For high-net-worth individuals (HNWI), finding the right bank is of utmost importance. When managing such large sums of money, even small variations in returns, fees, rewards and benefits can make a significant impact. For this reason, most big banks maintain self-contained departments that cater strictly to HNWIs with exceptionally large account balances. These special banking divisions employ the sharpest minds in the industry to manage the wealth of HNWIs, and they offer a host of services not available to traditional clients, such as a dedicated wealth management representative, concierge banking, discounted mortgages and perks and rewards on credit cards.
Two of the oldest and most well-known banks in the United States, JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Company (NYSE: WFC), each offer private banking services to account holders who maintain balances above certain thresholds. Their programs are strikingly similar; both feature mortgage perks, higher yields on certain deposit accounts and more personalized service, yet subtle differences exist between the two banks, most notably Wells Fargo imposes a $1 million account balance minimum to become a private client, while the minimum balance at Chase is only $250,000.
Mortgage perks offer a boon to HNWIs, as such customers tend to purchase much more expensive real estate than the average bank customer. Moreover, many HNWIs are wealthy at least in part because they invest in real estate, meaning it is likely that they are juggling multiple mortgages. For these reasons, going with the private banking division that provides the best mortgage services is a prudent move.
Both banks offer a list of mortgage benefits, though they differ slightly in nature and scope. Chase offers private banking customers discounted mortgage interest rates of varying levels based on the customer's total deposits and investments with Chase. These discounted rates apply to fixed-rate mortgages for the life of the loan and to adjustable-rate mortgages (ARMs) until the first adjustment. Private banking customers also receive a $750 discount on closing costs. Their loans close faster because they receive priority processing and access to a special senior underwriting team. Interest rate discounts for Chase private clients apply to home equity lines of credit (HELOCs) as well as traditional mortgages.
The mortgage rewards for Wells Fargo private clients cover different territory. Like at Chase, clients receive special interest rate pricing based on deposit account totals. Private clients with an existing mortgage who make a large lump-sum principal payment have the option to recast their remaining balance. This process adjusts the amortization table for the remaining term and allows more of each subsequent payment to go to principal versus interest.
The bank's cash purchase option enables customers to take advantage of cash-only real estate deals and still finance their purchase. The buyer pays cash for the property, and can then apply for a mortgage with Wells Fargo within 90 days. With good credit, a private banking client can purchase a property with a jumbo loan and put only 10.01% down.
At Chase, private clients receive wealth management services from JPMorgan. These services include financial advisory services, mutual funds, securities-based lending, annuities and college planning, which includes tax-advantaged 529 plans. Private banking clients receive a private client advisor and access to the firm's global strategy and global solutions teams.
Wells Fargo private clients receive personalized wealth planning, investment management, trust services and private banking. Additionally, clients with unique assets, such as small businesses, oil, gas and minerals and investment real estate, enjoy access to hands-on management from experts in these niches.
While both banks offer an abundance of benefits for HNWIs, it comes down to the specific services that a client feels can provide the most benefit. A client heavily involved in real estate investing who is in frequent need of creative mortgage financing should look to Wells Fargo. Meanwhile, those who actively trade stocks and concern themselves more with the brokerage side of a bank's business may be better off with JPMorgan Chase.