At their peak last summer, retail CDs accounted for nearly 30% of all wealth-deposits acquisition balances, thanks to offers on yields from many banks of over 500 bp. And they jumped to 12% of portfolio balances, up from a mere 1% in February 2022, before the Fed starting cutting rates in September.
At the time, Curinos predicted adoption would plummet once yields fell below that attractive 500 bp threshold, and it did—by more than 60% immediately after the Fed cut rates and banks passed along that beta on acquisition rates.
CDs now hover closer to just 10% of acquisition balances and remain concentrated at terms of nine months or shorter (see chart). This indicates that clients seek to preserve liquidity, but only to a point. Tying up funds at 5% for six months feels okay, but doing so at 4% for 12 months just doesn’t.
At today’s rates, retail CDs have fallen out of favor with Wealth clients, which means banks would benefit from taking a closer look at their pricing discipline for Wealth savings/MMS. They’ll need to be sure they have a compelling offer to retain the rate-sensitive balances of their most elastic, high-value clients in a product that responds to their desire for liquidity.
Wealth Acquisition CD Term Mix | Mar ‘24 – Feb ‘25
Source(s): Curinos Wealth Deposit Analyzer | Note(s): Simple averages displayed | Page displays all data available at time of production and bank consortium may differ from that of Wealth Deposit Analyzer tool
