What is a private bank? – The term private bank usually refers to the financial services provided to high-net-worth and ultra-high-net-worth individuals, families, and businesses. Customers typically have a dedicated relationship manager or liaison to help conduct transactions. The term “private bank” could also refer to a bank owned by shareholders or another entity vs. being government-owned.
How Private Bank Works
Private banking offers a personalized approach to common financial services such as checking and savings accounts. Each customer is assigned a relationship manager or private banker who handles all their financial matters. This includes tasks like arranging mortgages and paying bills, as well as addressing the client’s entire financial situation.
Specialized services like investment strategy, financial planning advice, portfolio management, customized financing options, retirement planning, and wealth transfer to future generations are also provided. While some private banking can be done with $50,000 or less in investable assets, most financial institutions require six figures’ worth of assets, and exclusive entities only accept clients with at least $1 million to invest.
Advantages and Disadvantages
All products have advantages and disadvantages, so Private Banks also have those.
| Advantages | Disadvantages |
|---|---|
| Privacy | Bank Employee Turnover |
| Preferential Pricing | Limited Product Offerings |
| Alternative Investments | Regulatory Constraints for Banks |
| One-Stop-Shop | |
| Assets and Fees for Banks |
Example of Private Bank
UBS, Merrill Lynch, Wells Fargo, Morgan Stanley, Citibank, and Credit Suisse are some of the major financial institutions that have significant private banking divisions.