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When to go with discount, full-service, PWM, and private banker
 

Faustus's picture
IB
 
Points)
 on 2/26/11 at 12:17pm

Does anyone know when it makes sense to go with each of these categories? And for the bankers out there, can you have a discount brokerage account? I would think there would be serious temptations that may occur arising if you could make independent trades.

Regardless, when does it make sense to go with:

1. Discount brokerage: Etrade, Scott trade, etc.

2. Full-service brokerage: MSSB, UBS, etc.

3. PWM: Goldman, MS, etc.

4. Private banking: Northern Trust, JPM, etc.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.
Tags:
rufiolove's picture

You probably don't have

IB
(Neanderthal, 3,412
 
Points)
 on 2/26/11 at 12:40pm

You probably don't have enough assets for a private bank or even an FA at a full service brokerage for that matter.

1/2 of the WSO Bash Brothers
"Licensed to Ill It"
We all know Bro J did it...

Faustus's picture

rufiolove wrote: You probably

IB
 
Points)
 on 2/26/11 at 1:12pm
rufiolove:

You probably don't have enough assets for a private bank or even an FA at a full service brokerage for that matter.

Clearly, really, the first two are the only options for someone out of college, nevertheless, I'd be interested in all categories.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

mkballer's picture

Emory Blaine – fdba BBA

CF
(Orangutan, 283
 
Points)
 on 2/26/11 at 1:27pm
Emory Blaine – fdba BBA:

Regardless, when does it make sense to go with:

1. Discount brokerage: Etrade, Scott trade, etc.

2. Full-service brokerage: MSSB, UBS, etc.

3. PWM: Goldman, MS, etc.

4. Private banking: Northern Trust, JPM, etc.

When you have a reason and the ability to pay for them.

MKballer

Faustus's picture

mkballer wrote: Emory Blaine

IB
 
Points)
 on 3/7/11 at 5:08pm
mkballer:
Emory Blaine – fdba BBA:

Regardless, when does it make sense to go with:

1. Discount brokerage: Etrade, Scott trade, etc.

2. Full-service brokerage: MSSB, UBS, etc.

3. PWM: Goldman, MS, etc.

4. Private banking: Northern Trust, JPM, etc.

When you have a reason and the ability to pay for them.

For fuck, please spare me the paternal advice – or saying if you have to ask, you can't afford it.

The genesis of the question: I've a full service brokerage account (due to family), h/w it does not make sense as the fees are so high at my level – there is a sliding scale and small trades have HIGH fees.

The last two categories are out of curiosity, the other two apply.

Further I'm curious if bankers can have discount or other external accounts or how you stay out of trouble in this regard.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

Faustus's picture

Bump.

IB
 
Points)
 on 2/27/11 at 2:20am

Bump.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

rebelcross's picture

I think it's a legitimate

IB
(King Kong, 1,466
 
Points)
 on 2/27/11 at 2:29am

I think it's a legitimate question to:

A. Have a better grasp of these things for the future
B. Have a better idea of the kinds of people / institutions who would make the strategic decision to go with one of the aforementioned investment categories

It's a good discussion for a finance community, not sure why nobody even attempted to answer the OP's question.

Faustus's picture

rebelcross wrote: I think

IB
 
Points)
 on 2/27/11 at 5:15pm
rebelcross:

I think it's a legitimate question to:

A. Have a better grasp of these things for the future
B. Have a better idea of the kinds of people / institutions who would make the strategic decision to go with one of the aforementioned investment categories

It's a good discussion for a finance community, not sure why nobody even attempted to answer the OP's question.

Thanks man, I feel the same way, obviously.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

rebelcross's picture

Emory Blaine – fdba BBA

IB
(King Kong, 1,466
 
Points)
 on 2/27/11 at 5:33pm
Emory Blaine – fdba BBA:

Thanks man, I feel the same way, obviously.

Yeah, I just hate when people post a real question and the immediate response is "well, you shouldn't even be thinking about that because of x, y, and z." These are meaningless assumptions, the person asking usually has a reason for asking the question. The person asking will deal with their own end, either respond with some real information or don't waste everybody's time.

jameshaha's picture

I personally use TD

IB
(Chimp, 15
 
Points)
 on 2/27/11 at 7:34pm

I personally use TD Ameritrade. The trades are pretty cheap (around 9 bucks per trade) and there's no management fees. If you don't have much money but still want to get a taste of things, I recommend opening up an online brokerage account. I think ING even offers a lower priced one at $5 per trade.

Also, if you don't have a lot to invest (or even a lot for that matter), go with ETFs instead of mutual funds. ETFs in general have lower fees, very easy to transact just like any other stock (with real time prices unlike mutual funds which are priced only at the end of the day or even slower for some brokers...), plus ETFs have the great benefit of easily diversifying to eliminate unsystemic risk.

D M's picture

Good question OP. IMHO it's

O
 
Points)
 on 2/27/11 at 7:36pm

Good question OP. IMHO it's all about maximizing your personal funds. Therefore, if you're losing a lot of money to fees and whatnot, it doesn't make sense to got with an FA if you can do it yourself.

They're all about keeping the money you've made and growing it to keep up with inflation and to pass on to future generations. PB is generally very full service, anything you need that is finance-related, they will do for you (and probably even a good number of things not related to finance). I *believe* that PWM also offers more services than a traditional FA, but PB is far more comprehensive as everything must be analyzed to minimize loss and maximize growth. Therefore your team at a PB will not just be a financial advisor, but they will also have lawyers and accountants working continuously for you. That's why so many people that are supposed to be paying ~50% of their income in taxes only pay maybe 35-40%. That extra 10% is huge when you're pulling in a million, 5mm, 10mm a year.

Frankly, for just out of college you're probably best sticking with a savings account or playing around with it yourself on etrade or whatever (that's assuming you're not working 110 hours a week). Of course, I'm not even graduated from college yet, this is just how I see it.

"WSO is like the 300 for anti spamage. None shall pass." -happypantsmcgee
"You stop being an asshole when it sucks to be you." -IlliniProgrammer

Faustus's picture

Any private bankers out there

IB
 
Points)
 on 3/3/11 at 12:34pm

Any private bankers out there who know the answers the the high net worth questions:
When does it make sense, in terms of AUM, to go with PWM and a private bank?

Also are there any FAs out there who know when it makes sense, again, in terms of AUM, to go with a full service brokerage?

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

LAWM's picture

It depends on the

AM
(Orangutan, 335
 
Points)
 on 3/3/11 at 4:12pm

It depends on the service/product you are looking for.
You want certain p/e or hf deals or access to certain/prop funds etc...
You can be 10mm + and at a regular brokerage (not pwm/private) and still get benefits. Its really about the person you are working with and what they can do for you.

rufiolove's picture

Faustus... if you wanna go

IB
(Neanderthal, 3,412
 
Points)
 on 3/3/11 at 8:22pm

Faustus... if you wanna go with a private bank, you are probably going to be in the neighborhood of $10MM minimum before you want to start serious considerations. That was the target client minimum threshold at a previous employer. In terms of a step below that, you may see some specialty in-house divisions of full-service brokerages or trusts that will give you a full-suite of services/benefits at north of $3MM... i.e. Northern Trust, Bessemer, US Trust, etc...

Most likely, you're gonna want to go with a discount brokerage where you can make online trades. TD Ameritrade, Chuck Schwab, Fidelity, or Merrill Edge are probably a good fit for a young professional looking for the ability to make a decent amount of trades and have a bit of guidance on the side if you need it. Didn't mean to be so dismissive before, it just seemed ridiculous that anyone on this forum would need a private bank, so I assumed you just didn't know what it was...

1/2 of the WSO Bash Brothers
"Licensed to Ill It"
We all know Bro J did it...

Faustus's picture

rufiolove wrote: Faustus...

IB
 
Points)
 on 3/6/11 at 10:19pm
rufiolove:

Faustus... if you wanna go with a private bank, you are probably going to be in the neighborhood of $10MM minimum before you want to start serious considerations. That was the target client minimum threshold at a previous employer. In terms of a step below that, you may see some specialty in-house divisions of full-service brokerages or trusts that will give you a full-suite of services/benefits at north of $3MM... i.e. Northern Trust, Bessemer, US Trust, etc...

Most likely, you're gonna want to go with a discount brokerage where you can make online trades. TD Ameritrade, Chuck Schwab, Fidelity, or Merrill Edge are probably a good fit for a young professional looking for the ability to make a decent amount of trades and have a bit of guidance on the side if you need it. Didn't mean to be so dismissive before, it just seemed ridiculous that anyone on this forum would need a private bank, so I assumed you just didn't know what it was...

Thanks — I am not suggesting I need a private bank, the last two categories are out of curiosity. Maybe this is just the wrong place to ask but there must be buckets for each area. This is what I was thinking: JPMPB min 10mm, and this is on the low end; 5mm for PWM; and 50k-100k for full-service to make sense. This is just a guess, I could be totally off. And Northern Trust is a great private bank from what I understand (not a step below JPM, if anything JPM is trying to catch up with them with some services), they've been at it for a while. Again, I could have done this without posting, so please correct me if I'm wrong

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

D M's picture

JPM PB (I think that's what

O
 
Points)
 on 3/4/11 at 12:39am

JPM PB (I think that's what you meant) has a minimum of $30mm (possibly lower for legacies, not sure).

"WSO is like the 300 for anti spamage. None shall pass." -happypantsmcgee
"You stop being an asshole when it sucks to be you." -IlliniProgrammer

Faustus's picture

Great, thanks, so we have one

IB
 
Points)
 on 3/7/11 at 5:09pm

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

jbert112's picture

I use TradeKing. 4.95 /

ER
(Baboon, 145
 
Points)
 on 3/5/11 at 9:23pm

There is all the difference in the world between treating people equally and attempting to make them equal.

D M's picture

The thing is Faustus, each

O
 
Points)
 on 3/6/11 at 12:49am

"WSO is like the 300 for anti spamage. None shall pass." -happypantsmcgee
"You stop being an asshole when it sucks to be you." -IlliniProgrammer

Faustus's picture

D M wrote: The thing is

IB
 
Points)
 on 3/7/11 at 5:18pm

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

pcola2234's picture

i think it makes sense if

(Chimp, 2
 
Points)
 on 5/17/11 at 1:49am
Unforseen's picture

PWM: You have a lot of money

(King Kong, 1,109
 
Points)
 on 5/17/11 at 7:09am

Check out my Blog

Chicago85's picture

I started writing and

IA
(Baboon, 163
 
Points)
 on 5/17/11 at 12:01pm

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