Personalized banking is making most in private banking. It is said that you need at least $40 million for you to say hello to private banking manager in New York or Geneva, but Australia’s younger record in private banking services are now rolling out on red carpet for clients that have much with less cash.
Naturally if you have extra $1 million funds in “footings” – excluding your assets that is connected to your family, these are home, cars etc that is considered common in which you have the power to borrow it or invest it on big banks and some specialist operators on investment banks will be much happy to have a chat on you to the possible service that they can offer on you.
In private banking, there is a dedicated professional known as “banker” that will cater all your investments and financial needs. The banker will then take charge on everything the time you made agreement and decide to trust on your assets.
As of the year 2009, there were 206,500 individuals in the world that are tagged as high net worth people, they are the people who have minimum of $1 million worth of investable assets and since that year the number of those special individual has been growing at 8 percent per year since 2002.
If we were to conclude about the amounts money in 2011 it would point us to tell that new millionaire will be created in half hour. But due to the postwar wave effect or shall we say the baby boomers stage that has been reached by global financing life in which investor accumulate lifetime wealth.
If they don’t want it, they can cash their investment from simply selling it before their retiring period or they are already in much profit with the years of investing their assets or the value of the assets they have invested have doubled or even more.
But this time, in “private bank” you don’t have to be a baby boomer before you can reach those achievements as termed. This time, even younger individuals are making big or small money too, this can be due to they are on small business entrepreneurs, high paid executives or by simply inhering family wealth.
There are lot of fresh money in some places like Queensland and Western Australia, wherein commonalities have greatly boom which resulted to the creation of new millionaires and even few billionaires.
Understanding Private Banking
Before we start saying things about it, allow us to ask. What is really a private banking?
With the help of our good research team, we found out that there was a little debate about the definition of private banking. This is because a private banking is designed for every individual who will need it. And it also depends on the level of interest and the things that will be used for it.
Basically, if you look and research some business articles and discussion, you will notice that there’s not many topics discussed on it or in other words published services, discounts or the products. But instead, a private bank talks about offering a personalized, integrated and holistic special service.
In country like New York, bankers can even extend their services by walking dog for those who are super wealthy clients, though the type of extended service is not that common.
In Australia, the international operators mainly focus on the wealth management, tapping history into the private banking as service for those leading families that has been in their hands for many generations.
For big banks and rising financial entrants, this is more about uniting the banking competence with an up to date methods applied in managing wealth, wrapping things up smoothly and systematically in a platinum level of personal service.
In private banking, you might be directed to have access on investment opportunities like bond issues or share floats, helping with the estate planning and insurance, access to the superannuation specialist and the financial advice. Not just that, if you have a private banker, you can enjoy fast approval of loans.
All of these benefits can be achieved, due to the fact that you have direct or strong contact with the bank manager and even higher stakeholders. Not just that, the people on it including the financial adviser. In short, your wealth manager will be available anytime when needed with no excuses.
We found out that private banking has three things to offer to those who are tagged as super high net worth people. These are: opportunities, service and advice.
This time the services that you will received from professionals were more broader and deeper compared to the services you enjoy from lone wealth planner and you manger won’t be having hundreds of clients waiting for them to be served next.
So we suggest that you deal only with managers that have few clients on their list but clients with super high net worth, so everything will be properly taken care off.
What is the cost?
Considering the amount of asset you have, as stated $1 million investable assets perhaps there are even more like $3 million, $20 million or even more than $100 million and if you are knocked on your door by a “boutique” entrepreneur, this only points out that you have a profitable client, so therefore you may or even many not have to pay separate fee for the special privilege you are enjoying on a private banker.
Based from record tract private bank that has $1 million to $500 million earnings don’t usually charge specific fees for private banking fee, let us say, as XYZ private one levies $1,500 year they are also getting profit from it. But the information that we have does not always be straightforward, as there are still lots of items to be noted that will be given as you go along.
In other words, you will have to pay for the professional financial advice, just as the same with others. Small or big private banks charge straight fee, while some operator’s uses a percentage based on the funds that they will be managing. Considering if you have $10 million asset under management, one percent might result to $100,000 a year.
Take note that banks that are levying specific charges may put aside other charges. For instance, the covers on credit card and access fees to online broker accounts.
At the end of the day, all items do not point to discounts. Therefore if you have adequate amount of funds, you will still get those items, no matter inside or even outside private bank as long as the service given to you is amazing.
There are people wonder whether the services in private banking are just strategies imposed by banks for them to extract additional fees by simply pushing the product and special services. But the reality is that super high net worth people are savvy and they are not tolerating flogging of product.
Who will be served?
Having extra $1 million in your pocket does not always mean that you can go on private banking. You future private bankers are similar to servants serving to people living in a complicated life with complex financial status.
If you don’t want that deep or close relationship, a separate service are also offered for those who are affluent clients that can be found outside private bank, they focus on transactions on side banking.
People who have the money but don’t have expertise or confidence for them to manage the huge amount of money they have and those who are financially powerful but has “time poor” characteristics are those likely to be served.
There are many people who have obscured needs, the challenges for them to device business wealth when it’s time to pass their wealth on the next generation or when they plan to finally set a charitable trust.
One of the top analysts in banking industry says that the price that you will get on private banking will greatly depend whether the client is ultra high net worth individual or plain wealthy will be based on the activeness.
Meaning, the more the transaction you are involved the higher the chances of getting huge profits on your account.
The Perfect Match
Private banking is all about personal relationship, it is like shopping on a mall without considering the price, in the world of private banking everything is negotiable, but you need to look for the perfect match. Experts suggest that you need to sit down with the potential person that will manage your wealth and evaluate the relationship if personalities and ideas shared coincide with yours.
In addition to the suggested advice, you need to consider matching in terms of the needs of the client, solving issues with skills and the emotional intelligence you posses that will match prospective wealth manager.
Digging Deeper with Private Banking
In toting up private banking in their exclusive system to provide special investment connected advice, they also cater transaction that is beyond their managing investment for them to address client’s goal to strengthen or level up its current financial situation.
Aservice like protecting or growing their current assets, planning their future retirement, providing or suggesting specialized solutions in financing and passing through their wealth to their heirs or next generation.
If you noticed on movie films, you won’t see movies related to private banks or even a scene from a private banker. There is a season with that, since there’s a deep understanding on it that most audience might not related much.
By contrast in private banking, it has seemed to be slower, gentler and older but not that what is was shown on cinemas. Bu, it will surely wake financial crisis. Today investment banking has been giving ground for aspiring professionals as it becomes a new target career and a life style choice also that even private banking becomes desirable.
The chairman of the Thurleigh Managers Mr. David Rosier sees it as a huge change in how those who are high net worth individual wealth mangers are recognized since the first day that he joined the firm that was 35 years already. H
e remembers that in the past that was 1978, people who carry out corporate fiancé or in other words wealth managers where those people who are on the second or third class citizens.
But now, it has completely changed, they are now the top or those who are high class people in the community. This track record leads to many people, especially the brightest one to intern wealth management career.
Perhaps struggling much on the weight of blame that will pointed on the wealth manager during a financial crisis is the main reason why private banking career are for those who have the knowledge and skills to show.
If things might go wrong with the wealth being managed, it will also affect other division of the company and the higher possibility of major changes in its overall financial system.
For sure unhappy client will leave investment and lead to a dramatic withdrawal of investment in banks, whether the services offered collapse or other reason like recession or activities that are harmful to other banks.
In 2015 private banker cuts almost 10,000 jobs that was worldwide.
This was when one of the top banks got hit by the crash not just that, it also includes over 4,000 investment divisions as investors shifted its focus to prime banking business.
People go where job trends are going, and those jobs somewhat pointed to wealth management, this is because the number of HNW (High Net Worth) individual are growing since 2008.
The growing industry of private management is expected to continue, this data was based by a report on World Wealth Management Report of 2015, in record a total of $44.7 trillion was driven by china together with the current markets.
And Global Banking Research of 2014 shows that the profit for private banking industry for worldwide will like to increase by ten percent annually reaching $80 billion for this year 2016.
A shift of demand with private banking also happened, this is because private banking industry requires individual that has wider skills and more capacious in doing complex financial transactions and effective management that truly give a good result to the firm.
Big investment banks are more concerned on a person that has the qualities in working with private banking and has absorbed competencies of the banking investment management.
The increase in the competition, the regulatory requirements and facts that customers tend to keep monitor on their growing portfolio are being considered. Industries are now attracting potential graduates and even current professionals to go on them instead of grabbing other business sectors.
Basically, it is not that thorny for a talented for them to track the patch of wealth management, the skills set is the major requirement making a certain individual absorbed immediately. As what we keep on saying, private banking is all about relationship driven type of business.
So no matter what investment performance may be whether going good or going bad, and to the fact that relationship of both baker and client is not that good, the business will not survive in the long run.
So the question again now is what type of skill needed in order for it to work?
All we can say is that “trust” is the main key, then follows the ability to be calm and think good under high pressure, can do multi tasking, can choose the right team to be with the client, good leadership skills. We believed that if those items that we have just enumerated will be followed you will have a smooth flow in your overall activities.
Private banking system has different reputation compared to junior banking. One of it is the stability in the earnings and the view is more stable and offering a better lifestyle. Obviously, you will be working hard but not leaving office up to midnight.
Meantime investment bankers have been suggested to tighten up their belts with the bonuses that are being cut and the reduced budget in corporate entertainment. The 1908’s days are already over when greed and investment banker displayed their Porsche have gone away.
The key points to remember in private banking
- Basically you will need large amount of asset with at least a minimum of $1 million outside family before you are given a chance to personally access services in private banking.
- In private banking, it will provide you with a personalized banking, close contact and wealth management. These services are offered in order for your portfolio to grow.
- Discount are not that necessary when you are in private banking, this is because if you have the money, you will never think those items anyway.
- This type of service is for high net worth, a person that has time poor data with huge assets in their authority.
- It is said that less wealthy may get “veneer” on private banking.