I recently inherited an account worth $10M, and super confused about managing it.
I'm 25 and live in Eastern Europe country. The money are in a small private Swiss bank. They are mostly invested into a wide range of bonds yielding around 4%, (no stocks). I don't know what was the train of thought of my father when he opened this account and invested the funds. What's confusing is that the bank is charging crazy fees. For example $5K per year for just having the account open. The custody account charges 0.3% (!) yearly fee, the transaction fees begin at 0.5% and then go down with order size. So it costs 0.8% to buy a bond and then 0.5% to sell it. Although the intent was to hold the bonds till maturity as the advisor explained.
Yeah the advisor is another "perk" of this account. This was his plan to put all the money into bonds and avoid the stock market. He's picking some random companies and suggests to buy their bonds. There is logic to his pics, e.g. focusing on floater bonds with short maturity as "LIBOR is likely to gain 1-2 points in the coming years". There are some random Turkish, Chinese, Brazilian companies that "are unlikely to go bust because they are vital to the host country's economy".
I'm not sure whether I can trust this guy at all. At the same time I don't know whom to trust. None of my peers has seen this much money. My family is shocked about this, no one knew that dad made this much. And he himself didn't care about money too much. He was more interested in building profitable businesses. A trait I don't seem to possess...
Anyway some imminent questions I have.
- Is there any value is keeping $10M at a private Swiss bank that charges 0.3% to keep the money invested and 0.5% in transaction fees?
- Do the advisors from such banks keep the clients interest in mind?
- If not, what is a more cost effective and safe alternative? I know Interactive Brokers charge almost 100 times less than my bank. Should I just deposit all $10M into IB account and trade from there? What is the point of Private Banking?
Thanks in advance!
Submitted December 15, 2018 at 04:18PM by golden_shower_tmp https://ift.tt/2A3ncWZ
