When the average consumer opens a new bank account, they choose from a standard range of products. They’re selecting an existing product that hasn’t been designed to meet their needs. In a vast majority of cases, the account they select will do everything they need and they’ll be relatively happy with their choice.
If someone has a lot of money available and is considered a High Net Worth Individual (HNWI), then they can instead opt for private banking services.
What is private banking?
Private banking offers a customised experience.
Customers have personalised financial products, designed specifically to meet their needs. Their bank will offer wealth and portfolio management, investing, insurance, estate planning and tax services.
For individuals with a vast amount of wealth, private banking provides all that a person needs to really make the most of their money. The bespoke service is tailored to the needs of the individual customer, with nothing left to chance and with complete control at every step. The bank will also work with the customer’s other advisors, to make sure that everything’s cohesive.
With private banking, the bank takes time to build a relationship with the customer. Decisions are made with the customer’s unique needs in mind. A private banking client has a relationship manager, or a small team, providing concierge services and personal attention whenever they’re managing their money.
Private banking eligibility
Private banking is usually only an option for multimillionaires. Three leading UK banks have the following criteria for signing up as a private banking customer:
- Bank 1: At least £100,000 sole income, and at least £100,000 in savings.
- Bank 2: An ability to invest at least £5 million.
- Bank 3: At least £2 million in savings and an annual income of at least £500,000.
Though many bank account providers will be very clear about eligibility criteria, others prefer to keep their requirements vague. In many cases, potential customers will want to call and have a discussion. The bank may consider individual circumstances, making a decision about whether or not to approve someone for private banking services.
Differences between private banking and wealth management
Usually, wealth management specifically focuses on handling and managing investments. Private banking covers wealth management as well as other aspects of financial management like tax, estate planning and insurance. In short, private banking is a full financial service for a High Net Worth Individual.
Many HNWIs will see the benefits of having private banking and also working with a wealth manager. A wealth manager can focus entirely on providing investment guidance, whilst private banking services will help with the bigger picture.
Benefits of private banking
If you are someone with a lot of money, it’s extremely important to make sure that this money is working exactly as it should. Missteps and mistakes can lead to lost fortunes, whilst wise investments can help money grow and set families up for generations.
Private banking customers have access to resources, networks and connections through their bank. They may have access to investment opportunities that they cannot otherwise access.
HNWIs may get preferential pricing on products like mortgages and credit. Existing savings might generate such high interest that loans and credit cards can be offered without fees or charges.
Private banking services provide privacy and confidentiality. Customers benefit from absolute discretion as well as their personalised service.
Private banking is also convenient. All financial services are available in one place, so account managers are providing their service with full knowledge of the customer’s financial situation and any available products. When all financial services are properly connected, they all work together efficiently.
As a private banking client, you are given the very best banking service. You have a direct line to your private banker, familiar already with your needs.
