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How Banks Court Rich Customers

Sunday, January 19, 2014 - 1:52 PM
From MarketWatch
Large banks have been ramping up efforts to expand their wealth-management groups over the past couple of years.
[...]
There have been several bright spots for savers. To lure them in, banks have been offering special deals, including higher rates on deposit accounts and lower rates on loans than regular bank customers receive.

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I think it's likely that the higher deposit account rates that these big banks offer to their wealthy clients are still lower than the best internet banks.
7
Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
Rep Points: 123,754
1. Sunday, January 19, 2014 - 4:14 PM
This doesn't always work out to the customer's benefit.  Chase tried very hard to get me to join their Private Client's group but I refused to.  I found out it wouldn't help me get highter interest rates on Chase CDs.  It was all about purchasing other investments which I have no interest in because they are not risk free.  Many are also not FDIC insured so no reason for me to waste my time or theirs speaking to a Private Client rep.
6
paoli2paoli21,149 posts since
Aug 10, 2011
Rep Points: 5,128
2. Sunday, January 19, 2014 - 6:33 PM
The too big to fail (TBTF) banks have been offering private banking services for high net worth clients for a long time. Private banking is riddled with conflicts of interests involving the use of proprietary products and cross-sold services. Less common is full disclosure to investors of the potential harm such practices may do to their wealth. If you opt to let a private bank handle your affairs, you can expect your separately managed accounts to be filled with proprietary products from the bank itself or from affiliated mutual funds, hedge funds and money market funds. This arrangement allows the bank to earn multiple layers of fees–often one for overseeing your overall portfolio and others for managing the sub-accounts. Such captive selling is highly entrenched.
6
ShorebreakShorebreak2,381 posts since
Apr 6, 2010
Rep Points: 12,717
3. Sunday, January 19, 2014 - 9:34 PM
What  amazed me is to what lengths the bank managers will go to find out "which" customers are the ones they should pursue for these so called "private banking services".  They are anything but private.  They stupidly think that they can find the financial worth of a customer just by scrutinizing their accounts for checks they cash or deposit from other banks.  As if people who really have wealth are just doing business with one bank!  It's such a joke!
4
paoli2paoli21,149 posts since
Aug 10, 2011
Rep Points: 5,128
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