Interactive Brokers vs Private bank
Interactive Brokers vs Private bank: which is the better broker for global investors?
Same portfolio at both providers: USD 50,000 to start, USD 500 a month, 5% a year, held for 30 years. Interactive Brokers costs USD 614 in total fees. A traditional private bank costs USD 45,000, which is USD 44,386 more, roughly 73 times as much.
Referral link: ibkr.com/referral/marco1592. The bonus is paid by Interactive Brokers. Using it costs you nothing extra.
Cost comparison, side by side
| What you pay for | Interactive Brokers | Private bank |
|---|---|---|
| Total fees over 30 years | USD 614 | USD 45,000 |
| Custody / platform fee | None on a standard account | 0.25% to 0.5% a year on the whole portfolio, plus tax |
| Cost per trade | From USD 0.35 on US listings, from EUR 1.25 on European listings | Typically USD 40 to USD 100 per order |
| Currency conversion | Around 0.002% of the amount, minimum USD 2, at the interbank rate | Retail spread, usually 1% to 1.5% |
| Other charges | No inactivity fee, no withdrawal fee for the first withdrawal each month | Advisory or mandate fees layered on top |
Figures are indicative, based on published tariffs for the portfolio described above and converted to US dollars. Pricing differs by country of residence and changes often, so check both providers before you decide.
Where Private bank is genuinely good
- One relationship for banking, lending and investing
- A named adviser and a physical branch
- Everything administered for you, including reporting
Where it costs you
- The most expensive option in this comparison by a wide margin
- Fees are charged on the whole portfolio every single year
- In-house products are often recommended and carry their own fees
My take
The most reassuring account on the list and by far the most expensive: USD 45,000 against USD 614 for the very same portfolio.
Both accounts are legitimate and both are regulated. The question is what you are paying for. If you want a hand-held experience in your own language and time zone, Private bank does that. If you want to keep as much of your return as possible, Interactive Brokers is the cheaper account and the extra paperwork takes about half an hour a year.