STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning
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.
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Private banking is a service offered by banks, typically only to high net worth or ultra-high net worth clients. Wealth management firms also cater to individuals who have over a certain amount of wealth; for example, at Pillar Wealth Management, our clients must have 5 million to 500 million dollars in liquid investable assets to avail our services. You can learn more about our holistic wealth management services and how we differ from private banks and other firms by starting a conversation with us. Contact one of our wealth managers for a free consultation session to get all the information you need.
Coming back to the question of private banking vs. wealth management, in this article, we will discuss how each serves a different purpose. Private banking offers all the services you would expect from a bank, including investment advice for high net worth clients. On the other hand, wealth management is a more comprehensive look into your finances, encompassing your specific life situation, goals, and needs. You can continue reading to learn more about their differences in detail.
Private banks are financial institutions that provide financial management facilities to clients considered as high net worth individuals. They typically make their service exclusive to clients who have a substantial amount of cash or assets that can be deposited into accounts or invested.
Private banking is similar to regular banking in the sense that you can carry out everyday processes such as paying your bills, using safe deposit boxes, setting up mortgages, and more. Like regular banking, you have savings accounts, checking accounts, and CD accounts, but a private banker who serves as your representative will take you through the entire process. This saves you the time it would take going through the usual channels.
Private banking allows you to access perks and services, customized banking solutions, and higher interest rates that are generally unavailable to customers. You will be able to pay a lower fee for transactions, have access to special lines of credits, avail of exclusive loan terms at prime rates.If you have an international business, you can even receive discounted foreign exchange rates.Some private banks can include other services in their packages, such as estate planning, retirement planning, financial planning, and tax planning.
Here are the duties and responsibilities that fall under the role of a private banker:
– Giving Financial Advice and Consultation
Private bankers build relationships with their clients and work to help them meet their financial needs and goals. They proactively advise the clients on the services they can avail, including banking products, financial or investment services, and knowledge of different industries or market areas they associate with. They consult with you to recommend strategies to utilize products or services that ensure your financial stability.
– Monitoring Client’s Accounts
Private bankers can open plus service accounts for you, ensuring that they are maintained within the organization’s certified limits and policies. This will include evaluating your financial, tax plus credit needs and being aware of your goals, income, and expenses to manage your portfolio. They even help draft loan packages for credit review.
– Provide Well-Researched Investment Options
Investment advice is one of the roles of a private banker, for which they must be knowledgeable and well-versed in the market trends and conditions. They must do extensive research to narrow down opportunities that meet private banking revenue goals. They analyze your investment personality to recommend the appropriate action based on your goals.
– Complying with Banking Policies and Practices
The most important duty of a private banker is to ensure that the services, products, and advice they provide are compliant with the bank’s policies and guidelines. They must understand and be updated on the legislation and regulations that could affect the bank and the client’s interaction. In this case, they will not recommend any investment opportunity or financial service that would not be in their institution’s best interest.
The Difference Between Private Banking Wealth Management?
Though both provide financial management services, private banking wealth management vary in a few crucial aspects. Now that you know what is the role of a private banker, you might want to know what the role of a wealth manager is.
Wealth Management
Wealth management is a broader category that offers more exclusive services to high net worth and ultra-high net worth clients. It involves optimizing your portfolio, considering your risk tolerance, and investing assets according to your goals. Moreover, a wealth manager’s service does not end here. They collaborate with you to develop strategies that enhance and secure your wealth by investing in liquid assets. There are various strategies that you can use to improve your portfolio’s performance to gain high returns. We have outlined some of these in our Performance Guide.
Be mindful of asking your wealth manager exactly which services they offer you and whether they come at an extra cost. At Pillar Wealth Management, we can assist you with an array of financial services such as estate planning, investment management, retirement planning, risk management, and more, at no extra cost. Contact our team of financial experts to schedule your first consultation with us.
Private Banking
There are many advantages that come with private banking.For example, you get to do all your banking tasks in one place. Your dedicated private banker will work with you each time to help you through the process. Moreover, banks offer you a great deal of privacy, with exclusive access to discounts, favorable rates, and high-interest rates on your money market, savings, and CD accounts.
While private banking is excellent in the above-mentioned aspects, if you wish to enlist in the bank’s wealth management services, you might be disappointed. Private bankers are not experts in wealth management related services such as estate planning or tax planning. They cannot offer the personalized expertise that you need to plan out your retirement or inheritance.
Furthermore, private bankers are not fiduciaries. They do not follow a legal obligation to work in your best interest; instead, they are focused on following their bank’s procedures and policies. This can create conflicts of interest for you, especially when it comes to investment opportunities.
When Is Private Banking Wealth Management Necessary?
If you are wondering, “When and how do I get into private banking or wealth management?” you first need to analyze where you stand in your financial situation.
Money management in itself takes up a lot of time. It requires focus, attention to detail, and knowledge of different products and markets that can be used to stabilize or improve your financial status. If you have multiple high-value assets, it can become overwhelming. That is why you should seek a financial professional’sassistance, such as a private banker or a wealth manager.
Wealthy investors have specific financial goals that they want to meet in a specific time-frame but may not have ample knowledge or skill to choose the best investments. A private banker or wealth manager can guide you towards suitable investment opportunities due to their in-depth study of the market and your investment portfolio. The best wealth managers know how to use portfolio growth strategies to maximize your returns and minimize your losses. You can read more about these in our special guide.
With so much at stake, it is reasonable to ask yourself, “Can I trust private banking?” You might have heard people raise concerns about how reliable private banking is. They offer increased privacy to their high net worth clients, but how can you be sure that you are receiving the best services they have to offer?
It is crucial to do background checks and ask for recommendations before deciding to work with a private bank. It would help if you were confident that they would not stuff your account with unnecessary investments managed by the bank itself or its affiliates. As private bankers are not fiduciaries, there may be conflicts of interest regarding the use of proprietary products and cross-sold services. They might not fully disclose how a practice can harm your wealth if it allows the bank to earn multiple layers of fees.
Additionally, if you choose to borrow money from the same bank that holds your investments, you open yourself up to a host of concerns. In the case you cannot pay the money back, they might exert leverage over your affairs.
Although a few banks will claim to offer facilities to “wealth management private banking clients,” the quality of service will be significantly diminished. Private banking and wealth management are distinguished services, with one being more procedural. The other is a strategic partnership that helps you live your best life and secure your future. Both these complementary services should be used for the purposes they were created for.
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