I suppose my question is about the reputation of these groups, things to look out for, and what the specific advantages are of working with them. Do they, for example, have access to special funds, or is it primarily their expertise, attention, and custom solutions? How does a private bank differ from an advisory firm, etc...
If any of you have had direct experience with these or other similar HNW advisers/private banks, I'd love to hear about it.
(comments to comments below)
First off, I do not have direct experience and I do not have anywhere near the amount of money your parents have. So I'll just offer a few comments:
First off, that is serious money. Assuming no major debts, they are set for life even if they do nothing more exciting than put the money in appropriately insured CDs. (It's possible to get 2% right now which is $400,000 per year. I think most people can live on that. If you go to a private bank you will likely pay that much in fees alone.Well, yes, this is serious $$, buts its definitely not their first million, and I think their goals are not so much being set, but trying to figure out how to preserve what they have for posterity. They already spend like mad, and can't seem to keep up with their income! Nice problems to have, but they really need to take a broad view of everything and get organized.
That said, they worked hard for that money building a business and there is no reason they shouldn't enjoy it now. That means spending it and working out a plan to leave it to their heirs and/or their favorite causes without undo taxes. Appropriate advice, and it may not come for a private bank, could easily be worth that fee.yes, I think this is where they're at.
I know one person who was a private banker for a private bank and I know a person who is an attorney for one of the companies you mentioned in their private client operation. The banker is not very experienced and is little more than a sales person wrapped up with a clerk. The lawyer (who I really only know socially) seems nice and reasonably competent but she also does not have much experience. She has been out of law school about 5 years (even though she is in her early 40s) and her role is mostly to process paperwork according to the banks pre-formulated estate products. In other words, mostly what she does is work with the clients' own attorneys to help them draft wills and trusts with the bank's preferred wording. She also advises clients on charitable giving which is how I know her. I'm not saying their is anything wrong with that but, in my opinion, that advice is not worth too much.Well, the reason why they approached the groups that they did was on personal recommendations from friends of theirs that have some REAL money, and are very savvy legally, and think that the services are definitely worth the fees. The impression i have from that is the banker is very experienced, but I still need to learn more about them.
If I were you I would tag along with your parents, listen carefully to what you are told by the banks, and ask pointed questions. You've asked some good ones here: what are the fees? Specifically what do they get for the fees. If you cant get a clear, honest, and satisfactory answer then you should not do business with that bank.It sounds like the fees are in the 0.6-0.75% area, which is the advantage of their only dealing with large $$ clients.
With that kind of money I would also bring along my own attorney to any meeting. The attorney's role is partly political, to keep the bank from putting on too hard of a sell, but also practical. The attorney can often a second opinion for anything you are told.Yes, actually the attorney, who they've known forever, was who recommended. This attorney is definitely to be taken seriously, even by a bigger financial group, so it adds some comfort from my perspective.
In my opinion, most people do not need advisors like that. But having major amounts of money as your parents do means the stakes are higher and also makes you a target. I don't see any harm in talking with a few companies to see what they can offer. I'd suggest meeting with at least three major international firms including those you mentioned as well as a couple of smaller, more private or specialized firms. You might find that you prefer the approach of one over the other.
Good luck and please don't rush into anything.
On a personal note, I'd be curious to hear what kinds of services they offer and what kind of fees they charge. Please let us know.