Jurgis Posted February 28, 2017 Share Posted February 28, 2017 But IB makes the vast majority of their money off active, professional traders who (should) care a lot more about pricing than customer service. Not sure what you call active, professional traders. Day traders? People with 200-400% annual turnover? In any case, as much as I can call myself "active" trader, I do care much more about customer service than I do about pricing. The only reason I would consider IB at all is their access to markets Fido does not provide. And yeah IB is probably the only viable smallish SMA platform. But the fact that most SMA advisors use it, doesn't mean I should fall in love with it. IB is crap. But you are right: I was on Fido before and I will only be happier on Fido now. If I decide to have someone manage my money, I'll weigh whether I want to endure the account on IB. Link to comment Share on other sites More sharing options...
KCLarkin Posted February 28, 2017 Share Posted February 28, 2017 I can't understand why everyone thinks price cuts is good for IB. If your main advantage starts to disappear, that's is not good for your competitive position. Commission prices aren't the main advantage for IBKR. Lowest cost is. Commissions are only a small part of the price paid. For example, Interactive Brokers pays interest on deposits. When interest rates rise, IBKRs interest rate spreads remain constant. Schwab's spreads widen. So when interest rates rise, IBKR is actually more competitive. Schwab (and presumably Fidelity) do not make much revenue from trading. They are asset managers. Schwab only makes 11% of revenue from trading. Rising interest rates allow Schwab to use commissions as a loss leader. -- But the theory is that the lower prices will force sub-scale brokers out of the business (and many will outsource to IBKR). Certainly, that is Peterffy's expectation. So you could potentially see the market shakeout as follows: - Retail investors and RIAs -> Schwab and Fido (free trading) - Active Traders -> IBKR -- If the other brokers are going to maintain their customer service and simply accept structurally lower margins, how does that help IB? As mentioned above, the other brokers aren't lowering margins. Higher interest rates are creating higher margins. Given the higher interest rates, they are competing more aggressively for assets. Link to comment Share on other sites More sharing options...
benhacker Posted February 28, 2017 Share Posted February 28, 2017 Huh, I posted, but I guess it was lost to the 404 gods... Count me as one who views this as moderately good long term for IB, but near term it will clearly lower growth / customer acquisition. I don't view it as a major change though, just a continuation of what has been happening for a long time. Fido and SCHW have both been lowering commissions for years, just stealthily through negotiations with big customers. Most I know were already at $5 commission if they had big accounts. I think you will see the US brokerages have less $$ now to compete / invest both in the US, and critically, overseas. Long term, I think IB's cost advantage will trend toward more consolidation, and more brokerages using them directly for infrastructure, and just focusing on support. I still think long term, this is an oligopoly business globally with a few differentiated competitors, but mostly a commodity business. I think IB's price advantage is getting lower today, I think their cost advantage remains intact and less profitable brokerage competitors will begin evaluating business plans soon given the trend of the industry. My 2 cents. Link to comment Share on other sites More sharing options...
KCLarkin Posted February 28, 2017 Share Posted February 28, 2017 professional traders who (should) care a lot more about pricing than customer service. And "customer service" for professional traders is very different. Professional traders should care much more about the quality of trade execution than the quality of a 1-800 number. Or the ability to trade internationally. Or the ability to easily get pricing for shorts. We can all agree that IBKRs marketing, user interfaces, and customer service are terrible. The fact that they are growing accounts 15% despite these obvious weaknesses, proves how compelling the overall product offering is. Link to comment Share on other sites More sharing options...
racemize Posted February 28, 2017 Share Posted February 28, 2017 It seems like it is growing because there is virtually no choice other than IB for small funds. Do they split out retail vs professional growth? Note: I don't know too much about this investment other than I'm essentially a forced user of IB for the reason above. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 28, 2017 Share Posted February 28, 2017 professional traders who (should) care a lot more about pricing than customer service. We can all agree that IBKRs marketing, user interfaces, and customer service are terrible. Oh I dunno, I like the one where the guy tries to make out with the other guys date at the end of the night. I also like the one where the lady needs to "do some hedging trades" before ordering wine. You can see why I decided to cut off my cable subscription. haha. Link to comment Share on other sites More sharing options...
Travis Wiedower Posted February 28, 2017 Share Posted February 28, 2017 It seems like it is growing because there is virtually no choice other than IB for small funds. Do they split out retail vs professional growth? Not that I've seen. On the Q4 2016 call Peterffy broke down accounts by type--56% are individual accounts that make up 37% of equity and 51% of commissions. The problem is the vast majority of that is professional traders so it's hard to know how much is retail. The other account types (other brokers, hedge funds, prop firms, and financial advisors) don't have any retail investors in them. Peterffy has said many times that he has no desire to market to or service retail clients so unless there's a major shift I don't expect that'll change (at least while he's alive). Frankly, if you're a retail investor who makes a handful of trades per year I have no idea why you'd be on IB. Link to comment Share on other sites More sharing options...
Hielko Posted February 28, 2017 Share Posted February 28, 2017 Easy. Some retail investors care about prices, and in some countries the competition isn't like in the US where TD Ameritrade, Schwab and Fidelity are actually already pretty cheap. My parents who don't do more than a handful of trades have an IB account for that reason. At the same time, I do some of my trades at TD Ameritrade because IB is a lot more expensive for certain transactions... Link to comment Share on other sites More sharing options...
Astrea Posted February 28, 2017 Share Posted February 28, 2017 Charles Schwab Corp says it will reduce its standard online equity and ETF trade commissions from $6.95 to $4.95 effective March 3, 2017 Link to comment Share on other sites More sharing options...
rb Posted February 28, 2017 Share Posted February 28, 2017 Easy. Some retail investors care about prices, and in some countries the competition isn't like in the US where TD Ameritrade, Schwab and Fidelity are actually already pretty cheap. My parents who don't do more than a handful of trades have an IB account for that reason. At the same time, I do some of my trades at TD Ameritrade because IB is a lot more expensive for certain transactions... +1. Also the international side at IB and the FX. Savings on one FX trade at IB will pay the minimums for a whole year. Also low margin interest that smart retail investors can integrate into a larger strategy. Link to comment Share on other sites More sharing options...
KCLarkin Posted March 1, 2017 Share Posted March 1, 2017 Interesting scuttlebutt from Twitter: Spoke to ~$1bn mutual fund that said banks charging them an arm & leg for trading. So they use $IBKR for most trades, same execution. -- @LuisVSanchez777 Link to comment Share on other sites More sharing options...
Spekulatius Posted March 1, 2017 Share Posted March 1, 2017 But IB makes the vast majority of their money off active, professional traders who (should) care a lot more about pricing than customer service. Not sure what you call active, professional traders. Day traders? People with 200-400% annual turnover? In any case, as much as I can call myself "active" trader, I do care much more about customer service than I do about pricing. The only reason I would consider IB at all is their access to markets Fido does not provide. And yeah IB is probably the only viable smallish SMA platform. But the fact that most SMA advisors use it, doesn't mean I should fall in love with it. IB is crap. But you are right: I was on Fido before and I will only be happier on Fido now. If I decide to have someone manage my money, I'll weigh whether I want to endure the account on IB. I have accounts with Fidelity, Interactive Brokers, and Wells Fargo Investments. I think from a Customer service perspective, I like dealing with Fidelity the most. I don't like the fact that they don't allow to buy some dark company stock any more. This is an area that I have been investing quite a bit over the years and I really hate this restriction and let them now. Wells Fargo investments does have similar restrictions. Wells Fargo investment is the cheapest, I get 100 free trades/year as a PMA (or whatever it is called now) customer, but the platform is bare bones. If they ever do away with the free, I will be gone in a NY minute. Interactive Brokers gives you access to the largest Universe of stocks, including foreign stocks. I rarely use the Pc platform any more but trade from the iPad or Android app. The PC app has become very unwieldy, imo. Their tax reporting is crap, they don't have import into Turbotax and I have found the import via different format lacking. it should really be a high priority to fix this, sind es they are behind pretty much every other broker in that regard. With Fidelity or Schwabs price cuts, IB is not really much cheaper any more for plain vanilla trading, if you trade a few hundred shares. IB is much cheaper when dealing with foreign stocks, currencies, bonds and margin. So far, not one broker meets all my requirements and that is why I have a few accounts at different brokers. I could probably whittle then down to Fidelity and IB, but my laziness prevents me from doing so. Link to comment Share on other sites More sharing options...
kab60 Posted March 1, 2017 Share Posted March 1, 2017 February metrics out, very nice growth in accounts. Link to comment Share on other sites More sharing options...
Guest roark33 Posted March 7, 2017 Share Posted March 7, 2017 IB's technology advantage shown here (two days running)... Link to comment Share on other sites More sharing options...
Jurgis Posted March 7, 2017 Share Posted March 7, 2017 It's preventing you from trading for your own good. Just go on vacation, you don't need to buy or sell anything. Come back in 10 years and you gonna be $$$$$. Link to comment Share on other sites More sharing options...
Guest roark33 Posted March 7, 2017 Share Posted March 7, 2017 It doesn't actually prevent me from doing anything. What is does is make clients wonder what is going on with their account. It's just so funny that people think IB is so advanced, but their back-end customer service technology is just so poor. Link to comment Share on other sites More sharing options...
Jurgis Posted March 7, 2017 Share Posted March 7, 2017 Sorry, my mistake. It's for clients' own good. Tell them to take a vacation and come back in 10 years for $$$$$. ;) Edit: I haven't gotten to entering IB transactions into TurboTax yet. I'm gonna be way more snarky when I do. Link to comment Share on other sites More sharing options...
undervalued Posted March 7, 2017 Share Posted March 7, 2017 Lol as long as it doesn't say your money is NOT available anymore. Link to comment Share on other sites More sharing options...
writser Posted March 7, 2017 Share Posted March 7, 2017 That's the MF Global approach. Link to comment Share on other sites More sharing options...
Travis Wiedower Posted March 8, 2017 Share Posted March 8, 2017 Just last week my girlfriend's Schwab account randomly showed a $0 balance. Couple phone calls got it sorted out. All technology companies have occasional glitches. Be careful not to extrapolate meaningless sample sizes. On another note, I got my copy of Preqin's 2017 hedge fund report and was happy to see the entire back cover is an Interactive Brokers ad. Thought the ad was pretty solid... Link to comment Share on other sites More sharing options...
oddballstocks Posted March 8, 2017 Share Posted March 8, 2017 Just last week my girlfriend's Schwab account randomly showed a $0 balance. Couple phone calls got it sorted out. All technology companies have occasional glitches. Be careful not to extrapolate meaningless sample sizes. On another note, I got my copy of Preqin's 2017 hedge fund report and was happy to see the entire back cover is an Interactive Brokers ad. Thought the ad was pretty solid... A few years ago Fidelity had a stock in my IRA's price showing as $60,000 per share instead of $6 per share. Instantly I had something like $13m in that account. I called them and asked to cash it out or get a margin loan against it. The rep laughed and said it was an error, I said they needed to help me figure out how to get the cash out... That's not as bad as another time when an international stock I held's CUSIP changed. I had a position that was worth about $10k that was rejournaled from a Portuguese stock into some worthless Canadian miner with $100 in value. It took a LONG time on the phone before that was fixed. They ended up talking to some IT person who determined it to be an error. That was a mess. Link to comment Share on other sites More sharing options...
atbed Posted March 8, 2017 Share Posted March 8, 2017 Just last week my girlfriend's Schwab account randomly showed a $0 balance. Couple phone calls got it sorted out. All technology companies have occasional glitches. Be careful not to extrapolate meaningless sample sizes. On another note, I got my copy of Preqin's 2017 hedge fund report and was happy to see the entire back cover is an Interactive Brokers ad. Thought the ad was pretty solid... Saw the same ad in Hedgeweek! page 6 http://www.hedgeweek.com/sites/default/files/Hedgeweek_Special_Report_Prime_Brokerage_2016_0.pdf An article about them starts on page 7. Link to comment Share on other sites More sharing options...
boilermaker75 Posted March 8, 2017 Share Posted March 8, 2017 Edit: I haven't gotten to entering IB transactions into TurboTax yet. I'm gonna be way more snarky when I do. I've done mine. It is easy. If you are on a Mac don't use Safari, it won't work. You have to use Firefox. Link to comment Share on other sites More sharing options...
rb Posted March 8, 2017 Share Posted March 8, 2017 Edit: I haven't gotten to entering IB transactions into TurboTax yet. I'm gonna be way more snarky when I do. I've done mine. It is easy. If you are on a Mac don't use Safari, it won't work. You have to use Firefox. You wouldn't have that problem if you lived in Canada :P 8) Link to comment Share on other sites More sharing options...
Jurgis Posted March 8, 2017 Share Posted March 8, 2017 Edit: I haven't gotten to entering IB transactions into TurboTax yet. I'm gonna be way more snarky when I do. I've done mine. It is easy. If you are on a Mac don't use Safari, it won't work. You have to use Firefox. Not sure what you mean. I haven't found any way to import IB taxe forms into TurboTax online. Are you saying there is a way? We can take it to private messages or other thread, since it's a bit OT here. Edit: This https://ibkb.interactivebrokers.com/article/2030 I believe only works for importing into TurboTax standalone. Not into online. Also this says only standalone: http://ibkb.interactivebrokers.com/article/2042 Link to comment Share on other sites More sharing options...
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