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Every major bank has one – a Private Client Group. A group of bankers dedicated to YOU. Someone that is there at your beck and call. Someone that has been in the game for decades and is there to provide you with a wealth of knowledge about your banking needs and provide advice on what solutions make the most sense for you. That’s peace of mind that will help you sleep at night. That’s a bank that cares. Awwww.
**jerk off motion**
The Private Client Group typically has some sort of requirements to be eligible to participate in their programs. It usually has to do with how much money you keep in the bank, how much money you make, or a combination of the two. The banks believe that since you already keep $250k+ with them, you already like them and are more prone to buy additional products and services from them. But they needed a hook…something to make you feel special. Thus, the Private Client Group was born.
The Private Client Group (or PCG) is, more or less, a load of crap. These individuals scream personalized customization from the rooftops, but the products they offer are very much in line with the products every other Tom, Dick and Harry has access to. Oh, you know your banker’s name and phone number? YOU SHOULD KNOW THAT INFORMATION – THIS IS YOUR MONEY WE’RE TALKING ABOUT! If you don’t have a go-to contact to solve any problems you have with your bank, then you aren’t doing it right. More on that later in this series.
One thing to be wary of with the PCG are the bankers themselves. You think you’re getting some super high end finance guru but the honest truth? The honest truth is this individual is in this position because he or she is just really good at selling retirement/wealth/investing products. That’s it. The PCG banker was typically a personal banker or a branch manager a few months ago and knocked it out of the park in positioning and selling a specific product set. They were so good, the bank decided to give them an extra $8k a year to be a PCG banker and solely focus on these products and nothing else. Remember that when you’re rolling your 401k over into a new IRA with them.
Now I won’t just completely poo-poo the PCG. Depending on how you bank and use your money, you might actually find some value in working with them. Typically, these programs will actually offer little perks like free wire transfers, 25 basis points of your home equity line of credit or no annual fee for specific credit cards. If you do a lot of wire transfers, then shit, it might make sense to work with the PCG. If your bank tries to position the group to you, look into what they offer in terms of free or discounted services. If it is something you will take value in, then go for it.
Full disclosure here everyone: I am a commercial banker and I will never pretend to be some sort of high end financial planner. The above article is just my observations on working with these individuals day in and day out over the last 10 years. But one thing I can tell you is that most of the individuals in the PCG lack certain designations and certifications that make me hesitant to work with them. They might have a Series 6 & 63 and can legally help invest some money, but unless their name has CFP after it, I would rather trust my financial future elsewhere.
See, that stands for Certified Financial Planner and is, at minimum, a required designation for anyone seeking to advise others on their retirement plan. There are other designations out there, but I’m not here to have a pissing contest on who can shout out the most acronyms. If your PCG banker has that particular designation, then you might be in good hands. At the end of the day, you want to do your homework on who you are doing your investing and retirement planning with. I would go so far as to recommend getting a referral from a trusted friend or, hell, even your parents because, at the end of the day, who you do your financial planning with matters much more than where you do it..
Respond
@billfromthebank
As an FA I compete once in a while with bankers even at the local level. It’s laughable how they tout themselves as advisors when they don’t even have the series 7. They will sell these bullshit CD ladders in IRA’s that don’t even keep up with inflation.
You walk into a private bank or even a BoA/ML office and they guide you to their “financial advisor” who’s some 30 year old guido in a too-tight black shirt with a white tie and black slacks and brown shoes with an oversized Diesel watch.
Much like attorneys, financial advisors are a plenty, but good financial advisors are few. I know low cost is the thing to do nowadays, but you should pay for good financial advice much like good legal advice — you get what you pay for. Of all things to be cheap on, your financial future shouldn’t be one of them when hundreds of thousands/millions are on the table.
I know a lot of people think they can manage it on their own but most of them certainly cannot. The things I hear people tell me they think as fact are astounding. It may be ok to do your small index funds here while you’re young but as soon as you get married, buy a house, have kids you need to have a professional manage your finances. It takes the burden off of you and allows you to enjoy your life knowing someone is watching over your retirement plan and is making good decisions.
Also yes re: the CFP. I don’t have mine (yet) but definitely look for that when looking for an advisor. It means they are legit amongst the masses of posers that are out there.
Sorry for the rant/advertisement but I feel strongly about this and I have seen people get fucked over because of either a bad advisor or they thought they could manage it on their own.
Tl;dr: Don’t skimp on advice be it financial, legal, medical etc. It pays off in the long run.
Also, when looking for a financial advisor, no matter how much/little money you have, go to an actual firm instead of a retail bank. All of their advisors will be fully-licensed and they typically won’t peddle you garbage some branch manager is pushing. Ameriprise and Edward Jones are pretty strong contenders with advisors just about everywhere.
I would tend to agree that one of those contenders is strong 😉
I worked for Jones. What they peddle may not be garbage but they charge entirely to much to put you in PIMCO & American funds with giant expense ratios and load fees.
Sales charges are universal across the industry and has nothing to do with pricing charged by Jones or Ameriprise or Merrill Lynch or anyone in non fee-based accounts. You get what you pay for.
They are, but Jones is moving you to those fund families because they get more money from them.
They aren’t going to move you to a different fund family or even class of funds that can do the same thing at a price better for their client/s.
It doesn’t matter what fund family you’re in as far as load goes. They all charge the same, and keeping it within the same fund family be it American funds or MFS gives you breakpoints which is why firms do it. At $1m a client wouldn’t even pay a load. In brokerage accounts at any institution it makes sense to keep it in the same fund family for breakpoint reasons. Moving some of it to another family would actually make it more expensive. Many firms have fee-based accounts that eliminate all load and fund family issues and have different share classes at lower expense ratios because of the wrap fee.
Okay guy, all I was getting at is that Jones doesn’t have their clients interests in mind when making investing decisions. Never indicated spreading your money fund families was a good idea, just that the thought of looking at all of the fund families was.
And let’s be real if I have serious money I sure as fuck ain’t going to my local Jones office to the guy who used to be a history teacher to invest it for me.
Good for you 🙂
More! More!
As someone who is constantly seeking out banking and financial basics, I’m really digging these SuitandTie, keep them coming.
I asked for more finance articles on big feedback Friday a couple weeks back and you guys delivered. I know it wasn’t directly because of me, but thank you anyway because all of us appreciate this stuff
Private Bankers = A bunch of guys who couldn’t get in to investment banking, PE, or institutional trading
In IB myself & this statement is 100% accurate. Stay away from PCG.
I’m just trying to find the next Mossac Fonseca and then buy a decommissioned missal silo in Montana and then find a way to automate myself out of every type of shitty existence lol
This is a good series, that is all.
Great article. Very welcome addition to my reading schedule.
We make you think you’re signing a typical disclosure form, but really it was a document agreeing to open several new accounts in your name. Then we start charging you fees for not maintaining account minimums in accounts that you were never aware were even opened to begin with. Then, we collect bonuses. That’s what our bank’s PCG does.
Yes – If you don’t have a financial back ground, do not trust these schmucks (or schmuckettes) at your preferred financial institution. The legal obligations to invest other peoples money are laughable and generally the company you’re working for will provide you so much study material and test prep that if you fail its because you lack the comprehension of a gold fish. Go with a CFA or a trusted CPA, or even a Private Banker with an extensive resume
I think you mean a CFP. A CFA is 99% of the time not going to be a financial advisor although there are some, and a CPA isn’t qualified to give investment advice unless licensed. So there’s that. Maybe while we’re at it though I can have my attorney diagnose my high blood pressure.
If it’s not emergency money, a Roth IRA is your next best bet unless you have high interest rate loans out. Pay those off first, then put it in a couple actively managed mutual funds inside a Roth and profit in 30 years.
Put it in a Roth IRA with vanguard. Select a target retirement date fund that most closely matches with your expected retirement age. That’s it!
I would look for a financial institution that is a fiduciary and does comprehensive financial planning, the thing is it might not seem like a lot of money but coming up with a plan for your future with someone is a very important first step for when you actually do have money. You said yourself your a science guy, let a finance guy take care of it who has a legal obligation to act in your best interest.
For some reason my reply posted as a comment see that.
After my regular savings account with 3 months of emergencies bill-paying money I have about $1500-2000. While I make smart financial decisions I am not experienced in all the options available to me (I’m a science guy not finance).
What should I do with this money? Lump it in with the rest in a high yield online-bank savings account that just barely keeps up with inflation? ETFs? I need advice but feel that $1500-2000 isn’t enough to necessitate a Financial Advisor.
As a fellow commercial / corporate banker, well done suit & tie. Keep ‘em coming.