Brokerage Battle: Saxo Capital Markets versus TD Direct International

I just finished reading a fabulous book, Why I Left Goldman Sachs.

Long-time employee, Greg Smith, left the firm after he watched the culture corrode.  

More than ever, the firm started to go after fees at the expense of relationships. Clients got screwed. They were called Muppets.

Never forget that banks and brokerages exist to make profits—not for you, but for their firms.

And that’s OK. But as consumers and investors, we can vote with our feet.

In late 2014, I published The Global Expatriate’s Guide To Investing.

At one point, I mentioned the brokerage firm, Saxo Capital Markets. Overall, they’re a very good firm. But my book led people astray.

And to sound like a teenaged kid, it wasn’t my fault.

In the book, I quoted a Senior Manager at Saxo Capital Markets, in Singapore.

I interviewed him in March 2014. He said that the firm would soon roll out a 0.2% annual charge later that year.

Here’s a passage from the book: “The fee, according to Mr. Eoh, would likely be waived on a ‘case-by-case basis.’ When I asked for clarification, he suggested that accounts exceeding values of $500,000 would be exempt.”

My portfolio value exceeded that amount. So I signed up for an account.

After reading my book, many expats followed.

A few months later, Saxo Capital Markets slapped me with the fee. It doesn’t cost 0.20%. It costs 0.12% per year.

But it was a bitter pill to swallow.

Despite my pleas for the firm to stick to their word, they said there was nothing they could do about the added charge.

This was an unusual step for a brokerage to make. Most of the world’s brokerages are slashing costs.

Saxo Capital Markets, in the face of steep competition, chose to raise fees instead.

TD Direct International, based in Luxembourg, went the other direction.

They reduced their account fees, making them a much cheaper option than Saxo Capital Markets.

They also reduced their trading fees.

TD Direct International Trading And Account Fees

Competitive commissions on 18 International Exchanges

Source: TD Direct International

Saxo Capital Markets maintains low trading fees that are comparable to those at TD Direct International.

But Saxo’s annual 0.12% account fee is a killer for large accounts.

Impact of Account Fees On Portfolios

Assuming No Trades For The Year

*Fees converted to U.S. dollars

*Sources: Saxo Capital Markets; TD Direct International

If investors choose to invest at least once per quarter, TD Direct International becomes an even better deal.

Impact of Account Fees On Portfolios

Assuming At Least One Trade Per Quarter

*Fees converted to U.S. dollars

*Sources: Saxo Capital Markets; TD Direct International

TD Direct International is impressive. Its platform is far easier to use, compared to the one at Saxo Capital Markets. On the website, its brokerage and account fees are also far more transparent.  Just don’t let TD Direct International change your currencies from one to the next.  Switch your money to the desired currency first.  Otherwise, the bank will hit you with a foreign exchange spread as high as 1.5%.

Should You Switch?

If you are interested in switching your money from Saxo Capital Markets to TD Direct International, it’s easier than you think.

1. Call TD Direct International at 352 2603 2003
2. Tell them that you would like to open an account with them
3. Let them know that you would like to transfer your Saxo Capital Markets holdings to TD Direct International

• TD Direct International will ask you to fill out some online forms.
• They will also ask you to fill out some paperwork that you’ll need to sign and snail mail.
• You’ll need to send a certified copy of your passport from a notary (this costs $25 to do in Singapore).
• They will then ask you to fill out a transfer form, so they can move your investments from the other brokerage to TD Direct International.

This transfer will take 3-4 weeks. You won’t be able to trade during this time.

Many investors prefer Standard Chartered’s brokerage. They provide access to a variety of stock exchanges. Clients, from feedback they have given me, seem to like this brokerage. Unfortunately, Standard Chartered doesn’t provide access to the Canadian stock exchange.

Their trading fees are also high.

Standard Chartered versus TD Direct International

Annual Commission Fees, Assuming 12 Trades Per Year Off The UK Market

Sources: TD Direct International; Standard Chartered

Other Costs To Consider

Investors should look into wiring costs before making decisions. They should also realize that some brokerages might be cheaper for smaller accounts and deposits, while those same brokerages lose their luster when an account value grows.

It’s your decision to make. But always remember. If you invest with one brokerage now, it’s always easy to make a switch. Doing so could save you thousands.