Recently Flatex shared an updated price PDF for the new year and to my surprise there will be an account fee starting from March. Since I have originally chosen Flatex to avoid percentage based fees (because they delay FIRE), it is the time to move away. Let’s look where I will move.

Prelude

I actually was a great fan of Flatex. In the world, where almost all German brokers take at least 0.25% of your transaction value, having a constant fee is a great. I definitely don’t want to give away 0.25% or 0.5% (once for buying, once for selling) of all my networth. This was the deciding point for me when going for Flatex.

However, it looks like the constant fee model Flatex has chosen is actually not sustainable. They have negative interest rate on cash since ages, but one could avoid it pretty easily by moving cash fast. Their fee structure is a bit weird for active trading (it is super expensive, especially for non European stock exchanges). Thus, they have likely attracted mostly ETF investors with buy & hold strategy. If one buys once a month, Flatex can’t get more than 100 EUR per year from such a user.

Changes

Thus, Flatex decided to change this and announced the news right before Christmas.

Degiro

Flatex bought Degiro. Surprise, surprise. 250M EUR (press release).

Fees

  1. Yearly depot fee of 0.1% (pre-VAT).
  2. Additional 2 EUR per transaction fee for some exchanges.

Impact

VAT in Germany is 19%, thus, for each 100k EUR invested or cash with Flatex, one will have to pay 119 EUR per year. This is not the end of the world, but unpleasant. If one has 100k EUR with them now and plans to FIRE (i.e. to hold the assets with them for 30 or more years), they may easily pay around 3k EUR in yearly fees. This is not a show stopper for FIRE, but just giving away 3k EUR is unpleasant.

Regarding the increased per transaction fee, this does have that much impact. If one buys once a month, it is 24 EUR per year. During FIRE, one can sell once a year.

If the new fees affect also Degiro, current Degiro clients will be very happy. I personally never used Degiro, but their fees were much lower than Flatex.

Alternatives

I don’t mind spending my time and moving away from Flatex to save 3k EUR.

My criteria are:

  1. No depot fee.
  2. The broker should be doing German taxes.
  3. Ideally no percentage based fees.

Interactive Brokers

I already have an account with IB and pretty happy with them (assuming that you have 100k USD with them to avoid monthly fee of 10 USD, it ends up cheaper than even old Flatex pricing). However, they don’t do German taxes. I am pretty sure that I will be able to figure our Vorabpauschale, but having an example from a broker would make the process much simpler. For such taxes example, I don’t even mind having a German broker with percentage based buying fee (since I don’t have to buy anything, I can just keep some assets there, but buy at IB).

DKB

I already did an overview of German brokers and somehow I completely missed that DKB technically has somewhat constant transaction fees.

Preis- und Leistungsverzeichnis.

Basically, they take 10 EUR for an order up to 10k EUR and 25 EUR for larger orders. This does not include stock exchange fees (e.g. Fremdkosten). The price jump at 10k EUR is weird, it may be that splitting e.g. 20k EUR transaction in two will save money on the transaction fee (depends on stock exchange fees).

10 EUR is actually quite pricey. If I were with a broker taking 0.25% transaction fee, I would need to perform 4 kEUR transaction to pay 10 EUR fee there.

They have saving plans and one contribution to a saving plan costs 1.5 EUR. One can have multiple saving plans, modify them frequently. They are executed only once per month on a specific day. The resulting ETFs are just like normal, the only difference is that one chooses EUR amount, not number of shares, thus, you end up with fractional shares. Looks like selling “saving plans” follows the rules above. Theoretically one should be able to move their depot to a broker with cheapest selling feels before their retirement to mitigate selling fees.

Obviously there is no depot fee (at least so far).

They also have free depot transfer. There is a form to fill in and to sent to the old broker.

Peculiar that they used to give 0.2% per year interest for up to 100k EUR for Aktivkunden. To become an active client, one needs to receive at least 700 EUR per month. Since 2020, the interest rate will be only 0.01%.

Since DKB is also a bank, it makes sense to consider their bank benefits. Active clients don’t pay 1.75% fee when paying in non-EUR currency (this only true for their Visa Credit Card, not Master Card). This actually looks attractive, since I occasionally need to pay in non-EUR and both Deutsche Bank and Ing have similar 1.75% fee.

smsTan costs 0.07 EUR per SMS.

OnVista

One can open an account here only if they are a citizen of Germany, France, Ireland, Luxembourg, Austria or Hungary.

Preis- und Leistungsverzeichnis.

5 + 2 EUR per transaction.

Buying for savings plan is 1 EUR pro transaction. Transaction volume is limited - from 50 EUR to 500 EUR. Selling is considered an ordinary transaction.

The account is free for existing clients. For new clients, there is a 0.5% yearly fee for amount over 250k EUR. Funny fact, the PDF says that Depot-/ Kontoführung is free (with a small note that “there is a fee over 250k EUR, see the following section for details”). However, it looks like this affects only cash. The original quote is [source, page 6, note 2]:

Zur Berechnung des Verwahrentgelts ermittelt die onvista bank den täglichen Saldo der Euro-Sichteinlagen auf Kontobasis. Hiervon wird der Freibetrag von 250.000,- Euro pro Konto subtrahiert. Ein positiver Restsaldo wird anschließend mit dem von der Europäischen Zentralbank (EZB) für die Einlagenfazilität jeweiligen tagesgültigen vorgegebenen Zinssatz multipliziert, sofern dieser Zinssatz negativ ist

“Sichteinlagen” is “checking account”. Looks like they try to forward negative interest rates from European Central Bank to the clients (i.e. it costs money OnVista to store your cash when interest rates are negative). Thus, this is not the end of the world. If I were you, I would definitely double check with them.

If this fee was to include stocks, this would be a party stopper for me for sure. In terms of FIRE, 250k EUR is pretty reachable. At 312.5k EUR this would become even more expensive than Flatex.

Trade Republic

New broker, which I haven’t even seen before. Looks like a “let’s disrupt everything” startup similar to Robinhood in the US.

Free orders (when not taking into account stock exchange fees).

They do your German taxes.

Looks like they have a limited set of ETFs and stocks. Their website says 7800 stocks and ETFs. This interview with the founder mentions 500 ETFs. It is also mentioned that they have 25 employees and 10M EUR investment round (the article was written in July 2019). Crunchbase gives 17M EUR as total funding amount.

Conclusions

Trade Republic looks attractive, but I am scared to put a sizable chuck of my FIRE portfolio there. My timeline is very long. I agree that these folks are doing a great thing, but I am not yet convinced that they will still exist in a couple years. This is a startup with 2 rounds of investment. This is very early for a startup. Moreover, Robinhood has plenty of problems in the US (e.g. the latest infinite margin bug). Disruptiveness of startups in brokerages - no, thank you! Moreover, the set of ETFs to buy is currently limited (e.g. this Reddit thread mentions only iShares ETFs).

OnVista has citizenship limitations and presumably cash depot fee starting from 250k EUR. I am worried that it may become “non-cash” too. 250k are reachable for a FIRE person.

Looks like DKB is the only option with constant buying/selling fees at this stage. Unfortunately, their fees are quite large. Thus, one may prefer to bundle investments into 10k EUR chunks or tinker with their saving plans.

I have already started opening DKB account. I will wait with the move until Flatex sends me Tax report for 2019.

I will keep you posted with the process.

If DKB introduces depot fee, I will then consider moving to a broker with non-constant transaction fees, but won’t buy there anything.

Further pointers

r/Finanzen on Reddit has multiple related threads (mostly in German), e.g.:

As we can see, many people will leave Flatex and quite a few will land at DKB. This can still be financially positive for Flatex - they may get more money in the end with fewer clients left (the ones who are ok with the new fees).

Happy investing without account fees!