Wealth management for the mass affluent-Article2

Wealth management for the mass affluent

Who are the players?

Bank of America's Premier Banking & Investments serves an even broader market starting at $100,000 and going up to $3 million in investable assets. The bank estimates that a quarter of the American population fits in that category.

"A Bank of America customer who has $100,000 to $3 million in investable assets with the bank has the potential to have a client manager, a dedicated banker and a financial adviser assigned to them. Not everybody who fits in that space wants that service or needs that service, but for those that do and those who can gain value from it, the opportunity is open here," says Mark Benson, central division executive for Premier Banking & Investments.

Clearly, it's not just big banks that are in this race for deposits. Hoffmeyer's employer, First Bank, has $10 billion in assets. That's a drop in the bucket compared with Wachovia, $706 billion in assets, which is doubling the size of its private banking business and recently gobbled up brokerage A.G. Edwards to become the No. 2 retail brokerage behind Merrill Lynch. And, of course, there's the nearly $1.5 trillion Bank of America. Add to that mix the premier private banks -- Bessemer Trust, Brown Brothers Harriman, Northern Trust and the like -- and the competition is fierce.

"We were recently up against Goldman Sachs and someone else and the client chose us because we were convenient and had his other banking business," Hoffmeyer says. "Now, does Goldman Sachs have a better name than First Bank? Yes, I'd think so if I were in the investment businesses. But after giving us an opportunity to share our story, people may think twice."

Consumers can benefit

As with most products, consumers should shop around before opening an account. For some people, a small bank may provide all the products and services they need and it may better suit the customer's comfort zone. Others may prefer the size and scope of a Bank of America or a Wachovia. Either way, competition is strong and that should bode well for the consumer, says Karen Massey, senior research analyst at Financial-Insights.com.

"The U.S. marketplace is saturated and there's no overall growth in banking. Essentially, at this point it's just stealing deposits from each other. Banks are always looking for that innovative approach in either products or servicing in order to improve their deposit situation over their competitors.

"But the consumer needs to be aware of what they're getting," says Massey. "If they think they're getting a private wealth manager, they're not. They're getting more information, more tools and more access to people who know how to manage money, and that's always a good thing."

What to look for

Look for an institution that has experts who can handle your needs. If you need tax planning, retirement planning or advice on stock options, make sure the bank can provide that.

Most banks have a self-directed investment site for do-it-yourselfers. If you trade a lot, check out Bank of America's commission-free trades, provided you meet certain criteria. If you want occasional advice or you want someone to handle everything for you, tell them so you can see if you and the bank are a good fit. Some institutions charge a fee for management, but many will do a financial plan for free; they make their money selling you products -- loans, investments, insurance and the like.

If you're teamed up with a financial adviser, make sure you're comfortable with the mutual funds or other products they're trying to sell you. Ask what other products may be available.
Check the adviser's level of experience. If he or she is young, Bank of America's Ellis suggests asking if they've been through a down market and what they would do the next time the market gets clobbered. And, finally, don't make snap decisions while sitting with an adviser. Take the materials home and review them before investing.

Article from: NasDaq