Private Bank Vs Wealth Management for the Rich – PillarWM
The worlds of wealth management and private banking often overlap, sometimes to the extent that the terms themselves seem to become indistinguishable or interchangeable. Even though both services can help you manage and build your assets, they satisfy different requirements based on your unique financial needs. So, naturally, you might think of some questions such as, Private bank vs wealth management – which one is better? Do you have to have to choose between the two, or can you leverage the strength of both simultaneously? And if you want to go for wealth management, how do you pick the best wealth manager? If you have $10 million or more worth of liquid assets, we highly suggest you read our guide on choosing the best financial advisor.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
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At Pillar Wealth Management, we’re a team of independent wealth managers. We offer wealth management services to individuals and families who own between $5 million and $500 million worth of liquid investable assets. Plus, we have been catering to high net worth and ultra-high net worth individuals and families for a combined period of over six decades! We have expertise in developing comprehensive wealth plans to ensure that you’re able to meet all your financial goals and attain financial serenity.Click here to set up a free meeting with one of our wealth managers and move one step closer to reaching financial serenity.
Private Banking and Wealth Management
Before we move ahead to analyze if private banking is better than wealth management or vice versa, we need to understand both.
What Is Private Banking?
In simple words, private banking encompasses financial institutions that offer financial services to affluent individuals. In some instances, an individual may be able to get these services if they have less than $100,000 worth of assets. However, most private banks set a criterion of a minimum of six figures.
Private banking may also allow you to earn slightly higher interest rates, access additional benefits and services, and some personalized banking solutions.
What Is Wealth Management?
Wealth managers are a type of financial advisors, and they usually serve clients who have a minimum net worth of $5 million. Wealth management firms are highly invested in managing their client’s investment portfolios and finances to help them improve their financial situation. Read this guide to learn about the paradigm shifts you need to make to get the highest possible portfolio performance.
Private Bank Vs Wealth Management – Which One is Better?
To answer some of the most commonly asked questions, such as which is the best private banking or wealth management?we need to start off by taking a deeper look at the differences between the two.
Technically, both private banking and wealth management provide similar services. Both institutions offer investment management, banking, retirement income planning, along with other financial and investment-related services. However, the difference exists in the expertise in those services.
Even though private banks do provide services, such as risk management and retirement planning, they don’t have expertise in these fields. Instead, their primary expertise exists in banking services.
On the other hand, wealth management firms have much more expertise and experience in these two services. Wealth managers are fully equipped with the knowledge of such services and have been offering them to affluent individuals for years, sometimes even decades.
All in all, you’re managing your assets and wealth on your own or via some other financial advisor and just require specialized banking services, a private bank may be the right choice for you. However, if you need extensive wealth management, you need to opt for competent and experienced wealth managers. A wealth manager will allow you to achieve the maximized optimum performance. Read our guide, Improving Portfolio Performance, and find out how achieving the best investment performance can help you attain true financial security.
As discussed earlier, private banking can also offer several services that wealth management firms usually provide. These include estate planning, financial planning, tax planning, and retirement planning.
However, this is where the limitations of private banking come forth and where wealth management outweighs it. For instance, you won’t always find all the services you need at a single bank. Some private banks may only provide estate planning services, whereas some might just offer retirement income planning. Using various banks to get various financial services will lower the efficiency of your wealth management process and hike your costs.
Contrarily, hiring a wealth manager will allow you to get all your investment and financial services from a single place. If you want to know more about how wealth management firms can help overcome the limitations of private banks, we recommend you place an order for a free copy of our book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million.
Wealth management firms and private banks also work with a different set of clients. Wealth management firms generally offer their services to ultra-wealthy individuals and families who have at least $5 million worth of liquid assets. This is because high net worth and ultra-high net worth families usually need much more complicated services as they own a higher amount of wealth and assets that have to be strategically managed.
Alternatively, private banks offer their services to everyone. Even if they do have some exclusivity standards, they have a significantly lower minimum wealth requirement of around six figures. This is one reason why private banks don’t have much expertise in managing the wealth of affluent individuals.
Conflict of Interest
Private banks, as opposed to wealth management firms, often have a conflict of interest with their clients. Even though private banks do offer a range of services with an intention to assist their clients, they are more concerned about their own profits and shareholders. Thus, any recommendations or suggestions private bankers give are aimed at maximizing their profits rather than satisfying their client’s financial goals.
In contrast, wealth managers offer fiduciary services, which means they are obligated to always work in their client’s best interests. Fiduciary wealth managers are usually Registered Investment Advisors (RIAs) authorized by the Securities and Exchange Commission (SEC). The SEC enforces a stringent code of ethics on fiduciary wealth managers to ensure they always work to benefit their clients rather than themselves, eliminating any possible conflict of interest.
Overall, wealth managers take decisions and offer recommendations that solely benefit their clients and invest all their efforts to serve their needs. To learn more about how a competent, private, fiduciary financial advisor can help to build, yet protect your wealth, read our ultimate guide to choosing the best financial advisor.
Ultra-wealthy individuals also required dedicated financial advisors who can fully comprehend and learn about their unique financial circumstances and goals and then advise suitable strategies and solutions. This is only possible when the advisor establishes a good rapport with the client and diligently works on their case from the start.
This isn’t usually possible in private banks. Even though they do allocate a dedicated financial advisor or employee to fulfill your needs and requirements, they don’t stay for long. Due to the high turnover rate in private banks, the advisor assigned to you might leave that bank to pursue employment in another one. This means that you will have to take a fresh start with an absolutely new advisor, and the transition can be extremely inefficient and inconvenient. With wealth management firms, you can stay assured that your wealth manager will stay by your side from the day you hire them till even after you have passed away.
At Pillar Wealth Management, we have helped our valued clients successfully get through the 2008 Financial Crisis and are currently assisting them in managing their wealth during the COVID-19 pandemic. To start working with one of our wealth managers, click here to schedule a free meeting!
Freedom of Independence
Since private banking is a part of the overall bank, it has to adhere to the overarching banking procedure and regulations. Due to this reason, clients of private banking are only provided the products in which the bank deals.
Wealth management firms are independent, unlike the private banking departments of established banks. Thus, wealth management firms can provide customized financial management and investment advice. This allows higher flexibility for clients and increased opportunities for wealth managers to provide a quality of service that is an accurate representation of clients’ needs and wants.
Is It Worth Using A Private Bank?
Now that you know the difference between a private bank and wealth management, you might wonder is it worth using a private bank.
The biggest advantage of using a private bank is that it allows you to conduct all your banking-related tasks from a single place, including the less frequent but more important ones such as securing a mortgage. Moreover, with a dedicated baking assistant, you won’t have to repeat your preferences and situation every time you have some bank-related work.
Additionally, private banking even gives you higher privacy. And with the exclusive access to conducive discounts, rates, and higher interest rates on your money market, CD, and savings accounts, the perks, and conveniences offered by private banks may appear quite attractive to wealthy individuals.
Nevertheless, it would help if you also focused on the drawbacks of private banking.
If you’re attracted by the option of availing wealth management services through a private bank, you will discover that private bankers have less proficiency in those areas. The best investment planning and money managing experts work as wealth managers, not as private bankers.
Hence, you won’t be getting the financial performance expertise that most high net worth individuals and families require. This limitation applies to all wealth management-related services such as retirement income planning, tax planning, estate planning, etc. Again, the best professionals in these fields don’t work at private banks.
Moreover, private banks also earn commissions from the products they sell to their clients, which means there can be a potential conflict of interest.
The Final Verdict
In conclusion, you can opt for private banks if you just want to upgrade your banking experience and avail some financial services that are only available to high net worth individuals.
However, if you need a comprehensive wealth management plan to secure and build your wealth, you should opt for an experienced wealth manager. To learn more on how investors with $10 million or more can choose the best financial advisor, click here to read our guide.
How Much Money Do You Need for Private Wealth Management?
Once you’re part of the millionaire club, you might wonder what’s the best time for you to hire a wealth manager. The answer to this question all depends on your existing net worth. If you do a quick Google search on “how much money do you need for private wealth management?” the results might give you answers that lie between $1 million and $5 million.
At Pillar Wealth Management, we provide exclusive services to individuals and families who own $5 million to $500 million worth of investable assets. Unlike other investment and wealth managers, we work with a limited number of clients. This allows us to ensure that we offer the kind of excellent service our clients need.
We don’t believe in offering standardized, cookie-cutter solutions to our clientele. Instead, we develop customized investment and wealth management plans that will help you achieve your financial goals. Sign up for a free meeting here to get more information about how our wealth managers can help you.
The Bottom Line
Keep in mind that private banks and wealth management are two separate services. While private banking is more of a procedural service, wealth management is a strategic partnership that helps you live your best life.
At Pillar Wealth Management, we are a team of wealth managers offering a range of services at no additional cost, such as tax planning, investment management, risk management, etc. If you have any questions related to wealth management, feel free to speak to one of our wealth managers today!
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