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| Bankers' Agenda |
Profitable Parleys
Constance Gustke
12/01/2003
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Mary Cooper calls herself a mini-CFO. She is among the ranks of private bank clients who are taking a hard look at the fees they pay for financial services—and in some cases negotiating them down. Cooper, whose husband launched a successful technology company that he sold in the mid-1990s, says it’s all about taking the initiative.
 When her bank charged her a fee on a loan without telling her beforehand, Cooper pulled her account—worth several million dollars—and put it with another bank. She got a better price and better service. "I was born at night," she says, "but not last night." Her philosophy: If you do not have to pay a fee, why should you? "I go right to the edge. They either say yes or no, but the ball is really in your court."
Competition among banks is giving clients more leverage in negotiations over fees than ever before. According to a recent PricewaterhouseCoopers wealth management survey, 86 percent of the financial institutions (mostly banks) said they would discount their fees, but they only do it about 20 percent of the time. Translation: Unlike Cooper, many people simply are not asking.
"We’re absolutely willing to negotiate fees," says Tiffany Barbara, a vice president in private banking at JP Morgan in Los Angeles. "If clients are asking, they probably think they should be getting a fee break anyway."
Banks can find ways to lower their own costs and pass on some of the savings to you. Folding more accounts, such as investments and trusts, into their care helps them spread out their fixed costs. For example, when one of Barbara’s clients eliminated his two other banking relationships in favor of using JP Morgan exclusively—causing his assets with JP Morgan to jump from $50 million to $170 million—he got a 30 percent break on investment management fees. "You get more bargaining power the more assets you invest," Barbara says.
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