Private banking is simply an exclusive banking service for clients with a high net worth. The bank will match you with private bankers to assist you with financial management. You’ll get better, more personalized attention with private banking than most bank clients. The bank would offer other perks, including exclusive rewards, discounted loan rates, or invitations to special events.
When you consult online or go to a bank with this intent, the bank will assess your bank accounts, mortgage, and other loans. Private banks can also aid you in handling your investments. Private banking is unlike wealth management, but the terms are used interchangeably.
Not all private bankers deal with investments, while wealth management firms emphasize building your investment portfolio. Wealth management also focuses on financial planning and advising.
Think of private banking as getting the usual services from a bank but being treated with more care and attention. Not all banks cater to private clients. Many big-name banks that offer private banking have a separate section in the office or website.
What qualifies an individual for private banking?
Private banking focuses on individuals with high net worths, although the amount considered “high” varies from bank to bank. For instance, you might need a minimum of $1 million in checking, savings, retirement, and investment to be entitled as a private client with one bank, but only $50,000 to another.
Why you should consider becoming a private banking client
As stated above, you’ll get specialized attention when signing up for private banking. Plus, you’ll be assigned to a banker. This person will be your provider each time you need a service.
This means that you won’t have to wait or be put on hold to speak with a representative. The banker will also become knowledgeable about your financial situation.
Private banks also offer special perks for clients, including large sign-up bonuses, discounted loan rates, ATM withdrawal refunds, or memberships. Many private banks also throw special events just for their private clients.
Business account perks
For business owners, you may be able to open both a personal and business account with the same private bank. Business accounts are assigned to a private banker trained to work with businesses.
Private banking drawbacks
Private banks require individuals to keep a large sum of money in a combination of accounts and investments, which may mean keeping tens of thousands — even hundreds of thousands — in a savings account.
Private banks may also pay low-interest rates on savings, so your money might be better off in a high-yield savings account. Before considering a private bank account, consider whether the perks you’ll receive will outweigh the amount you’ll be giving up.
Private banking also comes with higher management fees, which may come from monthly service fees for bank accounts. Before committing to private banking, be sure you understand the fee structure.
Choosing a private banking institution isn’t simply about getting the best, but what’s best for you. If possible, go for a partner with the richest features and capabilities. Even better, choose a bank with a good customer service track record, so you get fantastic features and are in the hands of the best people to provide you with solutions and opportunities.
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