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| Bankers' Agenda |
Profitable Parleys
Constance Gustke
12/01/2003
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"If you find a portfolio guy that clicks, he’s worth his weight in gold. If you’re achieving your goals, you can’t de-couple fees from the quality of advice," says John Fletcher, leader of wealth management services for PricewaterhouseCoopers. "When you’re not achieving your goals, maybe fees are part of the problem. Maybe it’s the wrong organization." The key is fair service for the fee charged.
Inlign’s Feldman recommends rethinking fees at yearly banking reviews. For example, clients can ax an unnecessary perq. "You can say, ‘I really don’t want to go to football games; I just want you to manage my money,’" he says. Foregoing the wining and dining can save costs, he says. Clients can usually secure a maximum reduction in fees of about 25 basis points, he adds.
Many clients prepare a 10- to 20-page checklist of their financial needs when assessing new private bankers. The clients use this information to shape the questions they ask banks seeking their business, such as: "What does it cost to have this package of services delivered to us?" according to Ken Evason, CEO of Jacobus Wealth Management, a private wealth manager.
Whatever the approach you take, the first step to negotiating fees is to take a close look at fee structures. Private banking fees can range from 25 basis points for rock-bottom service to 2 percentage points for full service. They’re structured in three ways: percentage of assets under management, transactional fees, and fees for custody—the last is essentially paying your bank for holding your assets, and is usually waived. "Find the right kind of fee structure for how active you are," advises Fletcher. "Is the fee structure representative of the level of sophistication you require?"
A topsy-turvy market with sour results translates into more private clients seeking respite through breaks on investment management fees, which are the easiest
to negotiate. "There’s lots of leeway based on investment size and type," says Jeff White, vice president of family office for InvesTrust in Oklahoma City. "Banks are willing to negotiate just to get you in
the door."
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