Wealth Management & Private Banking

Wealth Management versus Private Banking

Wealth management and private banking are common terms that usually overlap.

However, many financial services tender wealth management through private banking as they differ to some extent.

When we talk about wealth management, the scope is broader as it involves dealings with optimization of client’s personal portfolio that might create aversion or comfort.

It also involves risk and the assets that are to be invested according to the personal plans agreed to achieve the desired financial goals.

On the other hand when we talk about private banking, this usually refers to a direct solution for an individual that has high net worth, they are tagged as HNWIs (High-Net-Worth Individuals) wherein both private and public financial organization employs a staff member that will offer HNWIs clients with management and personalized care for their finances.

The main difference between wealth management and private banking is that, when we talk about private banking, it does not deal always with clients who are investing their assets.

A private bank authorized staff might offer clients a good guidance on specific investment selection, but for sure not all banks will be directly involved in the time of the process of the investment of the assets on the clients.

For the record, most people utilized private banking in the form of opening an account then made a deposit from one time to another.

Now, when we talk about wealth management, this involves employees, financial advisors that is tasked to provide strategically researched advice to clients in order to help them better improved their individual financial status and also assist them in the right selection of opportunities for them to invest their asset with a goal of getting maximum returns in the future.

Therefore we can say that private banking also includes wealth management, but in wealth management they cannot supply clients with banking services.

Wealth Management

To understand deeper, PWM (private wealth management) involves generally in advices and the execution of the investments in behalf of the clients.

The firms that usually focus on this type of practice are those people who look for individual or clients that are looking for a good window or opportunities for them to invest their funds in variety of options like stocks.

Since private management of wealth directly involved advices, the advisor will not help build the sound financial planning, managing client portfolios and even perform variety of services that directly involves financial services in connection with the clients financing choices.

By utilizing an expert or financial advisor for a wealth management, this will allow the client to effectively work with an educated strategy in solving financial issues while developing client’s financial status in general. The wealth advisor will assist client in achieving its financial goals.

Therefore, the advisor will formulate methods to assist clients in the management of their wealth. The advisor will now device series of options in terms of financial products that will help alleviate client’s financial goals.

For the record, most private wealth management providers are backed by corporations, but they can also be provided with independent advisors or shall we say portfolio managers that are licensed to offer many services and focus on HNWCs.

  • Normally, a wealth advisor sits down on one on one scenario with the client and carefully discusses the ultimate goal, the comfort levels with the risk, and other restrictions or stipulations that the client may have in mind regarding to its investment plans with the assets involve.
  • The wealth advisor will present a sound investment strategy that will incorporate all the data extracted directly from the client and these strategies will enable client to achieve its goals.
  • The wealth advisor then continues to carefully manage the client’s funds and then utilizes these investment products that will align with client’s conditions.
  • A wealth advisor don’t just offer clients with similar services to what private bank has, however, in many cases, financial advisors spend great time with their clients.
  • The advisors cannot in behalf open bank accounts representing their clients, but they can directly assist them in the selection of the right accounts needed for their client to open a bank at their choice.

money investment

Private Banking

In most terms, when we talk about private banking, this generally involves a financial institution or entities that provide general financial services to the HNWIs.

In some cases, any individual can have these types of services with an asset that is less than $200,000, but for many banks that has private banking refuse clients who have assets that are less than $600,000.

The statement points out that private banking is exclusive and reserved for those clients that has substantial amounts of funds and assets that will be deposited in the accounts that they want to invest.

Banking in private provides related investment advice that aims to address an entire financial condition on each client. Services in private banking usually aid their clients by protecting and even growing their individual assets.

The designated employee will then aid every client for them to provide individualized solutions in finance, the authorized employee at the same time will assist or even help the clients plan at the same time save funds for their retirement plans by passing accumulated wealth to family members or other designated wealth beneficiaries.

There are quite number of consumer banks in the private bank divisions. Each division has its specific offers and they have perks on HNWIs for them to attract clients.

Clients in private banking with large funds will received good rates and concierge services, guaranteeing instant access to all of their employees that they to work with their accounts.

  • Clients in the private banking never wait in line or even use teller in getting services. By just a single phone call, the client gets what he wants.
  • Client in private banking can directly contact the advisor working with his personal account and complete any transaction, starting from cashing a check or even ordering checks for him or her to move large amounts of money from different account.

The kind of treatment is part of banking institutions plan for them to benefit in terms of financial. Many banks pursue clients with high accounts because it also help them generates good amount of money that will be considered profit in the bank. For sure, every good transaction has quarantined repeat business and brings new businesses in the future.

With clients in private banking, specifically those who are considered wealth can also share experience with their wealthy circles that will become banks potential clients in the future. The bank personnel then send a special invitation to the potential client for them to acquire the perk for them to create such account in the private banking.

Not just that, private banking can also get clients by just completing a regular lending system. The banks then access the tax returns and discover on documents for potential clients for them to target. The said invitations are also sent to these people listed and private banking in charge will now follow up them.

The bank personal in charge will now then draw a line to the individuals who are contacted to be a new client and then this will be connected to different institutions.

They usually target accounts with good assets, meaning clients that has assets greater than $250,000 some private banking even set much higher target bar, targeting those individuals that qualifies the needed amount for investable assets.

Any customers that are utilizing private banking facility services pay for specialized treatment received. The banking institution in which wealth customer used then guarantee that they have large pool of funds, in form of customers substantial account balances that can be lend and utilize.

Any bank also generates funds from steeper charges on interest for huge mortgage and loans granted for business from wealthy clients. Even by just charging small percentage as fee for the services in huge sums of funds can generate good income for the private banking.

The specialized client treatment given by private banking cannot completely hide its drawbacks.

However, the rate of turnover will be high as client established a relationship with its employee that is managing the clients account, and then possibilities that on the preceding month the employee that is managing the account will be gone and replaced by another employee in which the client doesn’t know or does not have trust at all, with this reason they can even lose an income generating client.

This type of banking division might offer variety of services, but they are not considered master to it.

Put this in mind that banks are not considered experts in terms of financial issues or everything related to it, meaning the level of expertise given to the client is not the same to what he have in an individual who are considered specialist. In short, private bankers are only paid by banks, so it points out that the loyalty is to the employer itself not to the clients.

When we think about individuals having high net worth, the higher the tendency of viewing them as the type of people that are considered no problem at all, people that are living life with luxury because they have been able to generate massive amount of wealth in their life, they are then set for life or other thinking goes.

But, an individual having high wealth degree is far from care free condition. Owning massive wealth means taking care of it and the need to do it. This can be done basically by having the right tax plan, setting an orderly estate or by creating successful money making plan. The statements we have just stated clearly falls on wealth management.

According to report, the demands are getting bigger as we move forward, meaning wealth management is now set to be one of the “growth waves” in the future specifically in Australia.

This is due to the huge increase in agribusiness, gas, international education and tourism, therefore wealth management has a good potential industry.

Your key to retirement is Wealth management

This is the main reason we can tell why wealth management is that important to those who are planning in the future or shall we say the retirement issue.

Considering the cost of living continues to rise in every aspect of the world.

It is about your personal priorities,

wealth management is not just about creating sound financial plans for you to secure future, but the most basic thing with this is that wealth management is realizing life priorities.

If you have significant amount of funds or wealth, reasons may likely to come, whether planning to have a financial stability or security, so you are starting an enterprise that you can provide to your children.

With the right advice in investments, assistance with the taxes or counsel on handling debts, this will allow you to realize a dream that you have in mind.

In addition to wealth management, we have found out some of the biggest mistake that executors commits, the term executor might be an honor when people give their trust on you as in person tagged as their executor who are given legal responsibility to transact or distribute clients proper according the plan and make sure that all debts to the creditors are fully paid with no issue.

Therefore, as what we have said on the first part, investment banking and wealth management are popular choice in financial sector, there can be a significant interaction and even overlap in both fields of wealth management and investment banking, but in general they are distinctly different.

Again, wealth management is an expansive category to take which involves minor and major operations by a client to their manager who will optimize client’s asset portfolio, this is in accordance with the revealed risk and the possible effect in the future based on its long term goals.

Private banking generally tagged as a name that is used as envelope solution for clients with high net worth, wherein the financial institution assign its staff members to suggest or offer sound personalized attention to the client.

On the other hand the clients on private banking will received an array of studied or even specialized service in wealth management, of course with this products offered has its charge in form of additional fees but for sure client will have an superior attention from the institution.

The private banker assigned will take acre the assets as what usual wealth advisor do, not just that, it can also do things in their behalf by giving access to direct relatives of the client to the credit cards, no hassle approach in service that can even be done thru text messaging by directly informing the assign private banker, so as client you don’t have to come over on office to do the signing in the paperwork.

So after knowing both private banking and wealth management, the question now is

“Which One to Choose?”.

Here is our point based form the information that we have and the actual experience that experts have shared on us during our personal interview.

To balance everything or shall we say both occupations, the investment bankers are specifically focused on working longer hours and draw larger amount of pay checks.

Even thought the type of job offers good compensation that is above average and the possible opportunity to feel something like you have accomplished something.

While with wealth management, this is focused on the personal services that will be given to the individuals or clients, considering that clients with investment in banking are just corporations. The situation in wealth management is mainly focused on the personal preference of the client or client centered towards achieving financial goals.

As what we keep on saying, the frequent overlapping between wealth management entities and investment bankers takes place in the operations.

With the high net worth individuals or HNWIs who become clients in the wealth management companies, they are the type of individual that want sound yet professional advice for them to select in the investment banking options regarding the restructuring of its business.

And client might also access products in the investment banking or even bond issues that generates good amount of investment returns in the long haul.

We cannot say which one to choose, since they can work together, but if you can remember our previous topics, “specialization” pays much value, so we rather stick to people who are considered experts in the field than just an expert in general.

Well, even thought the rate of success in both of them are positive. Who knows, the specialized advisor can suggest a more concrete plan for the client to achieve its goals in the shortest possible time.

As to end the comparison, remember that:

Private banking is when you as the client (have to ask them nicely for them), the bank to take the asset or the money you have.

But when people ask you nicely for them to take your asset or the money you have, that is wealth management.


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