This is how it works: Open a custody account

Last update: 23.02.2018 12:42

A simple guide for anyone who is investing money in the financial market for the first time and needs a custody account.
And also for those who are looking for a cheaper custody account with the right conditions for them.

What is a depot?

A securities account is an account that enables you to buy and sell on the financial market (in banker’s terms: trading account).
You probably already have a private account that receives your salary and from which you make most payments and transfers.
You probably also have a savings account, which earns slightly more interest than your private account.
You cannot buy shares or funds directly into your private or savings account.
You need a separate account for this, known as a custody account.
And it works like this: You transfer money to the clearing account of your custody account, which you can then use to buy investment products such as shares or funds. These investment products are then stored in your custody account: you can see which securities you have bought, at what price, what costs have been incurred (unfortunately often somewhat hidden) and, of course, how your investments are performing – i.e. whether you are making a profit or a loss.
When you sell a security, the money is paid out to your custody account.
You can now transfer it to another account or reinvest it.

How do I open a custody account?

You can open a custody account with traditional universal banks or with independent providers.
These are also called (online) brokers.

The comparison at moneyland.ch shows that there are big differences in fees.
Depending on how you want to invest, how much money and how often you want to trade, there are cheap and less cheap providers.
Here are a few examples:

Best provider for passive portfolios, i.e. you invest your money and then leave it for a while:

1. Place: CornerTrader
2. Place: TradeDirect
3. Place: Swissquote

Best providers for casual traders:

1. Place: Saxo Bank
2. Place: CornerTrader
3. Place: Strateo

Best provider if you primarily want to hold Swiss ETFs:

1. Place: Strateo
2. Place: Swissquote
3. Place: Saxo Bank

A comparison is worthwhile because, depending on the provider, you can save several hundred to several thousand francs per year.
High fees can quickly add up, especially for smaller portfolios.
It is also worth taking a look at the user-friendliness of the application and the availability of customer service, especially for beginners.
Sample portfolios are also a good way of doing this.
A sample portfolio means that you can simply pretend to invest with the provider and get to know the application without any real money flowing in the background.

A free sample portfolio is offered by, for example: Strateo, CornerTrander and SaxoBank.
Your bank may also offer you this option.

What should I look out for when choosing my custody account provider?

In most cases, maintaining a securities account costs an annual annual (minimum) fee, even if you do not hold any investments in it. When choosing a provider, you should consider not only the annual custody account fees but also the transaction costs when buying/selling investments.
On balance, online brokers generally offer more favorable conditions than universal banks.

Custody fees you usually pay in proportion to the value of your securities account.
If the value of your shares increases, your fees increase.
With some providers, the custody account fees are capped at a certain amount or there is an (additional) fixed amount per position.
The annual custody account fees can therefore be charged as a percentage or flat.
Also with or without a minimum fee.

The transaction costs for the purchase or sale of securities consist of dealer fees, stock exchange fees and federal stamp duty. The dealer fee of the bank (the so-called brokerage fee) is usually determined by the service: So the question is how do you want to place your orders?
Online orders (via eBanking/Internet) are much cheaper than orders placed by telephone or fax.
The fee scale is important here: Are there minimum fees, flat purchase fees or does the purchase fee increase as a percentage of the value of the security?

Stock exchange fees. These are comparatively low.
Banks can reach individual agreements with the exchanges on the level of fees.
The exchange fee can therefore vary between providers.

The federal stamp duty is the same for all providers and amounts to 0.15 percent for investments with a foreign securities identification number and 0.075 percent for investments with a domestic securities identification number (also known as Valor).
This may be relevant for your choice of securities, but not for the selection of your custody account provider.
This is because all providers pass this stamp duty on to you 1:1.