What is private banking?
Private banking has many similarities with regular retail banking in terms of the products offered.
However, private banking clients are those with a significantly higher level of wealth and is only accessible tothem.
Clients will receive a more tailored and dedicated level of service, as private banks are geared towards those withhigher incomes.
The core focus of a private bank is usually traditional banking services such as managing deposits, providing credit,and facilitating transactions. The only difference being a more personalised and dedicated level of service isprovided.
That said, sometimes services usually associated with wealth management such as investment advice, wealth planning orgeneral portfolio management will also be offered by a private bank.
It is at the discretion of the client whether they want to receive these additional services from their private bank,or seek expert and impartial input from a wealth manager instead.
What services do private bankers offer?
- Credit cards
- Current accounts
- Deposit accounts
- Financial planning
- Foreign exchange
- Investments
- Loans
- Mortgages
- Overdrafts
- Tax planning
Why private banking?
Someone would opt for private banking when a regular retail bank no longer meets their needs, especially as a wealthyindividual or HNWI.
Private banks can offer a personalised service, specialised expertise, exclusive products and a higher level ofconfidentiality compared with regular banking. Another notable perk is that private banks tend to offer higherinterest rates for savers than regular banks.
In general, the clientele of private banks tends to be the likes of entrepreneurs, entertainers and sportingprofessionals. As a private bank may specialise in the specific banking needs of such clients, an applicableindividual may feel more catered to compared with using a retail bank.
Considerations of private banking
Not all private banks are created equal. As with regular banks, some are going to have better reputations, not tomention offer more or fewer services than others.
One major point to note is that banks will usually favour their own products or services over others on the market.As a result, the products sold to you may not be as competitive as the options a wealth management firm could have provided to you instead.
So while there may be some overlap in terms of actual services provided, the approach may differ with a private bankdue to aspects such as commission structures or even specialist wealth knowledge.
The fee structure of private banking can vary from charging a percentage of the Assets Under Management (AUM) tofixed fees. So it’s important to do your research to ensure a private bank is right for you.
There may also be ethical and moral concerns when it comes to who manages your finances – it’s not uncommon for private banking firms to be exposed by scandals.
Ultimately, be careful with who you trust to manage your funds.
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