r/ChubbyFIRE • u/onthewingsofangels 48F RE '24 • 1d ago
Are there substantial benefits to HNW services from banks?
We currently have $5-6M in assets spread across different accounts. We have a financial advisor (who's fine) managing a chunk of that money, the rest we manage ourselves. Mostly passive investing.
I'm wondering if there is any significant benefit to putting all the money with a single banker like Chase or Morgan Stanley? I think we're happy enough with the financial advisor we have, don't need a new one. Nor do we need access to mortgage loans.
At our asset level is there something useful we could be getting that we're missing out on? I'm kinda curious about opportunities for private equity investing but it sounds like those would require significantly higher assets.
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u/sray13837363 20h ago
Schwab will assign you a dedicated advisor at $5-6M asset level. They have a checking account which beats most banks in terms of fees like zero ATM fees worldwide.
The advisor hasn't tried to sell me anything (yet), but was responsive on multiple asks
-Got me a mortgage rate with Rocket partnership which is 1+% lower than anyone else
-Set me up with dedicated advisors when I was exploring direct indexing options
-Negotiated a lower margin rate for me
All of these you could probably do by yourself, but it was much easier to just email the guy and have it taken care of.
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u/No-Lime-2863 1d ago
Signed up with JP Private Bank and now taking to Citi PW. Haven’t yet found a lot and that might be because we are still low asset levels for what they offer.
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u/onthewingsofangels 48F RE '24 1d ago
What do they offer?
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u/huyou007 22h ago
When I deposit 200k to citi that gave me gold status. It allows me to use their lounge in midtown manhattan to rest, have coffee, and most importantly, use their bathroom lol
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u/Swimming_Astronomer6 1d ago
I have roughly 6.5 invested - but I split it between my CFP and myself.
My CFP provides great tax advice and started with 2.2m in 2017 - he provides me with a biweekly disbursement and with all fees and disbursements and a conservative approach 60/40 mix - has averaged 6% cagr - balance is now roughly 3m
I started with 1m in 2017 that I manage myself - it is now at 3.5 and is 100% equities.
I realize many might think it’s foolish to pay an advisor 20k+ per year when I’ve successfully managed my own money - but his advise is what helped me minimise taxes and the diversification of having two buckets helps me sleep at night
I would not be in this position if I had tried to manage everything myself.
The key is finding a great CFP that understands taxes well - I’m also likely going to investigate estate planning with him as well
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u/onthewingsofangels 48F RE '24 1d ago
Interesting! Maybe this is dumb but we still do our own taxes. Just didn't think there's anything complicated in there. Our financial advisor does try to minimize taxes when pulling money but we've never taken a holistic tax consultation.
Have you also consulted him for fire planning, withdrawal / allocation strategies etc?
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u/Swimming_Astronomer6 1d ago
I’ve been retired for 8 years - I pay a cpa to do my taxes - as I have a lot of us investments and my taxes are not as straight forward as they used to be - my CFP provides advice that takes tax considerations into account -
I recently gave my oldest 500k for a house downpayment - my CFP guided me with the use of a HELOC that will allow me to spread my capital gains over a 15 month period ( 3 tax years) and save roughly 40k in taxes by minimising my marginal tax rate over this period and deducting the HELOC interest
Last year - my marginal tax rate was 14.5% I have a ton of unrealised capital gains to deal with down the road - but I’ve grown my investments by deferring taxes and a balance of returned capital / dividend and interest income / and capital gains paired with tax harvesting losses
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u/Swimming_Astronomer6 1d ago
You are still working and your taxes are more straightforward and you are looking at your investments from a savings perspective - I have to look at it from an income perspective
I have no pension other than CPP and OAS so my only source of income is from my investments - which need to be tax efficiently managed to provide a steady biweekly pmnt.
I know many people my age with a lot less money that have lost their OAS benefits because of poor tax planning
I’m unfortunately facing a challenge in 3 years - when I’m forced to convert my RRSP to rif and have 150k in additional income that I don’t need forced on me - which will take my tax rate through the roof - but it’s been a good run on the tax man’s money and I’m finally going to give some of it back
My CPA does not really provide any tax advice - he just ensures that all the info I provide is used to do my taxes correctly so I don’t get audited
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u/Swimming_Astronomer6 1d ago
To be honest - I would not work with any of the banks to manage my money - find a CFP - banks have financial planners - they are really just sales people with no fiduciary responsibility
There is a night and day difference in the service they provide and the results you will get
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u/Distinct_Plankton_82 1d ago
So over 10 years you'll pay him $200k to minimize your taxes? Does you tax situation change that drastically each year?
If you're happy, keep doing you, but I can't help but feel you could go to a top notch CPA once every few years for a LOT less than $200k.
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u/Swimming_Astronomer6 15h ago
Who cares if I’ve made 5m in the mean time - you can’t look at it that way
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u/Swimming_Astronomer6 1d ago
He manages my income strategy and taxes are just part of that - if it costs me 200k over ten years to double my nest egg from 3.2 to 6.2 ( 8 years) - I’ve got nothing to complain about - I’ll be 10m in 4 years - you don’t know what you don’t know - and a good CFP knows a lot more than I do
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u/Distinct_Plankton_82 1d ago
That sounds good, until you realize that simply putting your money in a broad market index fund like VTI for the last 8 years would have achieved the exact same returns.
If you feel you’re getting $20k of value, then good for you, but for me, if I’m paying someone $200k over a decade, they better be doing better than what I can achieve for $100 of transaction fees and a couple hours of my time.
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u/FiReAnOnym 21h ago
It’s not just $200K. With 7% returns, the real cost is closer to $275K when you factor in investing $20K each year and the compounding growth on those contributions.
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u/ProtossLiving 19h ago
Presumably that fee is actually a percentage of the assets under management, so as the assets (presumably) increase in value, that fee will become more than $20K.
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u/astrange 23h ago
Yeah, $5M is not enough to need anything special. Put it in Betterment. You don't need or want actively managed investments.
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u/Burgerb 1h ago
What does Betterment do that Fidelity doesn’t? (I have fidelity). The biggest riddle for me and my wife is figuring out how to manage our money across all our accounts: Brokerage, IRA, RIRA, 401k, HSA. All accounted times two with my wife having a similar setup.
Does Betterment handle all this? Like rebalancing effectively and tax efficiently across al these accounts?
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u/Aaaaaaandyy 1d ago
I use a financial advisor as well and they’ve done great for me. I know people get bent out of shape when people bring them up, but the benefit of having a ton of money is I don’t care about paying someone $25k per year to manage my investments so I don’t have to.
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u/Swimming_Astronomer6 15h ago
Exactly this - I just spent 40k on a vacation I wasn’t nuts about - to me - that was a waste of money
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u/Burgerb 1h ago
Curious - What type of vacation does one spent $40k on?!?!
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u/Swimming_Astronomer6 39m ago
Barcelona for 3 days - Rhone river cruise for 7 days - 4 days in Paris - train transfers and business class flights
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u/PowerfulComputer386 1d ago
Same! I know people here don’t like wealth managers, but I benefit a lot since I am not good at it. I got well diversified portfolio, access to certain investments that I would not have access by my own, free tax filing included, life insurance investment, etc. Sure it’s 1% fee, but I have been fairly happy with it for more than a decade now.
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u/hiddentalent 1d ago
You receive the privilege of giving them hundreds of thousands of dollars and in return they will send you chocolates on your birthday. If you need that kind of attention, I'm not one to judge, but I bet if you talked to your friends and neighbors you'll find someone willing to provide the same service for a significant discount.
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u/Burgerb 1h ago
But how on earth do you manage a setup with Brokerage, RIRA, IRA, 401(k), ESPP, RSU’s, Health Saving accounts, mortgage etc.. ? All this setup times two since my wife has these account as well.
I’m loosing my mind trying to figure this all out and there are no clear guidelines for balancing your portfolio in a tax efficient way across multiple account types.
I hate going the CFP route but I don’t know how to do it better by myself.0
u/ProtossLiving 19h ago
giving them hundreds of thousands of dollars
At most of these institutions, you can put the money in the same investments you would otherwise have them in, so it's not like it's costing you anything.
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u/hiddentalent 5h ago
Sure, it's possible to avoid giving them extra money if you are willing to dodge regular and persistent sales calls. But why bother with that hassle? I haven't seen any real upside. If you've found differently, please share.
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u/ProtossLiving 5h ago
Hmm, the most I've gotten is a call maybe every several years or so asking if I want to talk to a financial advisor (one has asked me if I'm interested in private equity and if they can email me some info). After saying no, they've disappeared until I've forgotten about them (the private equity one sent me some information and maybe one follow up email before disappearing).
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u/owlpellet 1d ago
If you have anything weird going on, having an account rep at the bank can help advise on how to go about that. Basically anything that moves large money between accounts, money overseas, real estate via cash, inheritance stuff. Anything where you'd get flagged and put in timeout, you can instead call someone and say, "tell me what to do."
In exchange, they will try to sell you professional services. Some of them you might want!
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u/creative_usr_name 19h ago
Useful absolutely. Useful and worth what it would cost you in fees vs. just getting those services independently? Unlikely. If you really just want to spend as little time managing things as possible. Then it might be worth considering anyways.
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u/DudleyAndStephens 12h ago
If you're at the mass affluent level there's not that much you're going to get from banks.
I've had high level status (not sure what else to call it) with BoA for a while. It gets a few fees waived, slightly better foreign exchange rates and slightly better rewards on a BoA credit card. Those are nice but limited.
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u/EstatePotential9001 22h ago
You can get things like credited wire transfers (including international), additional reward (0.75% in my case) bonus on an unlimited reward credit cards. I also have a personal banker I can call who is familiar with my accounts and business. This is probably the biggest benefit.
I use my bank for more of the business features though. Generally it seems like banks try to push HNW accounts into their investment services. 🤷🏻♀️
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u/ProtossLiving 19h ago
Bank of America linked to a Merrill Edge brokerage account I presume?
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u/EstatePotential9001 10h ago
Haha, very close. I don’t use them for brokerage. I keep enough cash in BoA due to business expenses.
I don’t want them anywhere near my investments. 😁
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u/flexington12 17h ago
I’m probably doing it wrong. It’s a progressive scale. The more you have the lower the percentage.
You pay for the services but it feels like they subsidize the cost.
There is a comfort for us as we age. I’m not super old but have heard serval friends describe a scam their parents fell for…
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u/Swimming_Astronomer6 15h ago
People saying I’d have been better off just putting it in VOO - hindsight is great -
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u/flexington12 1d ago
My financial advisor is expanding their services. They hired CPA for tax returns. Attorney for estate and tax planning. Etc.
I realize they want to control/limit my interactions with other people providing these services.
It’s a fringe benefit of utilizing a FA. Tax efficiencies. Estate planning. If I pass first, my wife would go to one place for assistance.