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

Wealth management for the mass affluent-Article1

Wealth management for the mass affluent

By Laura Bruce • Bankrate.com

Companies in the financial services industry differ when it comes to defining mass affluent. Generally, it means that you have a minimum of $100,000 to $250,000 in investable assets, although some consider $50,000 acceptable. The growth in this segment is ballooning even when $250,000 is needed for entrée.

Banks, in an effort to get as much of the pie as they can, are creating new levels of service. Where once it took $10 million to be welcomed into a bank's private banking enclave, there are now multiple tiers for the mass affluent, the high net worth ($250,000 to $2 million) and the ultrahigh net worth ($10 million+) categories.
As your net worth increases, should you hand it over to a bank to invest or are you better off with a traditional brokerage firm?

How the market developed

For decades, banks were known for checking, savings, mortgages and other loans, and trust services, which were geared toward the wealthy.

"If people with $100,000 or $150,000 walked into a bank trust department they'd be laughed at," says Joe Hoffmeyer, managing director of wealth management at First Bank in Clayton, Mo.

"So they walked down the street to Fidelity or Schwab or Merrill Lynch with their money and, with their financial consultant, grew their account. Now the client has $300,000 or $400,000 and maybe a 401(k) they want to roll over. So, now they have $1 million in assets and who has the money? Merrill, Fidelity and Schwab. So, the banks are saying, 'Hey, come to us.'"

What you get for the money

Celent, a consulting firm to the financial industry, defines mass affluent as people with between $250,000 and $2 million in net worth; meaning the house and all other assets minus debt.

Celent estimates that 90 percent of wealthy American households are in the mass affluent category. What can these folks expect if they walk into a bank and plunk down $250,000?
"At $250,000 they're not going to get much different than anyone else," says Robert Ellis, senior analyst at Celent. "The mass affluent has a lot of assets as a group, but they're not significantly profitable (to the bank) individually.

"Here's where it gets messy. A lot of firms like Wachovia are everything to everybody. So if you are a mass affluent or an ultrahigh net worth you get a confusing message. If they had a clear business model you'd have a pretty good understanding of what you'll get for $250,000," says Ellis. "The guy who has $10 million is asking the same question. You'll find $250,000 at Wachovia isn't going to get you a lot of service. You're going to get very standardized advice. I'm not picking on Wachovia -- I could put the names of 100 firms in here. Bank of America is a retail mass-market brand. It's a very nice bank, but if you have $10 million, are you drawn to a Bank of America or a Bessemer or a Brown Brothers Harriman?"

Wachovia's Private Banking service is available to customers with $250,000 to $5 million in investable assets. The bank expects 18 million American households to be in that financial situation by 2010; a 30 percent increase over 2005.

Jeff Hartman, Wachovia's private banking director for the Southeast, says he hopes someone with $250,000 would get the same level of service as someone with $3 million.

"But the honest answer is I think their needs are different. The person at the $250,000 level may not have as much of a tax situation to worry about. They might be very comfortable in some high-performing mutual funds whereas the person with $3 million may have much more of a need to control taxes, so they may see a little more robust investment platform, not because they're any better but because they need to manage their tax situation better.

"I think the biggest thing we can do in this private banking space of $250,000 to $5 million is help them grow. They're in the wealth accumulation stage and they're going to reach their wealth by us helping them grow. I think what this space has not gotten is a depth and breadth of advice and I think what they're going to see are more tailored credit products for them -- mortgage or credit lines to help them grow their wealth further."

Article from: NasDaq

9 Tips to Keep Finances in Order

When a Spouse Dies
9 Tips to Keep Finances in Order

To help make the paperwork easier, here are 9 things you will need to do to keep your financial affairs in order.

1. Death certificates. You should get a minimum of 10 and probably 15 or 20 certified copies of your spouse's death certificate. You will need them to show to financial institutions, government bodies and in other situations. You can get them through the funeral home, your lawyer or in some cases, the local health department. Make certain they are certified. Copies are not acceptable.

2. Social Security. As a surviving spouse, you are entitled to your spouse's payments or your payments (depending upon your age), whichever is greater. And, if you have unmarried children under 19, they may be entitled to survivor benefits.

3. Your spouse's employer. If your husband or wife was still working, contact the company's human resources department or the benefit plan administrator. Ask about accrued but yet-to-be-paid salary, bonuses, sick days and vacation time. This is also the time to ask about his/her 401(k) plan (or other retirement plan) and about any life insurance and health insurance received through the company. Keep asking questions until you fully understand your benefits.

$Tip: If your husband or wife was retired and receiving a pension, you may be entitled to benefits.

4. Personal life insurance. If your spouse had purchased life insurance, get in touch with your insurance agent or the company directly. Ask for a clear explanation of your benefit options.

5. Driver's license. Contact your motor vehicle department to cancel your spouse's license. This is also the time to change the title on your car to your name if it was held jointly, or the name so stated in your spouse's will.

6. The Veterans Administration. If your spouse served in the military, it's very likely that you are entitled to one or more benefits, including a military pension, a death benefit and funeral costs. Find out by contacting the US Department of Veterans Affairs, 800-827-1000, www.cem.va.gov.

7. Financial institutions. If you held bank or brokerage accounts in joint name, have the accounts changed to your name only.

8. Creditors. Contact issuers of debts -- for those held in both your names. These might include your mortgage, car loan, personal loans and credit and debit card companies. Notify them of your husband's death and if you don't know, find out how much is owed and payment dates.

9. Taxes. The IRS requires you to report any income your spouse earned in the year of his/her death. That means filing a tax return. You can actually file a joint return for that year (if it's to your benefit to do so) and you can also claim the standard deduction, provided you do not itemize.

Article from: aol.theonlineinvestor