Convert millions of USD to GBP at minimal cost [closed]

Question

I live in the UK but am due to personally receive a one-off payment of millions of dollars - representing the majority of my personal wealth - from a US-based organisation with whom I do business. The organisation has the money in dollars and has no UK presence nor UK bank accounts, but I would ultimately like to have it in GBP, since I intend to continue living in the UK. The means of payment are negotiable and both parties would like to avoid getting screwed on currency exchange fees.

It is well-documented online that doing an international wire transfer from an ordinary US bank account will result in receiving an unfavourable exchange rate plus fees, and sure enough this has occurred when I have had US-based organisations pay me via wire transfer to my GBP account in the past. However, when I have previously tried instead having organisations pay USD into a personal account I created with a currency transfer service like Currencies Direct, and then from there paying it out as GBP to my UK account, I found that even for six-figure transfers, the exchange rate available was still around 0.7% worse than the "interbank rate" (looked up via Google) at the moment of the transfer - despite currency transfer services like this marketing themselves as a better way to perform such transfers! For my 7-figure transaction, this 0.7% cut will represent a loss of tens of thousands of dollars to financial middlemen, which I would naturally like to avoid.

What can a person with lots of currency to convert but no special connections to financial institutions do to convert currency at a rate closer to the interbank rate? I can find a few services that advertise that they provide currency transfers at the interbank rate, like Revolut, but in all cases there are strict limits on how much money can be transferred and the services are not intended for large transfers like mine. Is eating a ~0.7% loss on every transfer like this just an unavoidable cost of doing business across countries and currencies, or is there some trick that I'm unaware of that other millionaires use when they need to convert their money between currencies - such as buying some liquid asset on some kind of exchange for dollars and then selling it for pounds?

Answer 1

I would suggest using a large international brokerage with a presence in both the UK and the US, to a do a forex trade/spot currency conversion (plus wire transfer in/out, which should be a flat fee).

For example, Interactive Brokers advertises spreads as close as 0.1 PIP/basis point, and charges a commission of 0.2 basis points * size of trade. A basis point is 0.0001, so this is very very close to market rates, overall.

Answer 2

I think it's likely that the newer money transfer services are the best way to optimise costs, unless you are able to work some kind of special deal with a bank given the amounts involved.

For example Revolut Premium looks like a decent bet. At the time of writing, they advertise unlimited foreign exchange with no fees.

The cost of Premium, £6.99/month or £72/year would be negligible for your scenario.

Revolut advertise that they give you the interbank rate. That said, it's not a mid-market rate, there is still a buy/sell spread. Right now the rate is $1.2459 versus $1.2424, which are approximately 0.15% away from a notional midpoint rate. (Don't actually exchange at weekends though, they add an extra loading then.)

You would still have to pay to receive the USD in Revolut. I believe they allow both incoming ACH and Wire transfers, with an £8 fee per wire transfer. I'm not sure about the ACH fees.

I have personal experience of using them for large transfers, though in the thousands to tens of thousands range only. I wouldn't personally trust Revolut with millions of dollars at once, but if the sender is cooperative you could do the transfers in smaller chunks.

You might also be able to use Wise - with wire transfers you can transfer in $1mn at a time. Right now, they advertise that they use a mid-market rate and charge a fee of somewhere between 0.3% and 0.5% (I got different results playing with different calculators on their site so I'm guessing a bit).

Answer 3

I work for a large US company, who has an internal retention scheme involving "allocation" of company shares which take some years to be paid out. Thus I get some thousand of US dollars paid into a US holding company called netfidelity every year. There it will sit idle, until I do a withdrawal to a bank account.

However I live and work in another country, so like your situation, I need to "import" it while losing as little as reasonable.

My coworkers who did direct payments to their local accounts have been stung with "currency transaction fee" of up to 5%. Some of us used wise.com (formerly known as TransferWise) and the change of currency from US to my-local cost 0.46 %

You have to set up an account with Wise first, and that takes some time because of anti-money laundering regs, involves sending photos of ID and it is verified by a human. You also have to deposit ~$30 in to open the account but that is not a fee.

Answer 4

Warning: I may be completely off base here...

If the money was invested rather than being in cash, it would be possible to transfer management of those from the current US broker to one in the UK. The securities themselves are already owned by you; all you're doing is shifting who will handle selling them for you. (This can certainly be done between brokers within the US.)

Note that this avoids having to convert the investments into cash immediately, which could force you to take a Capital Gains Tax hit. Unfortunately, I have no idea whether either country would impose a tax on this bit of paperwork, or how taxes might have to be handled at the eventual sale. (That might make a good Question, come to think of it.)

There may be fees for transferring the investment management between brokers. If so they should be fairly small and probably are fixed sums rather than a percentage of the current value, since it's the same amount of work for the brokers to transfer 1000 shares as to transfer 1.

So a workaround appears to be to use the cash to invest, then transfer your portfolo management to the UK.

There has to be a downside of this, or folks would be moving capital between countries this way much more often. But I'm not seeing it, if so.

(As others have done, I must repeat that having a large sum of money "appear" in another country is often the first step in a scam. You may be the exception -- but the moment they start asking for your passwords or an unexpected fee appears, odds are that the money never existed and they're just trying to take your money. The fact that they seem to be pressuring you to move all the money now rather than drawing what you need as you need it scares me; creating a needless rush is also common in scams, to discourage folks from stopping to think about the situation critically.)