If you’ve been on your bank’s website, you might have seen something about its private banking and even investment services. Usually, those services come with features that up the ante regarding personal attention, such as concierge banking and a variety of perks. You may have also noticed that the typical private banking customer is one who has a high net worth.
Keep reading to find out exactly what private banking offers and decide if it’s the right way for you to help you reach your financial goals.
What Is Private Banking?
Private banking is the service that banks provide for high-net-worth customers. It typically includes a laundry list of investment and banking services, all of which are provided to the customer with an individual or team who handles them.
Often called relationship management, private banking is designed to provide customized service to clients to help them reach their financial goals. A private banker can essentially handle all their clients’ financial transactions, including bill paying, investing, special products such as jumbo mortgages and a wide array of wealth management services.
How Much Money Do You Need for Private Banking?
If the idea of signing up for private banking appeals to you, you must typically have at least $250,000 in investable assets. That said, the required amount you’ll need varies. For example, Citi® requires its private banking clients to have at least $1 million in their combined accounts, while PNC requirements are much lower at $50,000.
How Does Private Banking Work?
You might be wondering how private banking differs from wealth management. They are closely related but they offer different services. Wealth management professionals gauge their clients’ risk tolerance levels and invest their money to align with their overall financial goals, while private bankers provide dedicated, highly personalized banking and financial services to their clients — and it doesn’t always involve investing their assets.
Private bankers manage every aspect of their clients’ accounts, from paying bills to handling foreign currency transactions to transferring money among accounts to simply cashing checks. If a client wants a private banker to manage their investments, they will, but it’s not always the case. In other words, think of wealth managers as personal financial advisors and private bankers as personal financial assistants.
What Services Does Private Banking Include?
Private banking services vary among financial institutions. However, there are some services and products that most private bankers provide:
- Special rates on deposit accounts
- Discounted services on corporate checking accounts, tax preparation and estate management
- General financial planning
- Tax planning
- Trust administration
- Estate planning
- Investment advice and wealth management
- Lines of credit
- Currency exchanges to investments
- Elder care
- Philanthropic giving
What Perks Come With Private Banking?
Private banking does come with many perks. You might be able to access lower loan interest rates, better mortgage terms, higher APYs, fewer fees for financial products and higher limits for transactions.
And there’s more.
For instance, according to its website, Chase Private Client even provides its private banking customers with “invite-only events ranging from one-of-a-kind family experiences and culinary demonstrations to global insights and leadership-focused events featuring J.P. Morgan and other industry experts.”
And Citi gives it private bank customers access to its Citi Entertainment program, which features music, sports, dining, theater and virtual events. Plus, Citi doesn’t charge its Citigold Private Clients — who must maintain a minimum combined monthly balance of $1,000,000 — a monthly service fee for their accounts.
How Much Does Private Banking Cost?
Again, the costs for private banking — and the way banks collect them — varies among institutions. Some private bankers charge their clients commissions on products they sell them, some charge fixed fees that are like monthly maintenance fees on bank accounts and some charge sliding fees, which typically represent 1% of the clients’ assets under management.
Is Private Banking Worth It?
There are pros and cons to private banking. Make sure you review both when deciding if this type of service is right for you:
- You’ll receive individual attention.
- You can be privy to perks and discounts on financial products.
- It can be very convenient to have all your financial matters handled in one place.
- Your transactions will remain private.
- Private bankers often move around a lot, so there is not guarantee you’ll keep the same one.
- You’ll pay higher costs for private banking.
- You must be a high-net-worth individual to get the service.
If you have enough assets to get it and you love the idea of all your financial transactions taking place in one institution, you might want to consider private banking. That said, it’s key to recognize the potential costs of private banking and the fact that your bank’s personnel might change frequently — as well as the reality that you’ll likely have to keep all of your assets in one place.
Before you take the leap into private banking, carefully weigh the pros and cons — and any other options that are available.
Information is accurate as of June 22, 2022.