Many of us believe that Private banking and wealth management are the same terms, but there is a slight difference between the financial services offered via private banking and wealth management.
The wealth management category is broader as compare to Private banking. It involves dealing with the optimization of a customer’s portfolio, considering customer’s risk-taking capacity, dislikes, comfort, and investing financial assets in proportion to their exclusive plans and goals. As the name suggests, wealth management is geared toward the wealthy and can be practiced on a range of any size.
Whereas, Private banking, usually refers to a cover solution for rich people in which a public or private financial society uses staff members to provide high-net-worth customers tailored care and management of their finances.
Moshe Strugano Explain What exactly is private banking?
Generally, private banking includes financial institutions, which offer financial management services to high net worth individuals. On some occasions, an individual perhaps able to get these services with resources less than $100,000, however, most private banks placed a standard of at least six figures amount. Private banking is more inclined towards clients with large amounts and valuable assets to be deposited into accounts that have to be invested further for more profit.
Private banking offers investment advice to clients. Private banker works with an aim to address the whole financial condition of each client and always look towards to protect and maintain their assets. There are employees elected for each client work, who offers personalized financing solutions. These employees even help consumers plan and retirement plans for family members or other designated beneficiaries.
Moshe Strugano Defines Private Banking Perks
Private banking customers with hefty accounts usually get desirable rates and concierge-like service, assuring them immediate access to the staff working with their accounts.
Private banking customers never wait in queue for any banking-related services.
Private banking customers can directly communicate with the lead advisor working with their account and get details of any transaction within minutes.
Banking institutions added all these perks to their plan to get financial benefits. Banks pursue rich customers as their business makes a high amount of profit for the bank; also assure repeat business and chances of new business.
Moshe Strugano Explain Tracking Private Banking Customers
Private banking customers, particularly the ultra-wealthy, discuss the dedicated and best treatment they get with other rich individuals. This creates chances for new potential customers. Generally, these new potential customers are referred to private banking divisions by recent customers. Now, it becomes the responsibility of private banking divisions to send out invitations to their new potential customers. The bank often sends employees to visit new potential customer’s venues and get their account details in a greeted manner.
By completing the course of normal lending activities, private banking divisions can get new clients too. The banks have an access to see tax returns and further personal documents of clients from which they can discover other potential customers. Invitations are even send off to these individuals as well. Often private banking divisions get new clients by following this simple and effective procedure.
Remember, banks always work in a line when it comes to clients who are tracked and contacted to become potential customers. This line remains different for different places and different institutions. The private banker’s major target is the mass-affluent market that means individuals with investable assets more than $250,000.1 Some banks even set a higher bar, generally target only those individuals who have the least amount of investable assets in the millions.
People using private banking services provide financial support to the bank for the specialized treatment they get. The bank having a wealthy client offers a guarantee of a large pool of money. It can be in the form of the customer’s large checking account balances, to lend and use. The bank even generates income from the steeper interest charges on a bigger mortgage and business loans withdrawn by rich clients.
Moshe Strugano Defines Wealth Management
Private wealth management usually includes guidance and implementation of investments for their rich clients. Firms, which specialize in these practices, are the main sources for customers looking to invest in different funds and stocks. Advisors who offer wealth management services even help with managing customers’ portfolios, financial planning, and carry out a range of other financial services with respect to customer’s private financing choices.
Private wealth management services are provided by larger financial institutions as well as by independent financial advisors or portfolio managers who usually provide a broad range of services to high-net-worth clients.
What are the roles of Wealth Management Advisors?
Wealth management advisors discuss one-on-one with each client about their goals, comfort, level of risk-taking capacity, and any other terms or limitations the client perhaps has regarding the investment of their assets. After careful consideration of each aspect, the wealth management advisor makes a thorough investment plan that incorporates all details provided by the client and how the client can achieve his goals by following the particular investment strategy. The advisor resumes managing the customer’s money and uses investment products, which matches with the client’s conditions.
As compared to the private banking specialized and concierge-like services, wealth management advisors cannot always offer these to the clients. However, mostly, these financial advisors spend maximum time with clients to know their preferences and work accordingly. These advisors even cannot open bank accounts for customers; however, they can guide them in choosing the right kind of accounts to open in the bank.
Final Statement by Moshe Strugano
Remember, private banking does not always deal with investing and this is one of the main differences between private banking and wealth management. The private bank employees may provide clients guidance on particular investment options, but not all banks will be included in the real process of investing assets for their customers. Most customers use private banking services by opening different deposit accounts in the bank.
Wealth management staff generally includes financial advisors, who offer guidance to clients to help them develop their monetary standing and help clients in investing assets with the aim of generating high profit.
