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Private Banking vs Wealth Management – Which One Is Best for Ultra High Net Worth Investors Like You?

private banking vs wealth management

Differences, Similarities, Pros and Cons

How is private banking different from wealth management? Do you have to choose between these, or can you utilize the strengths of both at the same time? And if you do choose to use a wealth manager, how do you choose the best one?

At its core, the question of private banking vs wealth management is a question of purpose. You use private banking for a different purpose than you use wealth management.

At Pillar Wealth Management, we understand the difference and why it matters for ultra-high net worth investors. For thirty years, we’ve served families with assets ranging from $5 million up to $500 million through varying market cycles.

When things are uncertain, you want to protect your assets, and when things level out and turn up, you want to improve your portfolio performance. To maintain the success of your portfolio through ups and downs, you need to understand what the different financial players provide you.

We’ll begin with the ‘nutshell’ explanation of private banking versus wealth management, and if you need more detail you can continue reading beyond. Of course, at any time, you can reach out to Pillar Wealth Management to start a conversation about your financial needs.

The simple explanation is this:

Private banking covers all the same services you would normally use at a bank and can also include investments and other services if you want to access them. Wealth management focuses on your financial security and seeks to provide that through financial planning services and other processes related to achieving that.

Private banking is a service. Wealth management is a partnership.

So if you want to enhance your banking experience and access some exclusive services reserved for high net worth individuals, private banking is the usual path for pursuing this.

If you’re looking for focused attention on your investment plan, portfolio, and the achievement of your other financial and lifestyle goals, then you want to look for a wealth management firm such as Pillar, which is located in Walnut Creek, California near Palo Alto and San Francisco and serves high net worth investors in the surrounding areas as well as across the nation.

That’s the short explanation. If you need more – keep going.

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What Is Private Banking?

Private banking is essentially like regular banking on steroids, to use the common expression.

You still get savings, checking, and CD accounts, but you get served by a personal banking representative who you can reach by phone without having to sift through all the usual channels.

You’ll also probably earn slightly higher interest rates, access to additional perks and services, and probably some customized banking solutions.

Private banking enables you to do the usual mundane processes such as bill paying, the use of safe deposit boxes, setting up mortgages, and all the rest. And, you’ll likely pay lower fees (or none at all), get access to special lines of credit and exclusive loan terms, and receive prime rates. If you own a business that imports or exports, you may receive discounted foreign exchange rates.

So if you are a high net worth individual and want a banking experience that reflects the greater value your patronage represents, you might want to look into private banking.

Now, private banking can also include many of the services that are offered by wealth management firms. These include retirement planning, estate planning, tax planning, and financial planning.

However, this is where private banking’s limitations emerge, and where wealth management supersedes it in what it can offer you. More on wealth management in a bit.

Here’s another summary of services typically offered through private banking.

private banking vs wealth management

Pros and Cons of Private Banking

The single best advantage of private banking is that you can do all your banking tasks in one place, including the less common but more consequential ones like securing a mortgage. And with a dedicated banking employee working with you, you get to talk to the same person every time.

Private banking also affords you increased privacy. And with the special access to favorable rates, discounts, and higher interest rates on your savings, money market, and CD accounts, the conveniences and perks offered by private banking look pretty attractive to a high net worth individual.

However, consider the limitations of private banking as well.

If you’re lured by the option of also accessing wealth management services through private banking, you’ll find considerably less expertise in those areas at your bank. The top wealth management and investment planning experts do not work in private banking. They work as wealth managers. They don’t want to spend their time helping clients pay bills and set up CDs.

So you will not be benefitting from the financial performance expertise that most high net worth individuals need. This shortcoming extends to any related services such as estate planning, retirement planning, and tax planning. Again, top experts in these specialties do not work at banks.

For this reason, private banking departments experience higher turnover. Those private bankers who want to get into wealth management will jump at it when the opportunity arises. So your best private bankers will be continually departing for greater opportunities.

Also, private bankers are not fiduciaries. Though they offer personalized service, they also serve their bank’s goals and follow their bank’s procedures. Your financial performance is not their only priority or best interest.


Here’s a quick summary of the private banking vs wealth management:

Pros of Private Banking:

    • One-stop personalized banking
    • Dedicated banking employees, bypassing usual channels of service
    • Increased privacy
    • Better rates, terms, perks, and options
    • Exclusive access to opportunities

Cons of Private Banking:

    • Less wealth management expertise
    • High turnover and churn of best bankers
    • Not fiduciaries, possible conflicts of interest
    • Increased regulations since 2008 making it harder to certify new private bankers

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What Is Wealth Management?

In contrast to private banking, wealth managers don’t offer typical banking services. We are not banks at all. You don’t deposit money, or get checking accounts, or set up CDs, or get mortgages through a wealth management company.

Wealth managers devote their efforts to stewarding your finances and investment portfolio to help you optimize your wealth and achieve your short and long term financial and lifestyle goals.

A wealth manager is the person you’ll work with to invest your liquid assets. This should encompass three main categories: Equities, bond investments, and cash accounts like savings, certificates of deposit, and money markets. It can also include real estate and commodities, but the core focus usually includes some combination of cash, bonds, and equities.

Wealth managers are a specialized version of financial advisors, in that they typically work only with high net worth or ultra-high net worth clients.

Are All Wealth Managers Basically the Same?

No. As in any profession, you will find some people doing what they’ve been taught to do either at school or at a previous firm, and you will find others who have developed their own investment planning processes and systems based on years of experience and concern for their clients.

Pillar falls into this second category.

If you want help finding the very best wealth manager or financial advisor for you (and it might not be Pillar), we created a free eBook, The Ultimate Guide for Choosing the Best Financial Advisor for Investors with $2 Million to $70 Million Liquid Assets.

This unparalleled resource will walk you through the 7 warning signs you might be talking with an advisor who will fail to reduce your anxiety or uncertainty about your financial future. You’ll also discover the five (and only five!) areas of financial planning under your control, and why it’s so important to know what they are.

You’ll see examples of real investors who have risen and fallen based on the wealth management and financial advice they received.

For high net worth investors in particular, you’ll learn the five non-negotiable qualities you must demand from whichever wealth manager you decide to work with.

Packed with data, examples from history, and surprising revelations about the hidden costs some wealth managers (and private bankers) won’t tell you about, you’ll also learn the truth about risk tolerance, the shortcomings of trying to actively manage all your investments, and so much more.

It’s a complete guide to finding a financial advisor or wealth manager.

Get your free Ultimate Guide here

How Do Wealth Managers Work?

For Pillar, your process begins with a free Wealth Management Analysis, which you can schedule here.

Here, we’ll use your lifestyle goals and dreams, financial situation, and current family and work circumstances to create a highly customized investment plan. But please note: We only work with high net worth individuals with over $2 million in liquid assets.

Get more details here about the holistic wealth management provided by Pillar, and how our process differs greatly from that of big banks as well as most other wealth managers.

What Other Services Do Wealth Managers Offer?

This is actually one area with a lot of variation. Not all wealth managers offer the same additional services. Some focus exclusively on managing your portfolio and investments.

Pillar also offers many other services that high net worth investors need help with at critical moments of their lives, including:

    • Tax accounting and strategic planning
    • Retirement planning
    • Legal planning
    • Estate planning
    • Risk management
    • Trust services
    • Banking services
    • Philanthropic planning

These services come at no extra cost to our clients. Reach out to Pillar to schedule a free, no-strings-attached conversation about your financial goals.

Learn more about what wealth management is and how to find the right firm

The Final Word on Private Banking vs Wealth Management

Some banks call their private banking clients “wealth management private banking clients.” By mixing these terms together, they are sowing confusion and clouding the very stark differences between private banking and wealth management.

Private banking is procedural; wealth management is strategic.

One is a service. One is a partnership, forged to help you live your life in the best possible way, secure your future, and protect your wealth. They are not in opposition. They are complimentary services serving distinct purposes.

When you try to mix the two, you end up with a vastly diluted quality of service in your wealth management, and your confidence in your future will be strained and uncertain. Your best advice is to use these complimentary services for the purposes they were created for.

Financial Advisor Atherton