Private banking is a much more personalized banking service given to individuals who invest substantial sums, typically over U$S1M. The most noticeable difference between retail and private banking sets are that private clients receive customer service on a 1-1 basis via a relationship manager or a private banker. Wealthy individuals with private accounts can expect to meet their bank contact in person, and have direct phone access to a relationship manager. Usually the private banking arm of a bank is separate from the retail banking arm and the service is completely definite.
A private bank is one that is not incorporated. Private edges are favoured by conservative investors because the directors are personally liable, and more likely to be careful in managing client funds. Financial institutions like these are sometimes family owned and only cater to the very high. One of the reasons why wealthy people choose them is their confidentiality – a potential to continue client records secret. For some it is a case of not wanting to be targeted by criminals, lawsuits or corrupt governments. Others use this secrecy to protect income from authorities like the IRS and evade tax.
Many of the world’s private edges are found in Switzerland because of the strict bank secrecy laws and sophistication of Swiss financial sets. Small edges in countries like Switzerland are also more likely to keep their client records secret because they limit their operations to within the country’s bank secrecy laws.
Not only private edges offer private banking sets – in fact some of the biggest providers of private banking and wealth management sets like UBS, Credit Suisse and the Barclays are not privately owned. Private clients of these huge edges can take advantage of their in-house trading and research departments, and sometimes choose to have almost all their assets managed by the bank. This way they expect much higher returns than those given by a simple savings account or certificate of place.
Types of Private Banking sets
Usually only very affluent clients need wealth management – where private bankers manage an investment portfolio for a family or an individual. The fee for this service varies from bank to bank and is charged yearly as a percentage of the total amount invested. The return of a portfolio will also depend on the standard of the private banking service. While some will provide excellent returns, others will continue to charge high fees while investing client funds in the bank’s own investment funds, in spite of of whether or not this is advantageous to the client.
A popular different to wealth management is Self-Directed private banking, where the client manages his own portfolio, at times calling on advice from the bank. The advantages of this kind of account are lower fees and greater personal control.
Inheritance and tax planning are additional private banking sets provided either directly or by referral for an additional fee.