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
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 :)
Conclusion: Best way transfer from your DEGIRO account number to Interactive Brokers
The most cost-effective way to transfer securities from your DEGIRO account to your Interactive Brokers account is the basic FOP transfer method. It comes with low fees and helps you save money compared to the manual transfer method. To proceed, retrieve your DEGIRO account number and submit a transfer request using the IBKR request form.
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.
