Alternative Providers

[stevendorrans]

It seems that there is a strong preference for SBI and a couple of other online providers for iDeCo investments among members of this board. I get that their fees might be a couple hundred yen cheaper per month than some other providers. But I wonder why people don't value banks which offer the option of being able to do things in person.

[RetireJapan]

There are three reasons I prefer the online brokers over banks: lower fees, better range of products, and they don't try to sell you things.

Even if you went with a bank, you probably wouldn't be able to do things 'in person' as they seem to handle iDeCo through a specialised centre. In fact the first time I asked a bank about iDeCo, this happened: https://www.retirejapan.com/blog/investment-advice/

This guest post is also illustrative: https://www.retirejapan.com/blog/investment-advice/

In short, you can go through a bank, it's just likely you'll end up worse off in the long run

[adamu]

One of the golden rules of investing is to keep fees down. And the way to do that is via cheap online brokers.

With passive investing, there's little value in being able to speak to a person anyway, besides getting things set up, because ideally the process is automated as much as possible and there are only a limited number of cheap well-diversified funds to choose from. In general meeting bank staff is more of a chance for them to pitch you their inferior-but-profitable-for-them products.

If you have a good experience with a walk-in bank that can compete with the online brokers, please tell us about it.

[stevendorrans]

Useful insights. I read that Ben had used Iwate bank for some investments before switching to an online provider so it makes sense.

[RetireJapan]

Yes, Iwate Bank used to have one of the best versions of the precursor to iDeCo, but once the online brokers entered the market they rapidly became uncompetitive so we switched my wife's account across last year.

You can see a list of all the providers, their fees, and (perhaps more importantly) the fund fees here: https://www.dcnenkin.jp/search/commission.php

[TokyoWart]

But I wonder why people don't value banks which offer the option of being able to do things in person.

This repeats the advice above, but it is worth repeating because this applies not only to Japan but to other countries. Retail banks and insurance companies are not good providers of investment products. Because their internal expertise is not really in maximizing equity investment returns and their employee compensation policies don't attract or retain investing talent, they either offer internally managed products which perform more poorly than those from mutual fund and other investment companies or they provide those externally managed mutual funds with an extra layer of fees.