CD adoption on the part of wealth clients has always been significantly lower than that of their retail counterparts, and they’ve been less likely to sign on for terms over one year. But in 2023 and the first half of 2024, when rates were over 500 bp, wealth clients went longer: the composition of portfolios with balances having terms of 11 months or more was significant—as high as 60%.
Since the Fed started cutting rates last summer, however, acquisition has been increasingly more concentrated in shorter terms. In May, three-quarters were at terms of seven months or less, with 18% at terms of four months or less. Those shorter-term CDs now make up 55% of wealth deposits portfolios (see chart).
Wealth CD Portfolio Makeup Over Time | CD Term | May 2023 – May 2025
Source: Curinos Wealth Deposits Analyzer
At this stage of the rate cycle, it’s clear that wealth clients continue to favor going “short and/or liquid” with their deposits. Even with 11- to 14-month CDs averaging 359 bp, they’re much more likely to opt for wealth savings/MMS accounts at about 285 bp. If they do elect to go with a CD, a shorter term allows them to lock in a rate but also consider their options at each maturity.
But with additional Fed cuts likely, the potential for prevailing rates to be lower at maturity for both savings/MMS and CDs is very real. Banks therefore need to plan for the onslaught of maturities that could come more frequently in their wealth deposits portfolio and determine the best way to proactively address the headwinds they’ll face in retaining those balances.
