To attract and retain clients of high net worth, most banks are active in promoting privileged wealth management services offering preferential and personalised services to selected customers. Consumers, however, should take heed of the variations in practices by different banks and ascertain beforehand such areas as aggregate balance calculation and applicable timeframe which are relevant to service fee exemption, stock brokerage fees, and preferential interest rates for deposits. Privileged wealth management services offered by some banks are, however, not so distinctly different from services for ordinary clients, and their offers of privileges may not actually suit one's own personal wealth management and investment model.
The Consumer Council has conducted a survey on privileged wealth management services; 16 banks responded and together they offered a total of 27 types of related services. The survey showed that the threshold required for service subscription varied significantly. 4 types required maintaining a minimum aggregate balance of $100,000 within a stipulated time period to get exemption from service charge; 11 a minimum $1 million; 1 a minimum $5 million; and the rest from $200,000 to $800,000.
Consumers should however take note of the wide variations in the time periods prescribed for the relevant aggregate balance to qualify for service charge exemption. Among the 27 types of services surveyed, some (12 types) required a specific daily average aggregate balance to be attained in the past 1 month; some (10 types) based on the daily average balance to reach a required sum in the past 3 months or 1 quarter; some (2 types) required the monthly average to reach a specific aggregate balance in past 3 months; while the remaining (3 types) required the average daily balance to reach the specific sum in only 1 of the 3 months in the past.
According to the survey, if the aggregate balance does not reach the minimum requirement within the stipulated period, the clients will not be exempted from payment of a monthly service fee ranging from $50 to $380. Only 1 bank does not levy any such service charge. Consumers hoping to enjoy the preferential bank service and flexibility in wealth management therefore should take into account their personal income and expenditure and wealth management mode in the choice of a suitable service plan.
Further, consumers should pay attention to the difference among banks in the calculation of the aggregate balance. For instance, 2 service types both requiring an aggregate balance of $800,000, 1 type included in the balance calculation cash deposit, investment and joint account while the other also included the MPF account balance, the cash value of insurance policy and unsecured loans etc. – consumers of the latter service type will find it easier to meet the aggregate balance requirement.
Some banks do not include joint accounts in the calculation of aggregate balance while some exclude the cash value or total paid premium of life insurance or other insurance products. Consumers are advised to enquire with the banks directly to avoid the payment of service fees due to insufficient aggregate balance.
15 service types would offer preferential brokerage fees for Hong Kong stock transactions through manned hotline, customer service or branches ranging from 0.1% to 0.5% usually at a minimum fee of $100. In the case of transactions through the internet or mobile phones or voice response system the fees are from 0.1% to 0.25%.
In addition, 12 service types offered their customers overdraft protection interest rates, while 13 others preferential foreign exchange rates. Quite a few banks offered preferential savings or fixed deposits interest rates to privileged wealth management services subscribers but without clearly specifying if preferential rates will also be applicable to foreign currency deposits. Consumers frequently use or invest in foreign currency need to take note.
The survey showed that with the exception of 1 bank which only provides wealth management centres, all other banks operate wealth management centres as well as priority teller counters at their branches for special clients in order to shorten their waiting time for service. Customers of 4 service types could use the priority counters in all the branches of the banks concerned. 5 banks offering 2 or more service types would offer no priority counter service to lower end privileged wealth management subscribers.
The percentage of branches operating priority counters vary widely from service to type, from 100% to as low as 14%. The number of branches with priority counters could directly affect the convenience offered to subscribers of premium service who require counter service.
To attract new customer to subscribe to privileged wealth management service, banks will from time to time offer various benefits such as cash rebate or flying mileage awards etc. Consumers should pay attention to the terms and conditions of the service and the levy of cancellation charges by some of the banks. In the survey, 5 banks were shown to levy a service fee of $100 to $500 if the customers terminated the privileged wealth management service within 3 to 6 months of subscription. 1 bank though levied no early termination fee, would charge $100 if the customers re-apply for related wealth management service within 6 months after having terminated the service.
Consumers contemplating to use privileged wealth management service are advised to pay heed to the following:
- Be wary of the terms and conditions governing service fee exemption or the offer of special lower aggregate balance requirement. Change of circumstance in future may affect the privileges enjoyed;
- As banks adopt different methods in calculating aggregate balance, enquire with the bank directly to avoid having to pay service fee due to insufficient aggregate balance;
- Consider whether the privileged wealth management service meets with your personal financial management or investment mode, for example, the priority teller counters, the wealth management centres, the daily fund withdrawal limit or stock brokerage fees etc.;
- Consumers with fluctuating asset value and only occasional use of related privileged service, need to assess if the benefits they could enjoy can offset the monthly service fees.
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