What Is Private Banking And Wealth Management?

Private banking and wealth management are two of the premier banking solutions available to users today. They are increasingly becoming mainstream as banking entities are evolving and becoming more focused on providing high-end solutions.

Private banking and wealth management overlap each other significantly in theory, but the services offered in each category are slightly different. Wealth management is a broader term while private banking relies on a focused financial services niche.

Private banking

Private banking can be described as a solution offered by banking entities to high net worth individuals. A six-figure benchmark is commonly followed by the banks when deciding who to provide these services to. It is an exclusive and reserved segment of a bank’s services that are provided to people who have significant cash and large assets.

In private banking, banks intend to provide all-round financial circumstances management services to its clients and may even provide investment-related advice. The aim of the service is to ensure that the clients protect and maintain their assets. The financial solutions are more customized, and banking employees could be dedicated specifically to managing the assets, investment, retirement and structure plans of a client.

It becomes difficult sometimes to differentiate between banking and the full-service concierge facilities that the private banking clients receive. The clients usually have access to a dedicated account manager who can manage all transactions for them in an instance. The clients are offered a multitude of perks as well. Such clients don’t just provide good profits but also provide repeat business to the clients.

Wealth management

Wealth management is a broader area of private financial services that mostly revolved around investing advisory and execution services. This service is also provided to affluent clients and helps them in investing in stocks and other types of funds. Wealth management advisors manage client portfolios, help them with financial planning and provide them with several private financial choices as well. These services are usually provided by large banking institutions like Goldman Sachs, but a variety of independent financial advisors and portfolio managers also offer these services to high net worth clients.

Wealth management isn’t passive investing for the clients. They discuss their goals, levels of risk they can manage, the kind of returns they are expecting and other financial goals and restrictions that they may face to devise a plan for managing their investments. The advisor then creates an investment strategy for his clients that fall in line with the client’s goals. Wealth management doesn’t always include concierge-like highly customized services that private banking can.

Financial institutions make big bucks off the high net worth individuals who dabble into these services. Unlike retail banking, there is no shortage of resources here, and banks are ready to customize lending rates, offer better perks on cards and handle a variety of tasks for their clients. Along with private banking and wealth management, some financial institutions also offer private equity management solutions to their affluent clients, mostly those who make over $250,000 or equivalent.