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Private Bank base fees?

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  1. #11

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    Quote Originally Posted by Viktri:
    The margin rates offered by PB are OK, definitely not good. UBS charging 2.5% for USD when IB charges 0.75% and NO custody fee. Switching from PB to IB will save me almost 3% on levered gross assets. I have done very well with the PB in the past (there are some things you can do with the PB that I cannot do with IB) but going forward will move my funds to IB after the structured products roll off. The difference is just too significant.
    Thanks for this - can you tell us the things PB can do that IB cannot (eg. which structured products)?

  2. #12

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    Quote Originally Posted by GentleGeorge:
    Thanks for this - can you tell us the things PB can do that IB cannot (eg. which structured products)?
    i will help him rattle off a few as i doubt most clients would have touched many of these before. I believe IB doesn't allow such things but I have never used IB before so you can prove me wrong:

    - standard ones like Fixed coupon notes and Accumulator/de-accumulator, where client/investors are selling KO puts in various combination
    - bond like callable structured notes where coupon are conditional depending on FX/Interest rate barrier not being triggered
    - selling put options on bonds/swaptions
    - interest rate swaps
    - call options on bond or equity funds
    - target redemption type of structure (again combination of KO calls and puts) on FX and equity baskets
    - credit swap linked structures

    feel free to add if you have heard of more
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  3. #13

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    Quote Originally Posted by freeier:
    i will help him rattle off a few as i doubt most clients would have touched many of these before. I believe IB doesn't allow such things but I have never used IB before so you can prove me wrong:

    - standard ones like Fixed coupon notes and Accumulator/de-accumulator, where client/investors are selling KO puts in various combination
    - bond like callable structured notes where coupon are conditional depending on FX/Interest rate barrier not being triggered
    - selling put options on bonds/swaptions
    - interest rate swaps
    - call options on bond or equity funds
    - target redemption type of structure (again combination of KO calls and puts) on FX and equity baskets
    - credit swap linked structures

    feel free to add if you have heard of more
    Thanks for the assist.

    Another issue with these products is sometimes the way that they work can be very complicated, especially in edge cases (at least to me!), and it is nice to have someone that I can shoot questions to in order to make sure that I 100% fully understand the risks. Interactive Brokers has awful customer service because you get what you pay for - and at IB you are paying very little.

  4. #14

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    Not sure if they offer they offer this anymore, PBs offer (or used to) excellent interest only mortgages depending on your situation.


  5. #15

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    Super-useful post, many thanks to all contributors


  6. #16

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    Minor addition but one I've used that wouldn't be in IB are non-deliverable forward contracts on restricted currencies. Also as I understand, you cannot lock in the margin interest rate in IB for a term right but is (potentially) fluctuating daily? Whereas PB you can secure the rate for a longer duration.


  7. #17

    slightly off the topic - why is the IB platform so horrible? it can't be that hard to make it better can it !??


  8. #18

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    Quote Originally Posted by DellthinkHK:
    slightly off the topic - why is the IB platform so horrible? it can't be that hard to make it better can it !??
    It’s not horrible. It’s complicated because it is build for professional traders. But it will take a little effort to understand how to use it for standard trading on the desktop platform, while using the website or the phone app is very easy.

  9. #19

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    Anything under 1% all-in is "reasonable." Keep in mind the banks are going to get their cut one way or another . . . i.e. they might populate your portfolio with funds their bank manages. They might leave a little more of your account in cash for their benefit. Little things here and there so that your base fee looks attractive.

    shri likes this.

  10. #20

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    Quote Originally Posted by huja:
    Anything under 1% all-in is "reasonable." Keep in mind the banks are going to get their cut one way or another . . . i.e. they might populate your portfolio with funds their bank manages. They might leave a little more of your account in cash for their benefit. Little things here and there so that your base fee looks attractive.
    Anyone who’s attempted to read the “fine print” knows that financial services and products are really difficult to understand . . .

    Many people don’t realize that this complexity is by design. The inscrutability of contracts and statements is a feature of the industry, not a bug. For instance, the business models of many financial institutions revolve around fees their clients may not know they are paying. These companies don’t necessarily want you to be able to read, say, your investment account statement and see clearly and easily all the fees you’re being charged. They trade on an asymmetry of information: so long as you don’t understand a product, and they do, they have the upper hand. Actual financial literacy is a real threat to their business model.

    That purposeful confusion isn’t harmless; it has detrimental effects on people’s lives. It means you might be paying fees you don’t know you’re paying.

    It makes things difficult to understand so you feel you have no choice but to defer to the well-paid professionals. Or — worst of all — it can deter you from managing your money at all.

    Take the TFSA. As of 2017, 65 per cent of people with TFSAs exclusively held cash in them not investments — completely negating the benefit of the account, which was designed for long-term investments to grow tax-free. That’s because banks market them as savings accounts, promoting the interest rates you can earn on “deposits.”
    https://www.wealthsimple.com/en-ca/m...acy-month-2020
    shri likes this.