Wealth Balances: The Higher You Climb,
the Harder You Fall?

Fed rate increases may have stalled in July 2023, but Wealth savings rates continued to climb throughout the flat-rate cycle. The volume of savings deposits balances priced over 500 bp peaked at nearly 33% of portfolio balances in April and 11% of acquisition balances in July.   

Then, once the Fed started cutting rates in September, banks were swift to pass along the most significant betas to these clients. This was despite the fact that higher yields are generally necessary to attract and retain the Wealth clients with the largest – and therefore most attractive – relationships.  

From the end of August through yearend, rates declined by 50 bp across Wealth savings/MMS portfolios, according to the Curinos Wealth Analyzer. But while clients with <$500K in deposits balances saw a decline of only 29 bp (36% beta), clients with >$10MM in total deposits balances experienced a decline of 89 bp (93% beta) (see chart). By the end of 2024, the volume of savings portfolio balances and savings acquisition balances priced below 500 bp was down to 4% and 0%, respectively.  

In what now looks to be an elevated-for-longer rate environment, many deposits and pricing leaders are weighing whether to reduce interest expense further even without another Fed rate cut. The good news is that although the first cuts were likely the deepest (beta across all client balance tiers was 57%), 26% of Wealth savings/MMS balances are still priced > 400 bp. In addition, less elastic balances below 400 bp also have room for further reductions.