The currency game: my experience with Everbank World Markets

Personal finance

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With all the recent talk about , you may be wondering what your choices are to hedge against or make money should this happen. We wondered exactly that same thing about a year ago and discovered there weren’t many options.

Not easy to do

It seemed logical that the easiest way to hedge against a dropping USD was to directly invest in Euros (or another foreign currency), but there didn’t seem to be any easy way to do this that didn’t involve traveling to another country to open a bank account.

Schwab offered some services such as investing in or foreign bonds, but neither was as appealing, especially given that trades had to be conducted through their a specific department at their global investment division by phone. A few other brokerages offered investments in foreign currencies, but only to high net worth customers of $10M or more. (Sadly, we don’t qualify.) Other options we considered were some CEFs and mutual funds that invest in foreign companies or bonds.

Finally, our research pointed us to , which seemed to be the only service that offered . We decided to give this a shot after confirming that they were reputable and were FDIC insured as a bank (though obviously any loss in investments would not be covered). It seemed easy enough: open an account via fax and wire transfer or deposit money into it. When you wanted to convert to another denomination, you’d call them by phone to place the order.

My review

To make a long story short, after using them for a year, I decided to search for better ways of hedging against a fall in the US dollar. You can probably tell from my other posts that transparency is very important to me when it comes to investing and money, and I just didn’t feel that Everbank World Markets provided that level of service. Before opening an account, we couldn’t find any information on their commission structure on their site (even in the FAQ), so we had to call them and ask specifically in order to find out. They charged 0.5% for each trade (e.g. USD to another currency, and again vice versa) for amounts US$100K and above, and 0.75% for each trade if the amount was below that. (Not a bad spread for them, eh?)

I also noticed their customer service wasn’t at the level I expected for a bank or brokerage. The reps always answered with, “It’s a great day at Everbank. This is John”, always giving their first name only, always curt, and never particularly friendly. We found out quickly that they place currency trades in batch orders once or twice a day, so it seemed we could never find out what the current spot price was or what our trade was executed at unless we called back the next day. Oddly enough, once we had a rep who said, “Well, if you place a trade order now, I can guarantee you a good spot price.” This not only seemed counter to what all the other reps said with regard to the batch processing but reeked a little too much of used-car salesmanship tactics.

A few months after we opened the World Market accounts, they started offering online access to your accounts if you opened a FreeNet Checking account. After doing so, we were able to look at our World Market accounts online, but not easily. Many times their servers were down, and their login and password requirements were a bit complicated. Anytime you forgot your password, it seemed their automatic retrieval system (which asked you some security questions) were 404-Page Not Found, which meant another call to the Customer Service department to reset the password.

So, in the end, we decided Everbank World Markets just wasn’t right for us. It still seems to be the only way out there to invest in foreign currencies, but the lack of transparency and difficulty of use bothered me enough that I decided to seek different ways to invest in a weak dollar, namely, finding foreign companies whose markets are mainly in their own countries (and not exporters, who would be hurt by a weak dollar), or perhaps US companies that do the bulk of their business overseas.

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9 Feedbacks on "The currency game: my experience with Everbank World Markets"

Tim MMF

Good stuff. Thanks for the link.



Bertrand

I found out about Everbank from another financial web site. I believe Everbank makes their money from the interest rate “spread”. I only checked one currency, the Australian Dollar. But, here is what I found in Feb 2007: Everbank was paying 5% for an Australian Dollar CD. Inflation in Australia was 8%. Therefore you would lose 3% after inflation. So, the only way you could make money is if the Austrailian Dollar would appreciate more than 3% against the US dollar.

Bertrand



tim

so how do I do this? I’ve been searching, a bit desultorily, for 18 months or so. How do I play this?



Diane

I opened an EverBank account earlier this year which rolled dollars I had in an IRA (cash) with a brokerage firm into an EverBank IRA in euros. Today I added Swiss francs to the account. Because my money remained in an IRA, I haven’t paid anyone a fee.

EverBank has always been helpful, I receive a monthly statement, earn foreign interest on my euros, and the account is not in the form of a CD.

The staff at EverBank’s World Markets desk is not huge, so I have spoken to two people regularly. I don’t care if they don’t give their last names when they answer the phone. As long as they are doing their job for me, why should that matter?

It took a long time searching for a place in the US where I could actually own euros, and to find one insured by the FDIC up to 100,000 USD per account was perfect! Plus, The Daily Pfennig newsletter is an eye opener and an education in itself, arriving every weekday morning free to World Markets’ customers.

While you are looking for a friendlier place to do business, the dollar is falling like a stone. Good luck to you!



KC

Thanks for sharing. I’m also looking for ways to invest in Euro and wasn’t sure of Everbank.

Have you found a good alternative that is more transparent and accessible? Since this was written over a year ago, I am curious what you have found out since then.



keith

I first opened a money market account with Everbank at 6%.Then I got a c.d. tied to the price of gold(principal remains at the invested amount and the average price of gold over the life of the c.d. is paid to the account)I have hedged monies into 5 seperate currencies.I have also bought unallocated metals at bullion prices based on the London spot close prices.All my trades with Everbank have been easy.The Daily Pffenning is my “must read”every morning,even before the Drudge Report.My accounts are always transperent.



Drake

I’ve been with Everbank World Markets for a few years. I’ve never felt very comfortable with them and all of this blog’s cautious comments are fully justified. But now that some of their CDs in foreign currencies are tanking, they are literally liquidating accounts at astronomical losses to their customers. Check this other blog for more details:
http://www.openmarket.org/2008/10/07/everbank-can-multiply-your-financial-woes/?disqus_reply=3045286#comment-3045286



Robert Russell

I’ve been looking for a way to invest in gold backed currencies, and this looked like a possibility. Drake’s comment really puts me off; if they are liquidating accounts, that counters my understanding of what a CD is supposed to represent. Right now they are promising 25% on a 3 year CD — which in itself seems a bit unrealistic.



Clyde Berger

I have held some unallocated gold with Everbank World markets for several years. They state that there is physical gold being stored in Australia for all their accounts. I could demand delivery which they could accommodate but it would take time and incur shipping costs. There are no annual storage costs which is surprising. They quoted gold at 1074 today.



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