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| Bankers' Agenda |
Profitable Parleys
Constance Gustke
12/01/2003
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Cooper, for example, negotiates investment fees whenever she invests money in a partnership. "The fees are all over the board," she says. "Some charge an investment fee and a transactional fee."
Trust fees also call for scrutiny. "Most of these fees are at the discretion of the bank," says White. "There’s not a lot of incremental cost. You’ll find that through an interview process, you’ll get down to a similar floor." That floor usually ranges between 75 basis points and one percentage point.
Conversations about fees require a sharp eye, finesse, and more than one meeting. "It’s a tough discussion to have," says White. "It’s the shot over the bow." Anthony Perea, head of trust and fiduciary in wealth banking at Commercebank in Miami, points out: "A lot of clients are afraid to ask. They think banks will turn them down. But banks are more willing to sit down and negotiate now."
As trying as these conversations can be for clients, we must remember that they are equally so for the bankers. Clients, White says, are saying: "‘I’m giving you a second chance to earn my business.’ It’s a wake up call." Private bankers resist any suggestion that their services are mere commodities, insisting that they offer "high touch" service. But they concede that the value of their services is, in the end, quantifiable.
One timeless negotiating tactic is to note that the bank’s pricing is out of line with those of its competitors. Armed with research, Feldman says he coaxes banks into realizing that competitors will do the same service for half the fee. "They will usually negotiate then," he says.
Clients, however, should be wary of banks that low-ball costs. Many private bankers argue that new entrants are willing to quote what JP Morgan’s Barbara calls "incredibly" low fees. But clients must ferret out the actual level of service being offered for that 50-basis-point fee. "Are they getting estate planning or just fixed income advice?" Barbara asks.
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