Banking for the Wealthy: Here’s How Your Bank Measures Your Net Worth

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Banking can be a complex business, and financial institutions the world over are interested in your business — and in holding on to your assets in some form of management.

However, things may be a touch different for the wealthiest among us. As The Wall Street Journal detailed, three tiers of wealth are generally agreed upon by the largest banks inhabiting the space:

• Ultra-high net worth: Individuals holding more than $10 million in assets fall under this category.
• High net worth, or affluent: Those who have more than $1 million, but less than $10 million, are described thusly.
• Mass affluent: Persons holding less than $1 million, but more than $100,000, in assets are labelled in this fashion.

As the WSJ pointed out (citing Equifax data), 35% of U.S. households fall under the mass affluent descriptor — and just 10% achieve higher rungs than that. By contrast, while the mass affluent are responsible for 27% of investible wealth, the top 10% are responsible for a whopping 70%.

What Perks Do Ultra-Wealthy Investors Hold With Banks?

According to MoneyWise, there are three primary perks that the ultra-wealthy can avail of that many average Americans may not be able to gain access to.

The first is private banking, along with a dedicated financial manager. While this relationship relies entirely upon meeting a minimum balance of investment — the WSJ pointed to a minimum balance of about $500,000 for starters — it does unlock access to premium service.

“Eligible clients usually have a dedicated person or team who manages their business with the bank and makes sure their needs are met,” MoneyWise indicated. “They may go by different names, like private client advisor or private client banker, and can help the client avoid fees, solve any problems, and find the right financial products. There’s no waiting on the customer service line or doing an online chat for these customers.”

The second perk is a discounted (or in some cases, even free) services. There’s little doubt that most large financial institutions may charge at least a portfolio management or advisement fee (per WSJ, this number may be in the ballpark of 1%). However, some financial service fees could be waived for ultra-rich clients who can choose to park their money with whichever bank promises the most perks.

Finally, as MoneyWise suggested, ultra-high net worth clients may find themselves being offered higher CD rates, lower interest rates on credit or loan products — largely due to lower risk profiles — or simply waived fees on things such as wire transfers.

How Can the Mass Affluent Keep Up?

While there’s no “get rich quick” scheme that can help those with more modest net worth on their balance sheets reach the top tier overnight, there are few basic tips to keep in mind when handling your existing assets that could get the ball rolling.

• Eliminate debt, particularly high-interest debt: Debt is not always negative — many wealthy investors have taken on debt when necessary to fund wise plays — but high-interest debt, such as credit card debt, is a sign of ailing financial health. Before you begin to consider where to place your funds, eliminate this sort of liability.
• Shop around for high-yield savings accounts (HYSAs): Beyond brick-and-mortar options, many online-only banks offer significantly stronger yields for those looking to park their money in a HYSA. However, given the nature of persistent inflation in the U.S. economy, be sure that your rate exceeds inflation before committing to opening an account.
• Invest in appreciating assets, rather than depreciating luxuries: Vehicles are a tried-and-true example of depreciating assets, as are most. Consider investing in a balanced stock portfolio of proven performers, perhaps via a carefully selected ETF. Always make sure that you’re maxing out your Roth if applicable, and taking advantage of any employer matching on retirement funds. Real estate may prove to be a wise investment in certain markets, and a poor choice to plop down a bundle on a bubble about to burst in others.

As always, speak to a credentialed financial advisor before making any serious money moves. Your wallet (and bank account) will thank you.

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