One of the most important aspects of wealth planning is to efficiently manage spending needs. To ensure our clients have adequate levels of liquidity for short-term living expenses, we offer a competitive checking account which can be used to complement a dynamic spending strategy. Below, we illustrate the benefits of utilizing such a solution and the difference it can make.

Meet Brad Johnson

Brad Johnson has amassed a substantial net worth of $10 million as a restaurateur. He also has an annual net income of $1 million. At BNY Mellon, we recommend our clients put 3-6% of their total net worth into an easily accessible checking account for daily liquidity and rebalancing needs. This is based on an understanding that, on average, people spend 3% of their net worth annually.

If Brad follows this guidance and initially puts away 6% of his net worth for easy access, he will allocate $600,000 to a liquid checking account. At an expected annual expenditure of 3%, he would spend roughly $300,000 per year. However, he could maintain a balance of at least $300,000 in the account if he deposits additional funds of $300,000 (less than one-third of his net income) each year. If he can do this, he should have enough cash to cover short-term expenses while keeping his long-term investments intact.

Brad selects a BNY Mellon total wealth checking account

By choosing our Total Wealth Checking account,¹ Brad has access to a host of benefits and can implement a dynamic spending strategy that is undisruptive to his overall net worth and long-term wealth. Notably, he has seamless accessibility to his funds and real-life support on all his spending needs. Some of the perks include:

• Zero fees on checking transactions such as wire transfers and stop payments (up to $250/year)²
• Surcharge-free ATM and debit card point-of-sale transactions (up to $85 value)³
• Identity protection and monitoring from IDXTM, an identity protection company, at no additional cost⁴

•  IDX Privacy Score
•  Restoration services to support complete identity recovery, including $1 million insurance to cover out-of-pocket expenses related to restoration of identity
•  Tracking Blocker to limit personal data collection and Forget Me data removal
•  Dark web monitoring and compromised password search
 

• FDIC insurance, up to applicable limits⁵
• Wealth management team, including a dedicated private banker, providing advice and guidance across diverse disciplines

But the most compelling reason to open a BNY Mellon Total Wealth Checking account is its competitive deposit rate of 2.15% APY, which far surpasses the industry average. If Brad can keep a minimum daily balance of $250,000 in the account, he’ll be able earn 2.15% APY. Based on his annual spending needs of $300,000, he should stay comfortably above the required minimum balance to reap this benefit.

While our Total Wealth Checking account currently offers a 2.15% APY, the average deposit rate on money market deposit accounts (MMDA) from major industry competitors is 0.53% APY.6 See the chart below for an illustration of our Total Wealth Checking account versus a typical MMDA.

By keeping a balance of at least $300,000 in his BNY Mellon Total Checking, after five years Brad could earn $25,700 more than if his cash had been held in a typical MMDA.