Brokerage house got you down? For many brokers, moving to a private bank is equated with less autonomy—not to mention the scary world of salary-plus-bonus comp. But for others, the lure of the elite private banking brands is enough; at the very least, these firms deserve a look.
“There’s both good and bad at the private banks,” says Danny Sarch, a recruiter with Leitner Sarch Consulting in White Plains, N.Y. Sure, you’ll probably get salary and bonus instead of sky’s-the-limit commission and fee comp., but Sarch says reps can (and do) make as much money at the banks as at the wirehouses. There are considerations, of course: There is more of a team approach and the environment is much less entrepreneurial, he says. Plus it’s even harder to take your business with you if decide to leave. But there’s also more stability. “If you have the high-end skill set—asset allocation, lending and philanthropy knowledge to name a few, and you like the process of financial planning or recommending investments, the private bank may be for you,” says Sarch.
So who’s the best? New York-based research firm The Luxury Institute, which studies the wealthiest 10 percent of the U.S. population, just released a survey that ranks the wealth management brands at seven commercial banks, 10 regional banks and 21 private banks. (click here to visit the Luxury Institute Web site.) How’d they do it? They asked consumers. The study, conducted in May, surveyed 526 individuals aged 30 or older, with a gross annual household income of $200,000 and a minimum household net worth of $5 million. Respondents’ answers to a series of questions were then compiled into an index score, the Luxury Status Brand Index (LBSI), which was used to rank the various firms on a scale of one to 10.
The four “core” components of the LBSI come from respondents’ ratings of the following four statements: Does the brand provide “consistent superior quality?” Is it a “unique and exclusive brand?” What is its “social status,” Is it used by people that are “admired and respected?” And finally, what is its “self enhancement” value? Does it make the customer “feel special” across all aspects of the customer experience? The LBSI amounts to a popularity contest between wealth management programs at various firms, as judged by consumers that are familiar with them.
For reps, the list should provide some idea of who the competition is, as well as serve as a sort of guide of what wealthy clients think of each institution’s wealth management business (or businesses, for those firms with more than one) should he or she entertain the idea of joining one. One thing’s for certain, the firms with the greatest familiarity among consumers are not shoo-ins for popularity. Many of the best-known brands, including Merrill Lynch, Smith Barney, Charles Schwab, Lehman Brothers and Fidelity, received the lowest ratings.
The top 10 private banks (based on their LBSI scores) are:
- Bessemer Trust (7.33)
- Glenmede Trust (6.76)
- Credit Suisse Private Client (6.70)
- Goldman Sachs (6.48)
- Deutsche Bank Alex Brown (6.42)
- Bernstein Global Wealth Management (6.36)
- JP Morgan Private Bank (6.34)
- Neuberger Berman (6.33)
- Morgan Stanley Private Wealth Management (6.18)
- Boston Private Bank and Trust (6.17)
Bessemer Trust was the top-rated wealth management brand among all three bank categories for the third year in a row, says Milton Pedraza, CEO of the Luxury Institute. The New York-based wealth manager ranks first on three out of the four core components of the LBSI: it is perceived as unique and exclusive, consumers think it is used by people that are admired and respected and it makes consumers feel special across the full customer experience. “A lot fewer people may be familiar with Bessemer than, say, Credit Suisse,” says Pedraza, “but the people who know Bessemer love it.” Credit Suisse, the third-ranked brand, is far more familiar to the ultra-wealthy and has a much larger share of the market, says the report. Interestingly, US Trust, which ranked third among all three categories last year, dropped to No. 11 this year in the private bank category. Pedraza says this is probably the result of multiple management changes recently made at the firm.
The wealth management programs at the top six commercial banks (based on their LBSI scores) are:
- Deutsche Bank Private Wealth Management (6.24)
- HSBC Private Bank (6.22)
- JP Morgan Private Client Services (6.11)
- Wells Fargo Private Client Services (6.05)
- Wachovia Wealth Management (5.91)
- Citigroup Private Bank (5.80)
Among the commercial banks, Deutsche Bank Private Wealth Management ranked first on three out of the four components of the LBSI. One interesting finding is that women are more familiar with the brand than men. For Wells Fargo, the “social status” associated with customers of the bank increased significantly for respondents with an income above $500,000. According to the survey, JP Morgan is the brand that ultra-wealthy consumers are most likely to recommend to others. And while Citigroup ratings on the LBSI were much higher among women and wealthy consumers with a net worth of less than $10 million, its ratings as “unique and exclusive” improve drastically for respondents with an income above $500,000.
The top six regional banks (based on their LBSI score) are:
- SunTrust Private Wealth Management (6.88)
- Wilmington Trust Wealth Advisor Services (6.86)
- BB&T (Boston Bank & Trust) Wealth Management (6.84)
- Bank of New York Private Client Services (6.61)
- US Bank Private Client Group (6.60)
- Mellon Private Wealth Management (6.52)
By a slim margin, SunTrust has the highest LBSI score of the regional banks. According to the study, the respondents’ bank possessed “very strong perceptions of the social status of its customers” and the ability to make its customers feel special. It is the group younger consumers say they would be more likely to consider. Wilmington Trust gets top marks for delivering “superior quality,” scoring highest among two of the “outcome metrics” that the study uses in conjunction with the LBSI scores. Respondents said Wilmington Trust was “most worthy of a significant price premium,” and that they were “willing to recommend [it] to people I care about.” BB&T received top marks for being “unique and exclusive.”