Early next year, JP Morgan Chase’s private bank will double the minimum asset amount it requires to be a customer. Jumping the minimum amount from $5 million to $10 million, JP Morgan Chase’s private bank just got more exclusive … somehow more private, if you will. The rise has been happening slowly for years, impressively so since the Great Recession. So, what does this mean? In general, it shows that you may be snubbed by your private bank, and thus pushed out of the perks that come with being a member, such as one-on-one time with a top-tier adviser and access to the bank’s exclusive investment offerings. Or, should you not already be a customer, you may not be able to ever chase down the bank’s minimum asset requirement before they raise it again.
Customers turn to their private banks for investment management, and the banks are turning their backs. Showing how their largest customers are their bread-winners, major private banks are making it more and more difficult for so-called “single-digit millionaires” to find a place to invest their millions. Show an investment counselor at a private bank anything below $5 million (or anything shy of $10 million next year), and they’ll happily show you the door. But, instead of the door to outside, they might show you the door to their lower level option, like JP Morgan Chase’s “Private Client Direct,” which is its name for the service it offers to those who used to be good enough.
If this trend shows that big banks will only target and fight over the very, very wealthy, investors who are shy of those lofty demands are forced to turn elsewhere for investment options. But, as Suzanne McGee wrote for theguardian.com last week, single-digit millionaires still have investment options with private banks like JP Morgan Chase:
“Robo-advisers–the new breed of automated investment platforms that use algorithms to invest your money, taking into account factors such as age, income and risk tolerance–offer sensible alternatives. But they work best for those people who are familiar with how financial markets work. Someone who isn’t comfortable with markets, doesn’t understand the concept of an index fund, isn’t completely sure about how an asset allocation will help them, or isn’t certain about the relationship between stocks and bonds may not want to simply hand over their money to a robo-adviser and then step away.”
Robo-advisers? Sensible? McGee’s piece had her invested in sarcasm, which is clear if you read her full article here.