Personal Finance

With a $5 million net worth — how do I find a bank that best serves high-net-worth clients?

John Seetoo

Published: December 30, 2024 10:10 am

24/7 Wall Street Key Points

• Large banks are focused on amassing as many assets under management as legally possible since the landscape has become increasingly competitive. 
• Marketing campaigns promoting wealth management services can generate substantial fee revenues for banks, with combined savings, retirement, brokerage, mortgage, and estate planning services touted in television, print, and social media ads.
• Less publicized are the different tiers of quantifying the AUM levels to attain the advertised services, most of which are reserved for high net worth clients of eight figures and up.
• The best high-yield savings accounts are paying way more than most Americans realize, with some offering cash bonuses for new accounts. Click here to see our top pick today. ^(Sponsored)

Large financial institutions compete with each other on multiple market fronts. As finance is a global industry, not only are US banking giants like JP Morgan Chase, Bank of America, Wells Fargo, and Citibank vying for clients, but international banks like Santander, HSBC, TD Bank, Deutsche Bank, and others are competing for getting assets under management into their coffers.  

Aggressive advertising campaigns have proliferated television, print, and social media outlets. If you’ve ever seen promotions for “wealth management” services, you are seeing the rebranding process underway for the banking industry, which has justifiably damaged its own reputation over the past few decades. Predatory and unfair fees, closing personal accounts over political preferences, “errors” that confiscate personal funds that are not resolved for months later without compensation, etc.  

What They Don’t Tell You

After the 2008 subprime mortgage banking meltdown, a number of government-mandated mergers of investment banks into commercial banks were enacted. Bear Stearns was acquired by JP Morgan Chase. Lehman Brothers was taken over by Barclays Bank. Bank of America took control over Merrill Lynch.  The last one became particularly contentious. Bank of America CEO Brian Moynihan instituted a policy shortly after completing the merger for all Merrill Lynch reps to focus on acquiring high net worth clients. They were instructed to route all of their clients with $250K or less in AUM to their computerized order processing system, regardless of the length or depth of the prior client relationships. This caused an exodus of long-time reps who had built their books of business over decades with trusted and loyal clients, both large and small. Bank of America’s agenda, regardless of whatever advertising claims may be made, has not changed.  The equivalent case can be made for its rivals. 

A mid-30’s aged Reddit poster who has built up a joint net worth with his wife of $5 million. He was seeking a comparison of varying services from different banks, based on their AUM tier levels. His own circumstances included:

• Can separately add $500,000 from brokerage accounts, $900,000 in retirement accounts, and $200,000 liquidity for an additional $1.6 million if that will bump him up a tier. 
• Currently has a $3 million property loan with Bank of America, so if that helps (note: mortgages are liabilities, not assets, so the answer is no.) BoA would be his preferred bank choice.
• His present BoA tier is Platinum + Honors. 

Perks and Traps

According to Bank of America’s own policies, the poster would qualify for Diamond Tier ($1M-$10M) AUM. This would afford him the following perks:

• Zero Bank Fees
• Preferred Rewards Lifestyle Benefits (unique experiences)
• Unlimited non-BoA ATM transactions
• 75% cash back rewards credit card charges up to an annual $315 cap.
• Zero account maintenance fees for checking and saving accounts
• Unlimited international ATM and transaction fees.
• 2% foreign exchange discount rate for mobile and online orders
• 25 bps interest rate discount on mortgages using PayPlan
• 62 bps interest rate discount on new home equity line of credit
• 50 bps interest rate discount on auto loan
• 20% interest rate booster on BoA Advantage Savings account
• 15% discount on Merrill Lynch annual program fee

While the poster doesn’t indicate what kinds of additional services he desired specifically, these perks, on paper, can appear attractive, if one wishes to have all of their proverbial “cookies in a single basket.”  However, upon closer inspection, there is a lengthy fine print list of disclosures and footnotes at the bottom of the promotions page that can easily be overlooked. This section includes such exception notations as:

• “Other fees may apply.”
• Terms and fulfillment of the offers is the responsibility of the third party vendor and not of Bank of America.
• Mobile banking requires that you download the Mobile Banking app, which is only available for select mobile devices. Message and data rates may apply.

Some of the respondents also made the following observations:

• $20 million AUM is the apparent cutoff minimum for private client full-service banking status. Anything below is basically a different tier of perk collections.
• Brokerage firms like Fidelity or Schwab may offer equivalent and additional perks for equivalent AUM,
• Large institutions may assign the account to a team that may become a frustration if they lack the knowledge or experience to assist with more sophisticated asset management scenarios and strategies one might wish to explore. 

This article is intended to serve solely on an informational basis. For more comprehensive advice, one should consult a financial professional for a consultation.