Nee, niet weer he?DeGiro secretly charged customers for transactions at foreign exchanges. There’s a line in the fee schedule nobody ever heard about. It says “Setting up trade possibilities” (pdf). This means doing transactions at an exchange abroad comes at a small extra cost.

Once you do a transaction at a foreign exchange, you will be charged a fixed fee per additional exchange. No matter how many trades you do. The English customers have this fee curbed at 0,25% – but this isn’t the case for Dutch investors. Very recently the cap has been removed.

Paying in 2016 for transactions from 2014

Apparently, DeGiro wants you to pay €2,50 per exchange per year. Nobody knew, even DeGiro themselves forgot about it. They didn’t charge anybody in 2015 nor 2014. Last week they decided to charge for both years. Of course without any notice or specification. And the fee was hidden back in December in the overview.

degiro kosten

For most investors this is small change. The cost of €15 or €20 euro for two years isn’t a heavy burden. But no matter the amount of money involved ; you don’t want your broker to secretively charge you hidden costs. Two years after the fact. This is wrong at many levels.

Hidden fees, changed afterwards

This fee wasn’t clearly communicated in the fee schedule. Setting up trade possibilities? Nobody knows what this means. I didn’t know about it, and I have checked their fees closely. Wrote some earlier posts on DeGiro.

The fee schedule changed in the meantime. In the internet wayback machine I found another version from May 2015, with a capped charge (pdf, Dutch). In other words – DeGiro has changed the fee schedule in their advantage. And used it to charge people money. That’s not legal.

DeGiro has removed the cap somewhere between May 2015 en January 2016. This way they can hit the small investors too. If you have a very small portfolio (less than 1000 euro), you’re ripped if DeGiro charges you.

Vague description can mean anything. And they can charge you anything, because DeGiro doesn’t explain it. Nobody knows what other rabbits they pull from the hat.  At least it’s certain they advertise with the wrong figures.

Secretive bookings

Charging in the third week of January, but setting the date a few weeks earlier. Not informing clients. No message on the website. No apology. If it wasn’t for this Dutch geek forum, perhaps nobody would have ever discovered it. Maybe it’s necessary to double-check all bookings at DeGiro (including dividends, currency stuff..).

Brokers need to be transparent. It’s other people’s money. DeGiro has a terrible track record, concealing matters seems their modus operandi. A shame, because a lot things would be fine when clearly communicated.

Retroactive

Charging in 2016 for a transaction you did in 2014. That makes no sense. I doubt it’s even legal.

Not-so-free ETF selection

There’s a selection of ETF’s you can invest in free of charge. Very attractive for small investors with a few hundred euros to play around. However, some of these free ETF’s are listed on a foreign exchange. Meaning a “setting up trade possibilities” cost is charged anyway.

The mystery of HiQ

The attached hedge fund HiQ invest keeps on sinking. Imploding, is a better word. First two weeks of the year the market neutral fund lost 12,4%.

There’s something strange with HiQ and DeGiro. With the “high watermark“, hedge funds can generate performance fees when the fund reaches a new all-time-high. That situation is out of sight. That’s an understatement.

Management fees aren’t enough for covering the costs. The strange thing is this. HiQ is counterparty for DeGiro’s retail flow. That should be a profitable business. That’s not rational. It’s throwing good money after bad. The owners of DeGiro and HiQ will never benefit from internalizing the retail flow.

People suggest there’s a side pocket from the founders, to avoid giving the proceeds to hedge fund investors. But there’s no source for this claim – and probably not the case.

DeGiro seeking financing

End of 2015 DeGiro was actively seeking external financing. According to DeGiro, this was for new marketing expenses. Other people suggest a lack of funds due operations. Either way, large investors were amazed by DeGiro’s proposal without balance sheet and especially lacking revenue figures. Reaction to the quest for financing was mostly negative. And everybody seems to know about it.

Penny wise, pound foolish

This isn’t the first negative post about DeGiro on this website (1, 2, 3). Maybe hard to believe, but I have no problems with Gijs Nagel or his partners. DeGiro could be a fine low cost broker. Somehow, they mess up terribly.

It’s beyond me why DeGiro would want to insult their clients. This will generate an estimated 10k for them. Or let it be 100k. Why bother for such a limited sum? This affair will alienate customers and hurt the image of DeGiro, again. A broker people don’t trust. That’s a costly affair.

Jack
Jack