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Interactive Brokers - Forex, Family Account, Lending vs Others (Fido/Noble)


DoddDisciple
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I've looked through all the posts I could find on IB here and some online, but I still have questions. I've heard that their customer service is awful, but honestly, after looking at the competition, it seems like the savings could be worth any hassle. I'm just wondering how much there is.

 

The main reason I'm thinking about IB is that I want to setup a taxable brokerage for mainly international stocks. Fidelity's 1% forex fee doesn't look that great when IB charges $2-$3. Not to mention that international stock trades in general are lower.

 

They also have a family office option. At first this didn't seem for me, but could I actually use this to setup and manage accounts for immediate family members? Wife, parents, and myself? I'm not charging fees, this isn't an investment plan, and ownership will remain with the accountholders. Also, I don't want to end up generating any weird tax filings/problems by using an account like this.

 

Mainly if I can have everyone setup and fund their own accounts, and then I can manage them through this family office option, that'd help. It looks like IB even has digital trading authorization forms, unlike Fido.

 

In regards to forex, is Fido really as expensive as I am thinking? Does anyone compete with IB on such cheap currency conversions? I've seen Noble Trading recommended alongside IB, but it doesn't look like they get much traffic.

 

I mainly want to buy baskets of international stocks. I'd like to try to keep roundtrip costs at 1%-2%, which is why Fido isn't looking so hot: I'd need too much to buy say a 10 stock basket on a country-by-country basis. I may also buy a basket of unlisted stocks (curated from unlistedstocks.net) - I think receipt of annual reports may be a problem for these sorts of securities at IB.

 

I don't plan on using margin. A slightly better than nothing cash sweep rate would be good. I see IB has a security lending program. I'll mainly be looking at small stocks, say sub $50M, maybe up to $100M. Would this program be worth it? Any experiences?

 

Thanks everyone :)

 

 

 

 

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I use IB as one of my platforms and it works fine and information flow is also good. I have had no problem with customer service. IB gave me the opportunity to buy instruments that I couldnt buy at home ie TARP warrants.. I pay a dollar for stocks. If you want to build a basket of international stocks I think IB is a good option. Fees in IB FX are, as far as I know, quite cheap relatively to other platforms. It very much comes down how much margin they take from spot price. Some have structure to take direct fees, others to bake in the fees in spot price.. so essentially it comes down to how much you buy and sell.

 

For me, IB is not for chasing the cheapest fee structure, its for expanding my universe of opportunities that comes with at a resonable cost,

 

Best,

 

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They are making their money on their add-ons, so if you want real time, comp analysis, etc etc, then IB is expensive..

 

I also have accounts at Schwab, so I have no need for any of the IB add-ons. I have also noticed the fills at IB are better than the fills at Schwab. So for the same trade I get paid to make the trade at IB versus charged to make the trade at Schwab.

 

Note I do like Schwab and if you have a large enough account, or trade often, you can negotiate commissions. Schwab charges me $4.95 per trade.

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They are making their money on their add-ons, so if you want real time, comp analysis, etc etc, then IB is expensive..

 

I also have accounts at Schwab, so I have no need for any of the IB add-ons. I have also noticed the fills at IB are better than the fills at Schwab. So for the same trade I get paid to make the trade at IB versus charged to make the trade at Schwab.

 

Note I do like Schwab and if you have a large enough account, or trade often, you can negotiate commissions. Schwab charges me $4.95 per trade.

 

I am thinking about moving from fido to IB as well. The only concern is that IB doesn't have integration with turbo tax, which makes filing tax each year to be painful.

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I have really had very little problems with IB's customer service.  I can get someone online for chat immediately if there is an urgent issue.  The main issue I have is ongoing fees, which have caused me to move the most inactive accounts (mainly smaller tax-deferred accounts) elsewhere.  I went with Tradeking for these accounts, but it sounds like I should have explored larger firms and negotiated the fees.

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They are making their money on their add-ons, so if you want real time, comp analysis, etc etc, then IB is expensive..

 

I also have accounts at Schwab, so I have no need for any of the IB add-ons. I have also noticed the fills at IB are better than the fills at Schwab. So for the same trade I get paid to make the trade at IB versus charged to make the trade at Schwab.

 

Note I do like Schwab and if you have a large enough account, or trade often, you can negotiate commissions. Schwab charges me $4.95 per trade.

 

I am thinking about moving from fido to IB as well. The only concern is that IB doesn't have integration with turbo tax, which makes filing tax each year to be painful.

 

Yes I should have mentioned that. I think that is the only negative I have encountered with IB. It is very painful for me because I do a lot of put writing and I have over 100 trades at IB every year that I have to manually enter.

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Wow, IB has chat? Honestly wasn't expecting that. I see Fido does too, it's just not mentioned anywhere prominent.

 

The $10/month minimum doesn't sound bad. Just the savings on one currency conversion will pay for that for a while.

 

The $10 per month is per account type though, right? So $10 per an Individual IRA, Roth IRA, and taxable account, i.e., $30 total?

 

Has anyone used the family office feature like I'm trying to use it?

 

Are the data fees necessary? I mainly want to buy and hold a basket of stocks in a country for 1-3 years and then sell. Delayed quotes are free, and I'll enter limit orders, which can be filled partially, slightly below the market order at prices I'm comfortable with.

 

Thanks :)

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I have used IB personally for a long time, and I also custodian SMAs there for my advisory business.  I also own a large position in their stock, so I may be biased.

 

Pros:

1) IB has very fair and transparent pricing. They don't try to hide their fees for you, and their stated goal for the $10/month pricing model is to ensure all of their accounts are break even at worst.

2) Executions are good.  They route trades to the exchange on market orders, but also they tend to give me better limit order price improvements than any others.

3) Short selling -- they offer ability for you to get paid (transparently) for lending shares, and also offer pretty good transparency on cost to borrow for shorts.  They also allow you to invest your short proceeds which shockingly some other brokers don't do.

4) Margin -- not recommending it, but their margin rates are amazing... another "Costco-like" low profit markup that encourages you to do more business with them.

5) Flexible reports -- non-intuitive at first, but their reporting is very very powerful to show almost anything you want.  Will be helpful in the friends and family scenario.

6) Technology -- they may not have great support or UI but you know they will adopt new technology first...

7) Bonds -- they allow you to place standing limit orders on bonds... a surprisingly impossible thing to do with other brokers.  They expose your order on their platform as well and maybe forward it to Bond Desk too (not sure how that works exactly).

8 ) No "Corporate Action" Fees (splits, tenders, etc)

9) Web Based Corporate Action tool

10) Web based tax basis adjustments

11) Web based trade cancellation request tool

12) ... etc

 

Cons:

1) If you need real time data you have to pay, they don't subsidize like other brokers.

2) Access to some obscure, OTC issues.  I haven't really figured out what make them choose to not support a security, but they have issues.  One example is SSRAP... they don't allow you to buy, and if you held it in your account 2 years ago when they stopped supporting it, the price shows as the last price on that day (it's listed at $16 / share in all my accounts... hard to explain to clients why this is wrong).  Also they don't allow trading in a lot of bonds (converts, canadian bonds, etc)... not sure what cuts them off, but they are not accessible today... this kind of thing (bonds) will get fixed, but it's annoying now.

3) Customer support -- They do suck.  You can get most stuff you need done, but they have blind spots... see my comments below in no order:

a) Their chat window for support is cool... but it has two issues.  The chat response for discussions in my experience is slow... unnaturally slow.  I feel like there is like 17 conversations going on... or maybe I just expect fast typers... not sure. :)  This is compounded by the fact that the chat window doesn't have audio notifications, so you just have to sit there and watch and wait for a response (shitty).

b) Secure login -- two factor login is great... I like it personally.  From my clients (very copious) feedback, it's a pain for those who login infrequently.

c) On the lack of trading certain securities, they can't articulate to me what the issues is.  Maybe something about some OTC securites makes their electronic systems struggle... but for the SSRAP, they told me "this isn't a DTC eligible security"... so I contacted the DTC and it indeed WAS eligible.  I went back to IB and they didn't really explain, but they did say "we can't have you buy it, but if you need to sell, call our trading desk and we'll help you out).  This is classic IB.  Not necessarily lieing, but being misleading on stuff like this is common.

d) The customer is always right is not their motto -- I have had multiple arguments with their service group about various things where I was right, but they fought me and then didn't apologize.  I was told for example that a certain form I needed had to be hard mailed, not electronically signed... the support person said "I've been here 7 years... blah blah blah".  Turns out that they added the electronic signing ability 3 months earlier and this support person wasn't updated.  But it's classic that they treated me like an idiot even though I was quoting their website to them.

e) I have a client that read their site for instructions on resetting their secure login stuff through the phone system... it said their support line for that was open 24 hours... client called on Saturday and they were closed... turns out it's 24 hours during market action....

4) Their web interface is problematic (both from an actual "does it always work" and also from a usability perspective.  I have clients report issues... I think it all relates to connecting via a VPN (the account application breaks for clients through a common corporate VPN I know).  This is an odd issue, but is emblematic of IB kind of just having some traders doing their app and web QA...

5) They don't support UGMA / Custodian accounts or Solo 401(k) or Coverdell accounts.

 

 

I know I wrote more cons than pros, but frankly I love the company.  They do so much right, and they treat you professionally and honestly.  I think a lot of what they do wrong on the customer service front is to try to discourage rookies from getting on their platform and wasting their time (my issue with this is that they have jumped in the RIA business big and they haven't really figured out how to mesh that process with the clients of RIAs who are now on their system.)

 

Hope that helps.  A friend of mine who also owns the stock summed it up a long time ago "basically these guys are a bunch of Java programming and trading dorks... they aren't really into service).  Fair enough, the result is worth the pain.

 

Oh yeah, IB is run by a guy who has his entire network in the company stock, so you also know that they won't be the broker to pull and MF global and blow up your margin account.

 

Ben

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Has anyone used the family office feature like I'm trying to use it?

 

I have had this setup since 2007.  I manage money for friends/family.  There are many other posts on IB on this board, so I won't go into it here, but I would recommend it.  They also have the ability to "link" individual accounts, without needing to be part of the friends/family platform (so long as all accounts are owned by same individual).  They did not have this feature when I was there. 

 

One thing that wasn't mentioned here is that on the advisor platform, the $10 minimum is aggregated across all accounts...ie if you have 10 accounts and trade in only 1 frequently, the trades from that 1 can apply towards the minimum fee levels of other accounts under the same advisor.

 

At a minimum, open an account there, transfer some money, and see if you like it.  I think it is unlikely you'll be disappointed.

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  • 1 month later...

Thanks to all the comments so far :)

 

One thing that wasn't mentioned here is that on the advisor platform, the $10 minimum is aggregated across all accounts...ie if you have 10 accounts and trade in only 1 frequently, the trades from that 1 can apply towards the minimum fee levels of other accounts under the same advisor.

 

Is there any difference between friends & family and family office accounts? I'm not a RIA and not charging anything. Why would one pick one or the other?

 

I know I wrote more cons than pros, but frankly I love the company.  They do so much right, and they treat you professionally and honestly.  I think a lot of what they do wrong on the customer service front is to try to discourage rookies from getting on their platform and wasting their time (my issue with this is that they have jumped in the RIA business big and they haven't really figured out how to mesh that process with the clients of RIAs who are now on their system.)

 

Hope that helps.  A friend of mine who also owns the stock summed it up a long time ago "basically these guys are a bunch of Java programming and trading dorks... they aren't really into service).  Fair enough, the result is worth the pain.

 

Oh yeah, IB is run by a guy who has his entire network in the company stock, so you also know that they won't be the broker to pull and MF global and blow up your margin account.

 

Ben

 

Thanks, I really appreciate all the information. Honestly some of it is a little over my head, which is part of the reason that I've thought I should avoid IB. However, I've read on here about people trading international stocks at $200 one way, and I'd just have to put too much to work in a basket purchase to make such costs viable right now.

 

What's been your experience on securities lending? Is it not fooling with if you're not experienced? I know they have a self-managed and a 50/50 split they manage options.

 

Can you explain real time data - this is during the trading day only right? Can you get level 1 and 2 data from like say a day ago for free?

 

Does IB offer any screening tools? I see they had Reuters Worldwide Fundamentals for say $7 monthly. Is this just a database for inputting tickers and getting data or something more?

 

How did you find SSRAP? Was this through a screener? I didn't know they offered preferreds and bonds in the regular stock market.

 

Has does 2 factor login work for say family office accounts?

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IB customer service is excellent now.  Over a 10 year period it has gone from a D- to an A.  so the negative comments are out of date imo. 

 

The Friends and Family accounts offer an excellent opportunity to save money on fees.  You can set up one advisor account and get all their data feeds for all your accounts by just paying the data fees on one account.  So the person who moved his smaller accounts from IB because he couldn't justify all the fees really should have gone to Friends and Family.

 

Friends and Family generally has more competent customer service and you can avoid the voicemail system using them, but on any detailed issue they will refer you to the specific department anyway.

 

 

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What's been your experience on securities lending? Is it not fooling with if you're not experienced? I know they have a self-managed and a 50/50 split they manage options.

 

TTD - I don't use securities lending (to lend my shares).  To get borrow info (availability and cost) they are the best I am aware of for retail.

 

an you explain real time data - this is during the trading day only right? Can you get level 1 and 2 data from like say a day ago for free?

 

I don't use any real time data, so I'm not sure.

 

Does IB offer any screening tools? I see they had Reuters Worldwide Fundamentals for say $7 monthly. Is this just a database for inputting tickers and getting data or something more?

 

This has basic financial data - similar to what Morningstar or others have on their websites.

 

How did you find SSRAP? Was this through a screener? I didn't know they offered preferreds and bonds in the regular stock market.

 

Has does 2 factor login work for say family office accounts?

 

On SSRAP, I found many years ago and have owned since 2009.  Quantumonline.com is a good site for exchange listed preferreds.  The OTC / Pink Sheets sites also have ticker screening by type of security.

 

I don't use the family office / friends and family stuff.  I am set up as RIA only...

 

IB customer service is excellent now.  Over a 10 year period it has gone from a D- to an A.  so the negative comments are out of date imo.

 

I would say the improvement has been good.  It is far from A, and all the examples I gave were within the last 12 months... perhaps others have had better experience, but customer service is rough. (and yes, most definitely always improving).

 

Ben

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I would agree its not an A yet.  I would say its gone from D- To B-. 

 

I don't know the difference between family office and friends/family.  I would think family office is for family offices though...guys working full time managing 100mm+ for a 1 client, a specific family

 

That's what I thought too. However, I talked with them some and it seems like it would work for me (just investing family's IRA and brokerage accounts from a centralized area). Are any of you using the friends and family account for pro-bono investing? Like say investing a parent's funds?

 

Honestly, though, I'm willing to jump through some hoops to save a couple hundred here and there. There was a post on here about taking IB converted currencies and moving them over to Fido if needed (for some stocks IB doesn't cover), which sounded cool.

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