Becoming a private
banking client

The triggers which mean you should perhaps step up to a private banking relationship.

Private banks offer banking and investment services to wealthy individuals and families. These services include current accounts and lending, along with investment management and tax and wealth planning advice, in various combinations depending on the institution.

The tiers of banking services

The wealth management market is incredibly diverse and each institution is geared towards different types of client. One step up from regular retail banking is “premier banking”, which adds investment management options like advice on Self-Invested Pension Plans to the standard high street banking proposition. Private banking offers a higher level of service still, with clients offered access to almost every conceivable asset class and advice on all manner of potentially complex financial affairs. As such, while several private banks do offer basic cashflow services others prefer to focus on provided value-added advice and investment management, so it may be that you have to look elsewhere for day-to-day banking.  You can read more about Private Bank Services here.

How much money do I need?

Individuals typically hit the threshold to become a private banking client when they accumulate between £500,000 and £1 million in investable wealth (broadly meaning money which isn’t tied up in your main residence). That said, the goalposts have changed significantly over recent years as part of a general shake-up of the industry: while some private banks have begun to turn lower-value clients away to protect their profitability, others have stepped into the breach and made a point of welcoming those who are still building their wealth. Our directory of wealth managers details the thresholds of specific institutions.

That said, you shouldn’t automatically become a private banking client simply because you have amassed a certain amount of wealth. The services offered by private banks are customised and “high touch” – and therefore they could represent an unnecessarily expensive option if you don’t have a real need for them.

Private banks are great if you’re looking for a “one-stop shop” for most of your financial affairs, but there may well be better options. If you have a specific investment focus, or if you want to be more hands-on with your investments then a boutique investment management firm might be the better option. Read our guide to learn What is the Difference Between a Wealth Manager, an Investment Manager and a Private Bank?

Private banks have historically been perceived as financially strong due to the significant amounts of client money under their control. However, it needs to be borne in mind that many private banks are part of larger groups including a retail bank and an investment bank meaning that the lines can become blurred. Since the financial crisis, the problems associated with investment banks have often affected the credibility and stability of private banks. Potential clients should fully understand the vulnerabilities of different institutions so that they can make an informed decision about who they should entrust their money to.

The main thing to remember is that not all private banks are the same, even if two institutions are ostensibly very similar in terms of their service offering and capabilities. Many private banks are highly traditional and this will often be reflected in how they like to service clients (although some of the most venerable are making bold moves with technology now). You will also find that some are more “private” than others. Although some brands are very visible, in the media and in sponsoring high-profile events, others keep a far lower profile. Indeed, there are likely to be several well-respected private banks you may never have heard of.

Are you looking for a private bank? You can start the process of finding a professional to manage your wealth by trying our smart online tool. Or, if you would like to discuss your situation further with our straight-talking team, please do get in touch here.

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