2009 Private Banking / Private Client Discussion Thread

somdave2005 said: zmre2b9 said: What's the real benefit to the private banking any more? At Citi bank the private banker is someone who never answers the phone so i have to call the main 800 number. The website services seem to be the same available on any bank (pay bills xfer money between accts etc.) Although i wonder if citi is unique in being able to allow me setup my own wire xfers over their web site -- that has been handy on occasion.

I'm considering moving both brokerage and checking to Wells Fargo. See the FW thread at: http://www.fatwallet.com/forums/finance/703656/?start=400
and the boglehead thread at: http://www.bogleheads.org/forum/viewtopic.php?t=37155

If you have > $25k for a Wells Fargo PMA account you get:

* 100 free trades for each brokerage account per year
* free trades includes all stocks and ETFS (including vanguard ETFS)
* the free trades also includes most Vanguard mutual funds including the most attractive low fee ones like:
Vanguard Total Stock Market Investor Shares VTSMX
Vanguard FTSE All world ex-US VFWIX
Vanguard Total International Stock Index VGTSX
Vanguard Inflation Protected Securities Investor Shares VIPSX
Vanguard Inflation Protected Securities Admiral Shares VAIPX
* apparently flawless Sch D export to Turbo Tax

The WellFargo PMA Account with Wellstrade looks like a very good one-stop banking and brokerage.

Why is any private bank better than this? what will i lose leaving citi PB and going to wellsfargo?

doing some more research it looks like I would lose the citi ultimate savings rate of 1.4% for spare cash. Wells Fargo seems to only pay .65% in their High(?!)-yield savings and that needs > $25k, otherwise its just .05%.

But being able to costlessly trade into a muni fund may be acceptable alternative.

Along the same lines, using the Fidelity or schwab checking features as a main checking account seems to be a good one stop shop also.


Agreed, there's not a whole lot of benefit for private/premier banking anymore. With Citigold, you get a few free credit cards, some extra banking perks (ie free incoming wire transfers, etc) and some extra Thank you points. With BoFA premier, you get that one black credit card.

I still stick with Citibank for my B&M bank since I like to keep my emergency fund in a B&M bank and Citi pays the most interest on it out of all the physical banks. I plan on going with Charles Schwab for my one stop shop. Great checking account, great 2% credit card, and index funds with the lowest expense ratio in the industry.

BoA gives you 30 free trades per month compared to Wells Fargo's 100 free trades per year, but BoA requires $25K in bank deposits and WF only requires $25K in investments.
So it depends how many trades you are planning to do in a year. Fidelity, Schwab etc charge more for trades so they would be much more costly than WF or BoA, unless you only invest in NTF funds.

btw, Vanguard has the lowest fees for index funds, not Schwab, but many of their funds have ETF versions so you can trade them for free using BoA or WF. WF allows you to buy regular mutual funds (not just NTF) for free as part of the 100 free trades, but you should know that regular mutual funds may have a redemption fee if you sell them quickly. ETFs don't have a redemption fee AFAIK.

WF PMA has some benefits that BoA Prima account doesn't like no-fee for using other bank's ATMs and annual fee waiver for their credit cards, but none of their credit cards have an annual fee.....

To me it seems like the 360 free trades that BoA gives is a great deal, especially that I don't mind keeping $25K in thier savings account as my emergency cash.

somdave2005 said:
I still stick with Citibank for my B&M bank since I like to keep my emergency fund in a B&M bank and Citi pays the most interest on it out of all the physical banks. I plan on going with Charles Schwab for my one stop shop. Great checking account, great 2% credit card, and index funds with the lowest expense ratio in the industry.

Good points. Schwab funds have even lower ERs than Vanguard funds? The Citi TY points are nice -- in theory. but now the student loan cash in is gone for that and even Amazon gift cards are gone. In some cases Vanguard ETFs have the lowest ERs so the wells fargo buying lower ER ETFs for free may be best.

RagingBull said: why not try us bank private bank, their min is only 500k

Good god, that is even worse than BOFA Premier's recently increased $250K limit. Good lord that's a lot of money!

us bank is not that bad because it is only 500k for private bank, wells fargo is only 500k too i think, bofa private bank is 3 million

JPMorgan Chase has different levels of "Private Bank" / "Private Client Services"

The Premier Platinum account, is the highest, regular account (just requires $75K in deposit/inv accounts).

Next we have Private Client Services, which requires $3 mil - $10 mil in inv assets at JPMorgan Chase.

Then we have Premier Private Bank, which requires $10 mil - $25 mil in inv assets at JPMorgan Chase.

Finally, we have Principle Private Bank, which requires $25+ mil in inv assets at JPMorgan Chase.

Unfortunately, I do not know of the benefits of these type of accounts. Hope that helps.

SuperG03

Since you work for Citi private bank, is the requirement still $3 million in cash? When you sign up do you need to have all the money up front?

My question is...will you take $3 million in dollar coins?

RagingBull said: Since you work for Citi private bank, is the requirement still $3 million in cash? When you sign up do you need to have all the money up front?

actually, I am not sure. I am finished with CPB. I was in the law firm group, no requirement is needed for a law firm partner or trainee.

I would like to set the record straight for all who are interested in private and premier banking services.

1. Private Bank
A private bank account is an investment account; it is not a cash account for paying bills or writing checks against it to pay for shopping spree. Cash, bonds or stocks are regularly deposited into private bank accounts. Once deposited, they are meant to be sticky with that particular bank. A couple of small transfers up to a few hundreds of thousands dollar would be fine. However, any frequent transfers for larger amount will be frowned upon and may create trigger for money laundering investigations.
A private bank account is essentially a brokerage account in a grander scale. By the same token, a private banker is none other than a full-service broker in a higher hierarchy. Instead of limiting to offering stocks and mutual funds, a private banker can also offer bonds, FX trades/carries, futures, venture capital/private equity offering, structured products, insurance and wealth management vehicle such as trusts. If one has USD1million of cash/stocks/bonds, s/he may quality for a private banking relationship. But don’t expect to get a great service with anything less than USD5million, especially if one chooses private bank account from big institutions.
Private bankers from large institutions are accustomed to handling USD10 to 100 million accounts. Hence smaller account under USD5million tend to get less attention especially if the private banker is well established and has large AUM (assets under management) of USD500million and higher. In fact, for such customer, s/he is better off by sticking to a regular, full-service brokerage account.
The advantage of banking with large institutions is its depth of product offering and access to investing in financial instruments from all over the world (this is particularly true for Non-US Citizens/residents). With just one private bank account, one can buy stocks/bonds from emerging economies such as Indonesia, Thailand, Turkey or even have various term deposits of currencies in the world. In early January 2009, for example, some private banks were offering a rare opportunity of investing in a weekly Russian Ruble deposit at more than 80% pa of interest. For non-private bank clients, the only way to buy Indonesian, Thai or Turkish stocks and bonds is to fly to those countries and open multiple accounts with a number of indigenous stock and bond brokers (language barriers and local regulations may add up the complication).
Another clear advantage banking with large institutions is that they are more than likely to accept unusual bonds for collateral. For example, if one has invested in a Turkey Lira bond bearing 19% interest pa issued by KfW (a German bank), such bond may be pledged for 70% of market value to draw say a Japanese Yen loan (for 70% of the value of the bond), paying only 0.3%pa loan interest and further to convert this Yen into Australian dollar for buying a GE bond denominated in Australian dollar yielding 7%pa. This Aussie bond can be pledged further to draw on another loan for other types of investments. Hence from an initial USD1million cash deposit, the portfolio can be leveraged to USD2-3 millions (certainly this will create additional risks; however in a dim market situation such as right now it may be a good opportunity to leverage one’s portfolio).
Other advantages like access to the banks’ research papers and various programs for the young ones, such as a week of financial planning revelation at a Scottish Castle are favored by some.

2. Premier Bank
This premier service sometimes gets confused with private banking. A premier account is more like a cash account with banking perks thrown in, such as free transfer/wire fees, free credit card etc.
But if one tries to buy bonds or stocks with premier account, premier banks usually don’t quote good price (the buying and selling price gap is usually too wide; understandably the steep pricing is to subsidize the posh premier banking halls and amenities (hot cocoa, chocolates/cakes for customers who pop by the bank) and certainly they won’t be able to sell KfW bond denominated in Brazilian Real or Turkish Lira.
Premier banking can give satisfaction for some customers, since it gives a false sense of feeling that they already make it into the elite circle and that they are ahead of the pack. Premier services often hold glamorous gathering/event such as art auctions or fashion shows which accentuate the visibility of these customers and enhance further their successful images. Contrast such events with those sponsored by private banking which are usually rather private/secluded and more on market and opportunity updates.

One last contrast is that a private bank account usually takes anywhere from 2 weeks to several months to open. Banks will conduct due-diligence on how their prospective customers amassed their wealth. Walk-in customers are more likely to be refused than accepted as customers. Private bankers usually know their prospective customers ahead and they are the one who knock the customers’ doors instead of the other way around. On the other hand, premier bank account can be opened relatively quicker, if not immediately, when a prospective customer just walks in to a bank, without the need of an appointment.

ck08 said: Does Bank of America even have any sort of premium or premier banking anymore? I am not talking private banking but something for those with assets greater than 200k but less than millions?
According to this redirected Premier Banking FAQ, it appears that Premier Banking types of services are now under Merrill Lynch Wealth Management. That's where searches for Premier Banking information are redirected to. Per the link, Merrill Lynch Wealth Management is:

Generally for clients with more complex financial needs, who want to work with a dedicated Financial Advisor and who plan to invest $250,000 through Merrill Lynch

The next level up is U.S. Trust, Bank of America Private Wealth Management, also mentioned in the above link:

Generally recommended for clients with $3 million or more in investable assets

That seems equivalent to Private Banking from the days of yore. Note that the FAQ mentions that Merrill Lynch Wealth Management clients work with a Bank of America client manager and a Merrill Lynch financial advisor.

The Beyond Banking page from Merrill Lynch Wealth Management describes a securities type of account, linked to FDIC-insured accounts from "licensed banks", which would naturally include Bank of America. Interestingly, from the disclosures:

There is no monthly account fee for Beyond Banking and CMA Plus, providing one of the following requirements is met:

a) The account, together with eligible accounts linked through our statement link service, has assets equal to $100,000 or more, as valued by the prior month's statement. Any outstanding mortgage and home equity line/loan balances with Merrill Lynch Credit Corporation will be treated as "assets" and will be added to the asset total; or

b) The account itself has an Average Deposit Balance in the Merrill Lynch bank deposit program of $5,000 or more, as valued by the previous month's statement. The Average Deposit Balance is calculated by aggregating all daily Merrill Lynch bank deposit program balances from the first day in the prior month's statement period to the last day of the prior month's statement period, divided by the number of days in the prior month’s statement period.

From looking at my statements, my Bank of America Accolades American Express Card has been turned into a Merrill Accolades American Express Card, even though I'm not enrolled in Wealth Management, merely a former Premier Banking client. The account is still linked to my BoA Online Banking.

It seems that we former Premier Banking clients are in a state of limbo at the moment. We still have the Accolades American Express Card with no fee (and, per the above link to the card, it now seems to include Priority Pass, regardless of spending level or balances in accounts with BoA), yet we no longer have access to a client manager. The phone number on my Online Banking screen ays it's for "preferred services."

Bump to prevent archiving

ExpatAsia said:   I would like to set the record straight for all who are interested in private and premier banking services.

No offense, but this can be translated as private banks = dumping ground of last record and favorite place for banks to fleece unsophisticated customers with bizarre garbage products with no market. There are some extremely valuable functions they can provide though, namely those involving tax transactions.