Are you tired of your bank not caring about you?
With retail banking (banking that most people own) - it's easy to feel like you're a burden on financial institutions. You can face a long time when you seek help or get any on-site support completely.
For high net worth individuals, there is an inconvenient approach. If you have a large amount of assets that can be deposited into and/or invested in banks or investment companies, you may be eligible for advanced services such as private banking or wealth management.
What is the difference between the two? Some financial institutions use terms interchangeably, so it depends to a lot on where you are going.
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Private banking or personal banking is an exclusive service available to wealthy banking clients. Each bank offers something different, but private banks are usually personalized high-touch services for customers who keep a deposit of six or more numbers or six or more numbers invested through the bank.
These are some of the most common private banking benefits available to eligible customers:
Direct support: A relationship banker assigns you one-to-one advice and 24/7 support lines.
Financial Plan: Investment and tax advice and retirement plans.
Better rates and fees: Free bank fees, lower loan rates and higher deposit rates.
One downside of this service is that your relationship banker may inspire you to sell you specific banking products, which may interfere with the banker’s ability to recommend financial transfers in your best interest.
Wealth management is a service that helps wealthy people protect and develop wealth and pass money on to their heirs.
Wealth management is similar to the services you receive. However, you can get wealth management services at banks that provide them with wealth management and investment companies.
Depending on where you go, there may be a service layer for wealth management, where the most valuable services can be used for clients with millions of deposits and investment amounts.
For example, Citibank offers Citigold, a wealth management service suitable for clients who maintain an average deposit and investment balance of at least $200,000. But if you have a net worth of $10 million or more, you can qualify for Citi Private Banking Services, which includes tailor-made advice for art collectors and sports team owners, as well as financing things like aircraft purchases.
Some financial institutions can use private banking and wealth management terms interchangeably. So, before deciding where to go in business, you need to look at the details carefully.
Before opening any account, make sure to compare the assets you need, the services you provide, and the fee structure. You also need to check if the consultants are trustees, which means they are legally required to provide advice in your best interest rather than their advice.
Private banking is best for customers who already like the services provided by banks in terms of deposits and investment accounts but want more personalized services.
Why? Because you need to have a certain deposit and/or investment in the bank to qualify as a private bank and usually need to have a specific checking account at the bank. Therefore, it is important to ensure that the bank provides the right product for you.
Additionally, a banker that may inspire your relationships to recommend the bank’s products to you, including anything from credit cards and loans to CDs and IRAs.
If these conditions are useful to you, private banking may be a convenient option as it allows you to bank and get financial planning services in one place.
If you have enough assets, you can choose to use both private banking and wealth management services. However, if you choose only one, wealth management services may be the best choice. Both services include financial planning, but for wealth management you can go to a non-bank company. This means you are unlikely to be sold bank products that you do not need or suffer from other conflicts of interest.
Yes, wealth managers can also encounter conflicts of interest, but you can avoid this by looking for companies that offer fee-based advice rather than commission-based advice. The best option is to choose a company that charges annual packaging fees to cover all your support, rather than charging you with zoning fees and commissions such as stock trading.