Private Banks: Would You Like To Be Introduced To One?

Private banks provide banking, investment and other financial services to individuals depositing or investing sizable assets.

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The term "private" refers to the  customer service which is more personal, via dedicated relationship managers, when compared to mass-market retail banking.
 

Historically these banks have been viewed as very exclusive, only catering for high net worth individuals with liquidity over $1 million. Although it is now possible to open accounts in discreet Swiss banks with as little as $250,000 for private investors.

Personal banking provides various services such as wealth management, savings, inheritance and tax planning for their clients. Private banking is sometimes also referred to as wealth management.

What services does private banking provide?

Such banks offer an inside advocate - the confidential banker - whose mission is to help his or her clients make easy use of the bank's products and services.

A  private banker, will routinely arrange complex wire transfers for a client who simply calls in by phone to request them.

Retail banks may offer offshore services, but a private banker is an expert in facilitating the creation of offshore trusts and corporations, opening accounts for them, and arranging transactions on their behalf.

Retail banks will allow clients to open multiple accounts, but a personal banker, will not only create these accounts for a client, but also keep track of the assets in each account and arrange transactions among them.

Private banking will provide its clients with a team of specialists under the coordinated direction of the personal banker. These specialists include investment managers, trust officers, estate planners, and other financial experts, all prepared to act in concert.

A good personal banker, orchestrates their services with a degree of coordination that is often difficult or impossible to achieve in retail banking.

What Does Private Banking Mean?

Personalized financial and banking services that are traditionally offered to a bank's rich, high net worth individuals (HNWIs). For wealth management purposes, HNWIs have accrued far more wealth than the average person, and therefore have the means to access a larger variety of conventional and alternative investments.

Private banking services aim to match such individuals with the most appropriate options. However, because the minimum deposit requirements for discreet banking in many tax havens e.g. Seychelles or Dubai are less than US$ 7500, we are also offering these services to Medium Net Worth individuals as well! Of course at this level of deposit you don't get the same attention, but your money is secure.

What services are offered?

The main service is  advice and wealth management. The days are long gone when you could phone your high street bank manager for a chat about your investments. These days, you are more likely to be routed to an overseas call centre, but the personal banker will normally be your adviser, who can help you, or find you a specialist who can.

This could include investment advice, particularly on overseas investments, and help with setting up offshore accounts for overseas transactions, or for tax benefits where they apply. Personal bankers also provide access to specialist investments such as private equity, hedge funds, currency funds and derivatives - normally the reserve of institutional and sophisticated investors.

You will be able to obtain advice on compliance with international law, such as money laundering and currency export regulations, where these apply. In order to set themselves apart, some confidential banks, offer you advice on esoteric investments, such as racehorses, works of art, antiques, wine, bullion commodities and foreign property purchase in exotic locations.

You will also be able to get advice on loans and mortgages, including those on overseas property, and even boats and aircraft. Having a relationship with a private banker will provide you with a route to transactions that need approval from an overseas regulatory authorities; for instance, transfers of cash or artworks, which the bank should be able to arrange for you.

It should also be able to help with providing you with  credit references, for instance when raising credit in a country where you have no previous credit history, or assist you with other routes to raising cash that you need for a particular transaction.

Is it really confidential?

While the popular image of discreet banking is one of secretive Swiss banks, modern compliance, tax and money laundering rules mean that you can't be totally anonymous.

However, you should receive a significantly more personal standard of service, with a greater degree of discretion than with a standard banking relationship. Your dealings with your private banker, should remain just that. Private.

How do you choose a private bank?

 Find a name you trust. Either because it is part of a big international group with a reputation to lose if anything goes wrong, or one recommended to you by someone whose opinion you respect.

You can do most of your transactions on the phone, fax, internet or through a ATM card. Also make sure that the bank has premises and is not a virtual bank.

If you are investing large amounts, have an initial meeting with the person who will be your private banker, and test out the chemistry; this is going to be a frequent and intimate relationship. You need someone you get on with, trust, and who is sympathetic to your needs and concerns.

Naturally, review the range of services and expertise available via personal banking. Does it offer a good service in the areas you will want to use? Have a look at some of its research and see if its investment record is successful.
 

Cost of private banking

 Expect to pay for the service you want. Confidential banking is unsurprisingly, not cheap, although you will find that the more services you use with a private bank, the cheaper the service will be, as discounts will apply if you use more than one service. Check carefully how fees will be charged and if they will be cost effective for you.

Make sure that everything is included, and  satisfy yourself that you will be paying a fair price for the services you are asking for.

Generally, fees for investment assets managed on a discretionary basis, are based on the size of the assets, while on an advisory basis, the fees are linked to transactions. For trusts, charges are time-based, while on loans the fee charged would be a margin.

When choosing a private banker, make sure you are not paying for services you don't need. The advantage of confidential banking is that its wide range of services should be saving you money, not costing you. If you don't need a full service, go for a bank that lets you choose from a menu when calculating your fees.

 An offshore company acts as a buffer between you and the bank account and is advisable, instead of having a bank account in your own name.

Are you looking for more information on living abroad in a offshore haven, or retiring early because of savings offshore? Or are you an expat looking for ways to build your wealth?

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