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Choosing a broker is an important step when starting to invest. There are many different options available, so picking the right one for you is challenging. We take a closer look at Keytrade, a broker based in Belgium. We'll look at the pros and cons, the fees, convenience of setting up an account and safety. By the end, you'll be able to decide if Keytrade is a right broker for you to invest your savings, or if another broker suits you better.
Pros and cons of Keytrade
Read on to get the full low-down of Keytrade.
The story of Keytrade
Keytrade was started in 1998 and was one of the first online brokers in Belgium. Their offer has grown a lot since then, as they propose full banking services today. In 2005, Keytrade Bank was acquired by Groupe Crelan (formerly Crédit Agricole) and is now part of the Crédit Mutuel Arkéa group.
Fees
Fee structure
It's free to create an account. Also, there's no membership fee. So in most cases, you'll only pay a transaction fee for whenever you buy or sell something.
Keytrade charges higher transaction fees for higher transaction amounts, and different fees per exchange. This fee structure is fairly standard for a broker. However, there are on the pricier side among their peers. For instance, buying anything on the German XETRA exchange costs at least €24.95! This makes Keytrade unattractive when investing smaller amounts.
A few examples of transaction fees:
Fees for ETFs
Let's focus on ETFs, which are gaining in popularity (and for good reasons). Buying €1,000 of the popular IWDA ETF will cost €14.95. As you pay this fee for every purchase, it will compound to a lot of money and missed returns on the long term. As you can see below, Keytrade is among the most expensive brokers.
Find out all the fees on Keytrade.
Fee for dormant account
One thing to be careful about is the fee for dormant account. An account is considered dormant by the Belgian government if you haven't made any transactions over the last 5 years. Keytrade charges €50 as an administrative fee for dormant accounts.
Convenience of Keytrade
As Keytrade is a Belgian broker, they handle a lot of the heavy lifting for Belgian investors.
TOB ("beurstaks" / "taxe boursière")
There’s a tax on the transaction every time you buy or sell a security in Belgium. The rules concerning the tax rate are complicated, also for ETFs. Depending on the characteristics of the ETF, the transaction tax varies between 0.12% and 1.32%.
Fortunately, Keytrade handles the payment and declaration of the TOB for you.
Dividend tax
There’s a 30% tax on dividends that you perceive through shares that you hold. This tax is applicable to individual stocks but also to distributing funds.
As Keytrade is registered in Belgium, they automatically withhold and declare the dividend tax for you.
Reynders tax
For ETFs that consist of at least 10% bonds, there is a 30% tax on the profits made when selling. For example, if you bought a bond ETF at €100 and end up selling it later for €130, your net profit will only be €21. The other €9 will go to the Belgian state through this tax.
Again, Keytrade handles the Reynders tax for you so you don't have to worry.
Does Keytrade require declaring the account to the NBB?
No need, as they are based in Belgium.
Automated savings plans
Keytrade does not have automated savings plans on their brokerage platform.
However, they do offer an automated investment plan called Keyplan. They claim it's "free" and you can start investing from only €25. However, there are a couple of downsides to Keyplan:
- The real costs are hidden in the funds. Fund managers charge a fee for managing their funds. The total cost of a fund is indicated by the total expense ratio (TER). Index-based ETFs such as IWDA usually have a TER around 0.20%. But Keyplan's funds are a lot more expensive. For example, the TER of the funds in their Balanced portfolio vary between 1.51% and 2.30%. So even though Keyplan itself is "free", the fees are hidden in the running costs of the funds you invest in.
- You'll pay dividend tax on some funds. In Belgium, any dividend you perceive is taxed at 30%. Accumulating funds, which directly reinvest dividends, are a way around this tax. On the other hand, distributing funds distribute their dividends, which means they're taxable. Unfortunately, some of Keyplan's funds are distributing. So be careful in your choice of funds if you want to avoid paying the dividend tax!
Customer support
Keytrade aren't known as the most customer centric company and this is reflected in the fact that there isn't a live chat to ask questions directly. You can find all the usual support mechanisms though, like email and phone. From our experience, they can take weeks to reply to emails.
Fractional shares
Like many brokers in Belgium, Keytrade does not offer fractional shares. You're forced to purchase whole units of shares. Combined with the high fees, it becomes very impractical to invest on a monthly basis when using Keytrade. You almost have to resort to consolidating your monthly investments into large and infrequent contributions, like every six months.
Setting up an account
Let's dig into the details of setting up your Keytrade account for the first-time.
Keytrade uses itsme
You can create a new Keytrade account using itsme. This speeds up the process of creating an account, as the old way was very slow.
They take a while to approve accounts
The account creation can take a long time to process. We registered for an account on October 31st 2022 (without itsme) but as of today our account was still pending approval! We had to update an address which blocked the account opening... Similar slow waiting times have been shared by other Keytrade customers online. So if you're wanting to get started investing quickly, Keytrade is not the best option unless you sign up through itsme!
Create an account on the web but not on mobile
Besides a web platform, Keytrade also offers a mobile app for both iOS and Android. However you can only create a new account on a computer.
Ease of use: 2/5
As it's a trading app, Keytrade shows many details that aren't very relevant to most investors, especially for buy-and-hold index investors. This makes the mobile experience quite poor and fairly difficult to find the information you need to make an investment decision. You have more room on your computer to browse, but there's still the information overload. That's why we've rated it a 2 out of 5!
Business, children and joint accounts
What makes Keytrade stand out is that you can set up an account for your children. This is quite unique in the broker space. You can also set up joint accounts, which is handy for couples as well as a business account.
Is Keytrade safe?
As we’re dealing with our long-term savings, safety and trust is vital.
Who is the regulator?
Keytrade is a regulated entity in Belgium. Essentially this means that the FSMA oversees them.
Have they had any issues with the regulator?
Based on our research, we can't find any information that Keytrade has had any issues with any regulator.
How much of your assets are protected by the investor protection scheme?
Even though they are regulated by the Belgian regulator (FSMA), Keytrade is owned by the French Arkéa. In France, the investor protection scheme protects your assets up to €70,000 through the Fonds de Garantie des Dépôts et de Résolution (FGDR). This is really used as a last resort against fraud or embezzlement.
Is your cash protected by the deposit guarantee scheme?
Yes, if you have a cash balance on your Keytrade account, it's protected up to €100,000.
Does Keytrade do securities lending?
They do not do securities lending. This means you don't risk certain types of counterparty risk.
Does Keytrade do payment for order flow?
They do not do payment for order flow. PFOF is an important source of revenue for many new brokers, including Trade Republic. This practice involves routing your orders to certain market makers, who then pay the broker for the right of executing these orders. PFOF can work at your detriment, as brokers may prioritise payment over executing the best possible trade for you.
Keytrade vs other brokers
All brokers offer more or less the same service. So for most investors, the broker fees and handling of taxes have become the most important criteria to make a choice. The table below shows how Keytrade ranks, using the example of buying €1,000 of the IWDA ETF:
We have also compared Keytrade with other brokers, if you want to dig deeper into a specific comparison:
The easier way: Curvo
Brokers push you to trade and to pick individual companies to invest in. Rather than picking individual stocks such as Amazon or Tesla, index funds are a way to buy the whole market, across all sectors and regions of the world. Essentially, you own a small portion of thousands of companies throughout the world. Instead of betting on a particular company, you are placing a bet on the global economy.
Rather than having to pick the right stocks or ETFs among the thousands available through a broker like Keytrade, you invest in a portfolio that is tailored to you and your goals. These portfolios are composed of globally diversified index funds, meaning you earn a piece of the growth of the global economy, and they're best suited to make the most of your savings long term. And they're secure, as they're managed by NNEK, a Dutch investment firm under supervision of the regulator in the Netherlands (AFM).
We believe that investing is an important tool for our generation to improve our financial well-being and to prepare for our future. We are building Curvo to fulfil that vision, by making good investing easy and accessible to all:
- Diversified portfolio set up for you: The best portfolio for you is built by NNEK based on your time horizon and financial goals. Simply answer a short questionnaire and you’ll get everything set up for you.
- Automated savings plans: Through Curvo’s app you can set up a monthly contribution from €50. That means that money is automatically invested for you in your portfolio. Put your savings on autopilot!
- Fractional shares: All the money you send towards your portfolio is fully invested by NNEK. No cash is left on the side.
- No TOB: Significant savings as the portfolios aren’t liable for the Belgian transaction tax (or "TOB"). This saves you between 0.12% and 1.32% for every time you buy or sell!
- Sustainable investments: Your investments focus on one guiding principle: don’t invest in companies that are considered destructive to the planet. This means that sectors like non-renewable energy, vice products, weapons and controversial companies are all excluded.
- Project yourself into the future: Through Curvo you can see how much your portfolio is expected to be worth in the future. You can answer questions like “how will increasing my monthly contribution by €50, €100 or €200 affect my long-term savings?” to give a concrete idea for the “future you”.
Learn more on how it compares to investing through a broker.
Summary
Keytrade has established itself as steady broker for Belgians, offering a comprehensive range of services from online brokerage to banking. It's a convenient option, especially as it handles all the taxes and administration for you. However, its most important drawback is that it's expensive compared to other brokers. The fees add up and negatively impact your returns, especially if you're trying to invest on a monthly basis.