Is Being a Private Banking Client Worth it?

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AndroAsc
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Is Being a Private Banking Client Worth it?

Post by AndroAsc »

I'm going to assume most of the older Bogleheads here have decent net worth, and some may be eligible (or already are) for private banking status with major banks (e.g. Merrill Lynch, JP Morgan).

I'm basically wondering if being a private banking client with these banks is worth it.

From an investment standpoint, you lose out Admiral shares Vanguard funds, although that can be easily replaced with Vanguard ETFs. I'm guessing that they will waive all fees/commissions as well because of net worth, so that makes it zero extra cost like Vanguard. Of course their banker will try to eat you by selling the latest junk, but we can just ignore it.

I admit from an investment standpoint, it makes no sense to do business with those sharks. But let's assume I can handle swimming with the sharks. What about the non-investment perks for being a private banking client? Recently, I stumbled across Merrill Lynch Preferred Rewards program, where if you have >$100k assets with them (which honestly is not a lot), you basically get a 2.625% cashback card, which is the highest cashback that I've seen so far. It makes me wonder what other benefits they give for even higher net worth (>$1mil) customers.
stinkycat
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Re: Is Being a Private Banking Client Worth it?

Post by stinkycat »

I have often wondered about this. The Merrill Lynch/BOA deal has intrigued me a bit, it seems to be one of the more lucrative deals around. A related question is, what is the best broker/bank for a boglehead with $100k plus? I am Apex at TD ameritrade and while I have never had a problem with customer service (not that I have needed much), I don't think they offer too many perks that are that particularly valuable. The level II quotes were fun to watch for a week or so, but not much use to a boglehead.
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nedsaid
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Re: Is Being a Private Banking Client Worth it?

Post by nedsaid »

This is what Nisiprius calls stealing bait from the trap. Sooner or later you will get caught in the trap and the big lure is appealing to your ego. We all like the special attention but all of that for the purpose of getting you to buy expensive financial products. Bernie Madoff did this perfectly, he made it hard to invest with him. The more you "restrict" something, the more people beat the doors down trying to get in.

There is no snob appeal to saying that you have all your retirement in three index funds at Vanguard.
A fool and his money are good for business.
cherijoh
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Re: Is Being a Private Banking Client Worth it?

Post by cherijoh »

AndroAsc wrote:I'm going to assume most of the older Bogleheads here have decent net worth, and some may be eligible (or already are) for private banking status with major banks (e.g. Merrill Lynch, JP Morgan).

I'm basically wondering if being a private banking client with these banks is worth it.

From an investment standpoint, you lose out Admiral shares Vanguard funds, although that can be easily replaced with Vanguard ETFs. I'm guessing that they will waive all fees/commissions as well because of net worth, so that makes it zero extra cost like Vanguard. Of course their banker will try to eat you by selling the latest junk, but we can just ignore it.

I admit from an investment standpoint, it makes no sense to do business with those sharks. But let's assume I can handle swimming with the sharks. What about the non-investment perks for being a private banking client? Recently, I stumbled across Merrill Lynch Preferred Rewards program, where if you have >$100k assets with them (which honestly is not a lot), you basically get a 2.625% cashback card, which is the highest cashback that I've seen so far. It makes me wonder what other benefits they give for even higher net worth (>$1mil) customers.
I think to be a true "Private Banking" client you have to have a lot more money and be paying an AUM fee. Private banking might get you access to IPOs and private pools of investments (think hedge funds). I don't think Merrill Lynch is considered private banking - it's just a traditional brokerage. (JP Morgan does have a private bank division). Merrill Edge is the self-directed program that was designed to compete with Fidelity, Schwab, Etrade, etc. The preferred rewards is quite a sweetener - especially with all the free trades; they are looking to consolidate your entire banking relationship - checking, credit cards, investments.

But even if you start out as self-directed, the sales guys will try and sell you on having an advisor (i.e., getting into an AUM arrangement). So it all depends on whether you think the benefits are worth "swimming with the sharks".
Topic Author
AndroAsc
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Re: Is Being a Private Banking Client Worth it?

Post by AndroAsc »

I disagree, as Bogleheads we know BS and can smell it when the bank sells it. I have no intention of using the private banking for investment purposes, but it's more for the non-investment perks that I've heard about, such as:

- Better interest and mortgage rates. Interest rates is crap since Ally/Alliant can easily beat them. However, I wonder if the better mortgage rates for private clients can be beaten by the best credit union rates.

- Better credit card rewards. See my original post. 2.625% cashback on any spend without cap is huge. The best competing card available to the masses is only 2%. Could there even be better credit card rewards?

- Faster and personalized service. Saves time.

- Use your private banker as your advocate. I've heard stories of how people who got denied in their credit card applications who would call their private banker and get the decision overturned. I've also heard stories of how you can get discontinued credit cards by calling up your private banker and asking him to work the system. Unfortunately, all of these information are from 3rd-party "hearsay", but if this is true, that's a big perk.

Disclaimer: I'm into churning and gaming the credit card system, so I have a particular angle in this private banking thing.
letsgobobby
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Re: Is Being a Private Banking Client Worth it?

Post by letsgobobby »

In the very low range of one million to a few million dollars, I am quite sure they will not waive all charges and fees, in fact I'm pretty sure they charge exorbitant charges and fees and highly doubt they're going to let you buy Vanguard ETFs, charge nothing for the advice, and then give you better than market rate credit cards and mortgages. That's just not how capitalism works, and these guys are pros at capitalism. What they'll do is put all your money in 1% plus expense ratio funds, possibly with loads, and another 1-2% in management fees, then give you a good deal on a mortgage. I'm sure you can see why that's a wolf in sheep's clothing...
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Phineas J. Whoopee
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Re: Is Being a Private Banking Client Worth it?

Post by Phineas J. Whoopee »

Q: Why do you charge higher fees to private banking clients even as you gain greater economies of scale from them?

A: Because that's where the money is.

PJW
ericinvest
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Re: Is Being a Private Banking Client Worth it?

Post by ericinvest »

You generally need at least $5M to get into second tier private banking and $10M plus for first tier. You do get very favorable loan interest rate and credit/charge card, but you can negotiate with traditional brokerage on those too.
eucalyptus
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Re: Is Being a Private Banking Client Worth it?

Post by eucalyptus »

Fees buy some real conveniences, but IMO not worth it. Have worked with Bernstein and US Trust among others. DIY far better.
btenny
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Re: Is Being a Private Banking Client Worth it?

Post by btenny »

See here for Wells Fargo story.
http://online.barrons.com/articles/SB52 ... 0766097966

Some higher end people have very limited time and need the abilities of a private banker. Same with lots of small business owners. They need special services like revolving credit lines and special "cash banking" and so forth. I suspect some good private money manger and "wealth mangers" offer similar services but can't handle the "quick loan" thing or the "cash handling" that a private bank can offer so many people just prefer that.
Louis Winthorpe III
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Re: Is Being a Private Banking Client Worth it?

Post by Louis Winthorpe III »

A nearly identical thread from 6 weeks ago may be of interest:

viewtopic.php?t=168070
dan23
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Re: Is Being a Private Banking Client Worth it?

Post by dan23 »

I perused Citis private baking client offering pre-crisis, when interest rates were high, and I did not see them offering anything that I cared about that you could not get elsewhere (though not elsewhere at a Bank with physical locations). Basically, I remember noticing that they had free wires (don't recall if it included international) and competitive interest rates with the online offerings at the time.

There are various having a person help you do things perks that the relationship comes with that I have no interest in.

The BOA/ML offering, on the other hand, is worth keeping 100k there (an orders of magnitude lower amount than needed for proper private baking client places) for the credit card offering and potentially the free trades if you would use them, and since I feel like I need at least one account with physical locations and since they waive many fees including all monthly fees, might as well be them.
Last edited by dan23 on Sun Aug 02, 2015 12:41 pm, edited 1 time in total.
Leemiller
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Re: Is Being a Private Banking Client Worth it?

Post by Leemiller »

We considered it and met with someone regarding a mid-five figure portfolio. The fees seemed high and the investment choices weren't compelling at our level. Honestly, we may have gone with the guy except he seemed pretty disinterested in our business and yet shocked we didn't sign with him....

A few of my friends have private banking privileges due to current/former jobs. The only perk I've heard is a lower mortgage rate and even then I don't know anyone who has beat ours.
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Re: Is Being a Private Banking Client Worth it?

Post by Grt2bOutdoors »

Leemiller wrote:We considered it and met with someone regarding a mid-five figure portfolio. The fees seemed high and the investment choices weren't compelling at our level. Honestly, we may have gone with the guy except he seemed pretty disinterested in our business and yet shocked we didn't sign with him....

A few of my friends have private banking privileges due to current/former jobs. The only perk I've heard is a lower mortgage rate and even then I don't know anyone who has beat ours.
Mid-five figures isn't going to cut the mustard for a private banking relationship at any of the regional/high tier banks/trust companies. Heck, I don't even think the local savings bank will entertain a mid 5 figure portfolio. On the other hand, if you have mid-7 or 8 figures and greater, now we're talking. The lowest minimum's I've seen to play with the sharks is $2 million.
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karpems
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Re: Is Being a Private Banking Client Worth it?

Post by karpems »

I use private banking. There is no cost to me. Makes my life so much easier as I can just call one person and she takes care of all my needs.
buckstar
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Re: Is Being a Private Banking Client Worth it?

Post by buckstar »

AndroAsc wrote:I disagree, as Bogleheads we know BS and can smell it when the bank sells it. I have no intention of using the private banking for investment purposes, but it's more for the non-investment perks that I've heard about, such as:


- Better credit card rewards. See my original post. 2.625% cashback on any spend without cap is huge. The best competing card available to the masses is only 2%. Could there even be better credit card rewards?


Disclaimer: I'm into churning and gaming the credit card system, so I have a particular angle in this private banking thing.
If you put 100K @ Merrill, you are foregoing at least 1% interest on that which is $1,000 per year. To make that difference up in CC rewards (2.625% vs 2%) you would need to spend $160,000 on your credit card per year. It's actually a little less depending on your marginal tax rate because you pay income tax on the interest, but not on the CC rewards, but still....
Bacchus01
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Re: Is Being a Private Banking Client Worth it?

Post by Bacchus01 »

Used to have one with BoA premium client. Did not invest with them.

But, if you had $500k with them, which also included your mortgage, you got some nice perks. .25 discount on mortgage and points/origination waived. .25 extra on CDs. .25 extra on MM deposits. No ATM fees. Personal rep you could call. I loved it.

Then they moved th threshold to $1M and no longer included your mortgage. They also changed bill pay services such that dollars were taken from your account about 3 days before the due date versus when the check actually cleared.

That was the straw. I refinanced my mortgages to Wells Fargo and moved most of my consumer banking to Ally. I'll never go back to BoA.
stinkycat
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Re: Is Being a Private Banking Client Worth it?

Post by stinkycat »

buckstar wrote:
AndroAsc wrote:I disagree, as Bogleheads we know BS and can smell it when the bank sells it. I have no intention of using the private banking for investment purposes, but it's more for the non-investment perks that I've heard about, such as:


- Better credit card rewards. See my original post. 2.625% cashback on any spend without cap is huge. The best competing card available to the masses is only 2%. Could there even be better credit card rewards?


Disclaimer: I'm into churning and gaming the credit card system, so I have a particular angle in this private banking thing.
If you put 100K @ Merrill, you are foregoing at least 1% interest on that which is $1,000 per year. To make that difference up in CC rewards (2.625% vs 2%) you would need to spend $160,000 on your credit card per year. It's actually a little less depending on your marginal tax rate because you pay income tax on the interest, but not on the CC rewards, but still....
This is true. However, one way of getting around it would be to transfer more than $100k in securities because I think those count too.
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Re: Is Being a Private Banking Client Worth it?

Post by Jack FFR1846 »

Do your due diligence wherever you think you want to be a private client. What are the costs? What exactly are the benefits?

I'm a Fidelity private client (I think over $500k with them gets this). When I hit over 2 commas, they paid more attention. What does that attention mean to me? They seem to bother me more. To their credit, they asked how often I want them to call and check up and I said 3 times a year. I get a personal investment advisor who I never use. Why? Because he's one guy to answer the phone and he's never been there to pick up. Instead, I call the 800 number and when they say "oh, you have a private client advisor" I tell them I want to do my business right now with them. I don't take advice from Fidelity....ever.

Better mortgage rates? My credit union does that just for being a member. Better credit card rates? Well, if you work at it, it's not difficult to match 2.6% using category cards with citi double cash as a back up.

Maybe there's something of value. I don't see anything.
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Sharpematt
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Re: Is Being a Private Banking Client Worth it?

Post by Sharpematt »

I work in private banking and most people on Bogleheads have no idea about the segment.

Private Banking is for individuals with $5mn or larger and is not the same as what Merrill Lynch, Ameritade, or Fidelity offers. There are about 7 true private banking institutions in the United States.

The product offering is vastly different than anything typical investors deal with. The value add for these folks are:

Block Trades on large positions in dark-pools
Direct access to prop private equity deals sourced by the bank.
Private access to hedge fund managers and highly unique networking meetings
Syndicate access to IPOs prior to retail investors
Very competitive rates in FX hedges for business transactions
Having a banker who you can call on their cell any hour of the week, and they will drop everything to assist you.
Instituional rates in lending with odd collateral like art or jets. Typically not much over LIBOR.
Philanthropic review of 501c3's prior to charitable donations
Advanced tax entities to help with estate planning.

This list could go on and on, but again people here don't like the unknown. I love Boglehead strategies for common investors, but it's not a coincidence that the most sophisticated investors with the most assets choose private banks.
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Re: Is Being a Private Banking Client Worth it?

Post by shawcroft »

Sharpematt wrote: This list could go on and on, but again people here don't like the unknown. I love Boglehead strategies for common investors, but it's not a coincidence that the most sophisticated investors with the most assets choose private banks.
Shucks, I guess we Bogleheads just ain't sophisticated enough to be in the know.........'Tis a pity.

Or..as Warren Buffet says: "If you sit down at a poker game, look around, and can't figure out who the sucker is......it's you!

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unclescrooge
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Re: Is Being a Private Banking Client Worth it?

Post by unclescrooge »

At BOA/ML, they consider anyone with less than $250,000 in investible assets to be "poor", and they've stopped paying out a commission on those clients. Instead these clients are to be transferred to the Call Center.

So if they've told you you get a private banking facilities with just a $100k, they've changed the definition of a private banker to mean you'll get advice from an $12/hour teller or call center employee.
Diogenes
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Re: Is Being a Private Banking Client Worth it?

Post by Diogenes »

I have been solicited several times by Chase to join their Private Banking program. We keep a few accounts open at a branch near where we have a house to use if necessary when in the area. As far as I can tell the only advantage is a better mortgage rate (except we don't want a mortgage), a free safe deposit box and other minor things, more credit at attractive rates which we would not use, and a real person to call anytime who knows less about finance and investing than I do ( and I'm not an expert).
I can't see any benefit. Certainly don't plan to deal with hedge funds or block trades that sharpematt mentioned.
Seems to be a real push for Chase to move people this way, and I suspect significant incentives are paid to employees that land someone. I just don't see any good reason to move investment or cash accounts to Chase Private Banking.
In the old days it may have been useful as a large bank could more efficiently move money to/from the U.S. But there are now other options.

_D_
inbox788
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Re: Is Being a Private Banking Client Worth it?

Post by inbox788 »

karpems wrote:I use private banking. There is no cost to me. Makes my life so much easier as I can just call one person and she takes care of all my needs.
Can you describe some of those needs they've been able to help with? I've had difficulty coming up with needs that aren't often better met elsewhere.
Sharpematt wrote:Block Trades on large positions in dark-pools
Direct access to prop private equity deals sourced by the bank.
Private access to hedge fund managers and highly unique networking meetings
Syndicate access to IPOs prior to retail investors
Very competitive rates in FX hedges for business transactions
Having a banker who you can call on their cell any hour of the week, and they will drop everything to assist you.
Instituional rates in lending with odd collateral like art or jets. Typically not much over LIBOR.
Philanthropic review of 501c3's prior to charitable donations
Advanced tax entities to help with estate planning.
Interesting list. Will have to learn about these if I ever reach these levels.
livesoft
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Re: Is Being a Private Banking Client Worth it?

Post by livesoft »

karpems wrote:I use private banking. There is no cost to me. Makes my life so much easier as I can just call one person and she takes care of all my needs.
That was quite cryptic and uninformative. I am left guessing that she is like a wife. Better not tell my spouse though because she would like a wife, too, and we would have to accept that private banking invitation.

Sharpematt did give a nice list. However, when I look through the list, I didn't see anything that I would need now nor in the future, but I'm guessing that I am just clueless about what I really need.
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ResearchMed
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Re: Is Being a Private Banking Client Worth it?

Post by ResearchMed »

livesoft wrote:
karpems wrote:I use private banking. There is no cost to me. Makes my life so much easier as I can just call one person and she takes care of all my needs.
That was quite cryptic and uninformative. I am left guessing that she is like a wife. Better not tell my spouse though because she would like a wife, too, and we would have to accept that private banking invitation.

Sharpematt did give a nice list. However, when I look through the list, I didn't see anything that I would need now nor in the future, but I'm guessing that I am just clueless about what I really need.
I thought karpems *was* referring (semi?jokingly) to a spouse!

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dodecahedron
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Re: Is Being a Private Banking Client Worth it?

Post by dodecahedron »

buckstar wrote: If you put 100K @ Merrill, you are foregoing at least 1% interest on that which is $1,000 per year.
I am forgoing 0 to keep $100K @ Merrill. I just moved some Vanguard ETFs (previously held at Vanguard) over to Merrill. No cost, plus Merrill gave me $1,000 cash bonus for moving the assets there. (Admittedly, I had to move $200K to get the $1,000 bonus, but it only had to stay there six months to get the bonus. $100K is steady state minimum needed for other benefits.)

I am not, however, interested in a "private banking" relationship with my banker. I do get treated very well when I come into the bank for routine needs (e.g., signature guarantees, notary) but that was also true before. (I have banked at same branch for 25 years, though it was previously a regional bank later acquired by B of A.)

Also, I think the local banker who signed me up for the program got a bonus for doing it.
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WallyBird
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Re: Is Being a Private Banking Client Worth it?

Post by WallyBird »

Diogenes wrote:I have been solicited several times by Chase to join their Private Banking program. We keep a few accounts open at a branch near where we have a house to use if necessary when in the area. As far as I can tell the only advantage is a better mortgage rate (except we don't want a mortgage), a free safe deposit box and other minor things, more credit at attractive rates which we would not use, and a real person to call anytime who knows less about finance and investing than I do ( and I'm not an expert).
I can't see any benefit. Certainly don't plan to deal with hedge funds or block trades that sharpematt mentioned.
This is consistent with my experience.

At DS's insistence, we have some manner of tiered relationship with Megabank with a comparable basket of perks, most of which we don't use. They wave refi teasers at us (which, if we were in the market, we could likely beat by shopping around), and signed us up for a line of credit (didn't need that either, but they gave us a handful of MegaBankSuperBonus points, which we should be able to redeem for a toaster or something.) I think they pay a higher interest rate on our balance, too -- instead of 0.5 percent, they pay 0.52 percent. Or something like that. Whatever it is, it's way less than Local Credit Union pays if I use their debit card for six lattes a month.

They did do a Medallion Signature for no charge when I was transferring an account to Vanguard. That came in handy, I guess.

But ultimately, if I'm going to spend more to get my rear end kissed, I'd go for airline status. The occasional first class upgrade is worth more to me than having Mr. Potter over at Megabank on speed dial.
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karpems
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Re: Is Being a Private Banking Client Worth it?

Post by karpems »

Our banker comes to us for all paperwork that needs to be signed. Never need to leave my office.

When we bought our house, one phone call and our mortgage was all arranged. No paperwork. They fill it all out.

Free safety deposit box.

When I have certified mail that I won't be home for, they sign for it and I can collect it at my local branch.

Free HSA account with debit card.

The list goes on. Fantastic service. Doesn't cost me a penny.
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gasdoc
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Re: Is Being a Private Banking Client Worth it?

Post by gasdoc »

I am a private banking client. After a few times explaining that I do my investing with Vanguard, they quit calling and selling. Lately, we have even moved most of our "spare cash" to an online account. I asked the secretary to the president of the bank if they ever fire a private banking client. She said, "not really." I really did not find anything that they were selling that I needed and couldn't get at a better price somewhere else. At the time we were recruited to the private banking area, I had only about $250K in investments, and most of it not at that bank. I believe I was only invited as a physician who had "sucker" written on my back.

gasdoc
Zecht
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Re: Is Being a Private Banking Client Worth it?

Post by Zecht »

The main reasons you would get into the private banking world is if you needed services like Sharpematt has indicated. "Private" banking is basically a huge benefit club that easily pays for itself if you participate in the services described. Typically Bogleheads are not going to need this service because they aren't multibillion dollar corporations/companies that need to quickly get loans for millions to land an office for a new contract in Southeast Asia (generalizations, YMMV).
livesoft
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Re: Is Being a Private Banking Client Worth it?

Post by livesoft »

@karpems, will they take your car in for an oil change and bring it back completely cleaned and detailed? How about all the other things that show up on this forum?

1. Tell you where to eat and get those reservations?
2. Tell you what to do in San Francisco, Maui, Macchu Picchu, London, Berlin, Spain, etc and make all the necessary arrangements?
3. When your car is hit by an uninsured motorist, they deal with it and not you?
4. Fix the A/C in your home and solve the problem with that different kind of Freon?
5. Buy your cars for you, so you get the best prices without negotiating?
6. Teach your kids about money, saving, how to get into college?
7. Tell you where to open your individual 401(k) and how much you can fund it with.
8. Answer for you Roth or Traditional?
9. Answer for you: Mac or PC?
10. Answer for you: Nikon or Canon?
11. Answer for you: Disposable or cloth?
12. Etc ….

… wait a minute, Bogleheads is kind of like Private Banking.
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BigOil
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Re: Is Being a Private Banking Client Worth it?

Post by BigOil »

Sharpematt wrote:The product offering is vastly different than anything typical investors deal with. The value add for these folks are:

Block Trades on large positions in dark-pools
Direct access to prop private equity deals sourced by the bank.
Private access to hedge fund managers and highly unique networking meetings
Syndicate access to IPOs prior to retail investors
Very competitive rates in FX hedges for business transactions
Having a banker who you can call on their cell any hour of the week, and they will drop everything to assist you.
Institutional rates in lending with odd collateral like art or jets. Typically not much over LIBOR.
Philanthropic review of 501c3's prior to charitable donations
Advanced tax entities to help with estate planning.
That's a really neat list. Certainly some of the services have value to people who have more money than time, --- they will pay a lot to keep the main thing the main thing... small ego stroke probably is nice (Where is my AMEX Black card LOL?)

I recall reading that NW >$10+MM becomes a pretty small club fast, because without inheritance or entrepreneurial skills, or a few top top execs, even the best professionals can't accumulate much more than that (do the math)... Makes sense of most us here are not familiar with this stuff. But I'd bet LOTS of BH are or will be NW >$1MM

The funny thing in the list, as we strip out the services and discounts elements... Which are undoubtedly very valuable to certain individuals. There's nothing in there to generate above-market investing wealth (adjusted by risk) ... Just a chance to go to the "Whales room" at the casino...
TradingPlaces
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Re: Is Being a Private Banking Client Worth it?

Post by TradingPlaces »

The "benefits" offered to the private client customers are not great.

E.g., 2.65% cashback card.

I have cards which give me an effective 5%+ cashback on almost everything I spend.
Furthermore, if you are really after cashback, there are a lot better deals out there.
edge
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Re: Is Being a Private Banking Client Worth it?

Post by edge »

This seems like a remarkably barebones service and doesn't sound like typical single or multi family private bank services. I am guessing it is a low asset threshold service where they basically provide minor perks for captive sales. You are paying something by limiting your choices and I don't want anyone filling out paperwork for major transactions who isn't a fiduciary, which this service is highly unlikely to be.
karpems wrote:Our banker comes to us for all paperwork that needs to be signed. Never need to leave my office.

When we bought our house, one phone call and our mortgage was all arranged. No paperwork. They fill it all out.

Free safety deposit box.

When I have certified mail that I won't be home for, they sign for it and I can collect it at my local branch.

Free HSA account with debit card.

The list goes on. Fantastic service. Doesn't cost me a penny.
FedGuy
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Re: Is Being a Private Banking Client Worth it?

Post by FedGuy »

nedsaid wrote:We all like the special attention
Not all of us do. In my law firm days, we were given membership in Citibank's private bank--or, at least, we were told that's what it was--simply by virtue of our employment at the firm. My banker was very helpful when I was overseas and needed to deposit checks or what have you, but otherwise I never really had much use for them. Admittedly, I wasn't trying to invest in IPOs or invest through dark pools or anything. When I returned to the US, the bank near me had a special line for private bank clients that I was entitled to use, but I stopped using it--it made me uncomfortable to blow past everyone else while literally standing under a sign that might as well have said "rich sucker."

I'm no longer in the private bank but am still a Citigold member, and even their occasional fawning ("Thank you for being a Citigold member for XX years!") makes me a little uncomfortable. Although I do have to admit that I liked it that one time when the manager approached me and gave me a few free pens just because she saw my gold ATM card.
protagonist
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Re: Is Being a Private Banking Client Worth it?

Post by protagonist »

Reviving this thread....

I opened savings and checking accts. with Chase, responding to a promotion- I deposited about $15K and, theoretically, will earn $500 in bonus if I maintain the account for 3 months or so.

A month later I went into the branch where I opened the accts. and asked if I could become a Private Client. I figured, why not ask?

They immediately said "yes", enrolled me as a Private Client, and told me I was expected to deposit $250K within the next year and maintain a $250K balance with Chase.

My question....if I don't meet these requirements will I be terminated as a Private Client, and if so, at what point? What if I have the audacity to withdraw the bulk of my $15K+ as soon as I get my bonus?

Has anybody had the experience of having their Private Client status terminated when they did not meet the requirements?
Last edited by protagonist on Mon Aug 29, 2016 9:37 pm, edited 1 time in total.
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reriodan
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Re: Is Being a Private Banking Client Worth it?

Post by reriodan »

Cmon sheeple, they aren't doing you favors because they like you, they are doing you favors because they make money off you. Goodluck, but I'd rather keep my money.
youdiditr2
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Re: Is Being a Private Banking Client Worth it?

Post by youdiditr2 »

But get fooled by the Marketing game.

In the old day, $1 million minimum get you Private Banking service. Now Banks accept "Private Banking" with $250k minimum, but you're not really getting Private Banking service.

If you don't have $5 million, you're not getting "real" Private Banking service.

Think of Private Banker as the Beverly Hillbillies and Mr. Drysdale.

Will your Banker fly from CA to Italy to have documents signed?

Will your Banker send your invites to all the big events?

If you have a real Private Banker, they will drop everything when you call. The folks with $1 million will get the assistant or a call center from a $10 a hour employee
itstoomuch
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Re: Is Being a Private Banking Client Worth it?

Post by itstoomuch »

My older bro (risk manager/private banking) was filling in and making small talk with a CFO, he ask, "What does Beatrice [Foods] do (prior to breakup)"?

There is private banking and there is Private Banking. :oops:
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
madbrain
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Re: Is Being a Private Banking Client Worth it?

Post by madbrain »

stinkycat wrote: This is true. However, one way of getting around it would be to transfer more than $100k in securities because I think those count too.
You would still be foregoing the bonus you might get by moving your funds or investments every year to new institutions.

Also, not having to deal with BoA is priceless, and well worth the opportunity cost, even if there is a very small benefit in terms of credit card rewards rates, IMO. My first and last experience with BofA was with a checking account on which they failed to pay a signup bonus. I will not be fooled by them again.
madbrain
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Re: Is Being a Private Banking Client Worth it?

Post by madbrain »

AndroAsc wrote: - Better credit card rewards. See my original post. 2.625% cashback on any spend without cap is huge. The best competing card available to the masses is only 2%. Could there even be better credit card rewards?
Technically not cash back, and there is a substantial annual fee, but the following combo gives you more than 2% effective rewards on any category spending :
- Chase Freedom Unlimited, no annual fee, earns 1.5 points per $1 on any category
- Chase Sapphire Reserve, $450 annual fee, earns 3 points per $ on dining/travel categories
This combo allows you to redeem the points for $1.5 cash value towards travel.
So this is 1.5 * 1.5 = 2.25% net redemption rate on any category spending. And a net 4.5% net redemption rate on dining/travel purchases.
You do have to transfer the points from the FCU to the Reserve.

The Sapphire Reserve $450 annual fee is quite substantial, but this is really $150 net AF since there is a $300 annual travel credit, if you do any amount of travel at least once a year.

I think you can easily get way more than $150 a year by moving $100k around. I was able to collect about $1200 in various bank bonuses for moving < $20k cash in the last 2 months. It' was a little work to move funds around - and I changed my direct deposit a few times for each period. And I realize that 2.25% < 2.625%. Still worth it to me to never have to talk to BoA in my life again.
SQRT
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Re: Is Being a Private Banking Client Worth it?

Post by SQRT »

I have considered this from time to time. Always decided that the hassle of continually fighting off their sales pitches, not to mention the actual costs of this "enhanced" service was not worth the extra convenience/hand holding. If you are comfortable as a DIY'er stay away from these guys. They are much better at selling than you are at resisting. Wood panelled meeting rooms and dinner receptions mean nothing to me.
protagonist
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Re: Is Being a Private Banking Client Worth it?

Post by protagonist »

TradingPlaces wrote:
I have cards which give me an effective 5%+ cashback on almost everything I spend.
What card does that?

Chase Freedom gives 5% but only in categories that rotate every 3 months.
afan
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Re: Is Being a Private Banking Client Worth it?

Post by afan »

One Wells Fargo product seemed interesting. A service that will handle bill paying, coordinate health care access, prepare and file tax returns and such things would be a huge boon to any elderly person who did not have relatives in town. That would be worth a lot of money. It could be worth 1% of assets for someone with a large portfolio. Those things are hard to reproduce outside of a family relationship. Trying to do this for family members long distance leads to a lot of dropped passes. I would pay for that.

On the other hand, most of the items on Sharpematt's list are things that I would never consider doing- IPO's, private equity, hedge funds? No thanks. Not just not interested. Run away screaming, fast as I could while keeping both hands on my wallet.

If I would not want them, or anyone else who thought those things were good ideas, managing my money, I could not see the logic in private banking for the few benefits it seems to offer. Perhaps this is appropriate for people who gave up riverboat gambling because the lifestyle was too tame.

Paying one percent of assets to save a quarter percent on a mortgage? If that sounds like a good idea to someone, please let me know. I have a collection of bridges for sale.

The tax planning, estate planning and charitable help would be welcome, but one can get those directly from accountants and lawyers without the extra layer of the banker.
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gasdoc
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Re: Is Being a Private Banking Client Worth it?

Post by gasdoc »

I am still a private banking customer at a Synovus Bank in town, even though I have not used their services in years. I would feel guilty asking them to do things for me when I don't invest in their inferior products. I am surprised that they haven't dropped me from "the list."

gasdoc
sc9182
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Re: Is Being a Private Banking Client Worth it?

Post by sc9182 »

Some additional perks I've noticed

- Free museums card for family (many more museums than BoA first of month)
- if you have private-banking, how about making your wife, cousin a private-banker too on a joint-additional-$5-savings-account ? Spread the fun a bit
- Free locker-box

Allow me to expound on Mortgage Loans (for Private Banking clients):
- Rate-Match on Jumbo loans Mortgages (if you have competing quote, and quotes can be easy to get if you have a decent friend in mortgage bidness)
- qualifying higher LTV -- if you have decent nest-egg (isn't the topic title?), they qualify for higher LTVs based on nest-egg/(40*12) -- as potentially extra income when qualifying
- if you are close to LTV, they could push it over the edge
- never had to deal with it, may be they could help push you into slightly better tier/rate if your FICOs are on the edge
- not sure if available to other clients (possibly do) -- you can get 15% down on Jumbos, with 25% down Interest-only ARMs (who says I/O loans are dead or bad ? :D

Investments:
Stay-away as far as possible; Infact, they won't allow leveraged ETFs (not that you play with fire, may be with 5% of your portfolio ?) -- selling those specialized dark-pools, thanks - I will tread happily in well-lit areas of the market!

Taxes/Trusts:
There are experts for those areas (accountants, lawyers)

May be if you got tips regarding a distressed but valuable local opportunity - some other client trying to fast-exit a good business/land/services due to XYZ reasons, they need to marry up with you and see you could benefit from such deal.

Does these sort of deal-hints happen often, any more ?

Thanks
SC
fareastwarriors
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Re: Is Being a Private Banking Client Worth it?

Post by fareastwarriors »

A million dollars (or a few) is not real private banking anymore.
timemoveson
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Re: Is Being a Private Banking Client Worth it?

Post by timemoveson »

Long time reader and my first actual post. This is a great community and I know quite a bit, but am learning a lot too, thank you.

I've been a private banking customer for 20 years, since I became a business owner. In my situation, it is not free, there is a flat rate fee. My version of "private banking" appears to be kind of in-between Platinum ("dark pools access") and plebeian (free this or that).

The actual services/benefits have included:

- One phone call or email to team of people who have handled everything for my entire family effortlessly over the last 20 years with dozens of transactions, some complicated related to my business and personal matters. They have responded very well to emergencies and urgent situations over the years, despite rotating through a number of team leaders (this role seems to be used to grow their people and they move on to other work over time)
- Seamless and no questions asked loans and credit extensions once the set up was done and my net worth statements are updated yearly
- Material discounts on foreign exchange transactions when needed
- Material mortgage rate discounts when needed
- Premium credit card (cash back, my choice) included for the entire family as needed
- Safety deposit box at location of our choosing
- Additional business banking accounts set up as needed and managed at no additional cost when other needs arose for us
- Accounts for children set up as needed and managed at no additional cost, when they became relevant
- Financial plan creation. I wasn't impressed but my situation involves more than paper assets and these people are not fully equipped to understand it if it's more than paper assets IMO
- No sales pressure of any kind on anything over 20 years
- No requirement to invest anything in anything. I chose to work with one of the Banks investment teams and DIY with them as the transaction engine and advice provider (totally controlled by me). We have significant investments in tax deferred and taxable accounts and the investment team and private banking people work together to make money movements/special events happen seamlessly at no cost
- Through this channel, I chose to make the Bank's trust department co-executor of our wills in the event my wife and I die together before conditions are met for the children to assume this capacity. This will change in the future but it is very appropriate for now, done with my lawyer's full support
- zero mistakes I could attribute to this service or teams over the last 20 years. The Bank has done a few things but I know it is in the bowels of the machine (e.g., credit card fraud programs run amok, etc.) not the private banking service

In all, I think this version of "private banking" has worked for us well and I don't think I could have pulled everything off the way I did in my financial affairs over this period without it or something substantially like it.

Finally, since the services are fully tax deductible here as well, it doesn't cost what it appears to and seems in line with my needs and requirements.
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Meg77
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Re: Is Being a Private Banking Client Worth it?

Post by Meg77 »

protagonist wrote:Reviving this thread....

I opened savings and checking accts. with Chase, responding to a promotion- I deposited about $15K and, theoretically, will earn $500 in bonus if I maintain the account for 3 months or so.

A month later I went into the branch where I opened the accts. and asked if I could become a Private Client. I figured, why not ask?

They immediately said "yes", enrolled me as a Private Client, and told me I was expected to deposit $250K within the next year and maintain a $250K balance with Chase.

My question....if I don't meet these requirements will I be terminated as a Private Client, and if so, at what point? What if I have the audacity to withdraw the bulk of my $15K+ as soon as I get my bonus?

Has anybody had the experience of having their Private Client status terminated when they did not meet the requirements?
I'm a Private Banker, though I work for a smaller regional bank not one of the big companies. At the big banks where you have to meet a deposit minimum, they usually give you a set amount of time (a year at Chase, apparently) to meet the minimum. If you don't, then your account will just be changed internally to not designate you as a private client. Most private client checking accounts have no fees and give you perks like free ATM withdrawals and different interest tiers, so once the coding is changed you may see those benefits disappear. You should receive ample notice of that change in advance though.

For the record, Chase and WF and BOA all have lots of different "private client" tiers. The type you're in is a lower level type where you don't get your own banker or the real perks - super low mortgage rates, a personal relationship with a banker, access to a team of specialists you can meet with whenever you want (estate planning attorney, trust officers, investment professionals, etc.), invitations to high end events, regular lunches and golf outings courtesy of your banker's expense account, etc.

This is why unless you have 8 figures of liquidity, you're usually better off at a smaller bank where the minimums to be designated a Private Client are much lower. The two banks I've worked for have $1,000,000 liquidity minimums and/or income requirements of $350K per year or more. What's more, the $1M doesn't even have to be held at that bank - you just have to prove you have it to work with a private banker to get a loan via the Private Bank (which often has better loan options not to mention all the expensive personal service). Also often physicians and attorneys as well as C-suite employees are automatically designated as private clients even if they are just starting out or don't meet the minimums.
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