Private banking provides wealthy clients with personalized bankers and perks like exclusive events (2024)

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  • Private banking is a financial service for people who have a high net worth.
  • You have to keep a minimum balance in your accounts to qualify for private banking.
  • When choosing a private bank, go for one that offers perks that will benefit your lifestyle.

Private banking provides wealthy clients with personalized bankers and perks like exclusive events (1)

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Private banking provides wealthy clients with personalized bankers and perks like exclusive events (3)

What is private banking?

Private banking is an exclusive banking service for customers with a high net worth. The bank matches you with one or more private bankers to help you with your money. You'll receive more personalized attention than most customers, and the bank may offer other perks, such as discounted loan rates or invitations to special events.

Private bankers look at your bank accounts, mortgage, and other loans. Some private banks also assist you in handling your investments, but not all.

Private banking is not the same thing as wealth management, but the terms are often used interchangeably. Not all private bankers focus on investments, whereas wealth management firms place a huge emphasis on building your investment portfolio. Wealth management also concentrates on financial planning and advising.

With private banking, think of all the services you'd normally receive at a bank, but heightened.

You probably won't find a bank that only caters to private clients. Many big-name banks just have a separate private banking section of the company, with its own website.

Who qualifies for private banking?

Private banking targets high-net-worth clients, but the amount you need to be considered a "high-net-worth" client varies from bank to bank.

For instance, you'll need a minimum of $1 million in checking, savings, retirement, and investment accounts to become a private client with Citibank. However, PNC Bank only requires $50,000.

Should you become a private banking client?

The pros of private banking

Specialized attention

When you sign up for private banking, you're assigned to a banker. You'll speak with this person each time you need a service.

Not only does this mean you won't have to wait on hold over the phone to speak with the first available representative, but it also means the banker will become knowledgeable about your specific financial situation.

Perks and discounts

Each private bank includes its own perks for clients, such as large sign-up bonuses, discounted loan rates, or refunds on fees for ATM withdrawals or foreign transactions. Many private banks also throw exclusive events just for private clients.

Business account perks

If you're a business owner, you may be able to open a personal and business account with the same private bank. Business accounts come with a private banker who is trained to work with businesses.

The cons of private banking

Low interest rates

Private banks require you to keep a lot of money in a combination of accounts and investments. This means you'll probably keep tens of thousands — if not hundreds of thousands — in a savings account.

Many private banks pay low interest rates on savings. You could earn much more by keeping money in a high-yield savings account at bank that doesn't offer private banking.

The difference between 0.05% and 1%, for example, may not seem like a big deal to someone with a couple of thousand bucks in the bank. But if you keep a large amount in savings, you could be leaving thousands of dollars on the table by keeping cash in a low-rate account.

Before opening a private bank account, consider whether the discounts you'll receive on certain products will outweigh the amount you'll be giving up by settling for a low interest rate.

Management fees

Private banking typically comes with higher management fees than regular banking. This may come in the form of monthly service fees for bank accounts (although some banks make it possible to waive these fees). Or a private bank may charge a percentage of your investments — which could come to handsome sum since you keep a good chunk of money with the institution. Before enrolling in private banking, be sure you understand the fee structure.

Where should you open a private bank account?

Many large, brick-and-mortar banks offer private banking services. Think of institutions like Bank of America, Chase, JP Morgan, and Wells Fargo.

You might be wondering if the bank you currently use offers private banking. You may see your bank's website has a menu option along the lines of "private banking" or "wealth management."

When searching for a private bank, find one that has a fee structure you're comfortable with and offers perks that benefit you. For example, if you're a frequent international traveler, you may want a private bank that reimburses foreign transaction fees. If you know you'll be buying a house in the near future, you might go for one that offers discounted interest rates for private clients.

Private banking may be for you if you're comfortable keeping a large sum of money with a given bank, and if you feel confident it will save you money in the long run. Otherwise, you may want to look at other high-yield savings accounts and investment options.

Laura Grace Tarpley, CEPF

Personal Finance Reviews Editor

Laura Grace Tarpley (she/her) is a senior editor at Personal Finance Insider. She oversees coverage about mortgage rates, refinance rates, lenders, bank accounts, and borrowing and savings tips for Personal Finance Insider. She was a writer and editor for Business Insider's "The Road to Home" series, which won a Silver award from the National Associate of Real Estate Editors. She is also a Certified Educator in Personal Finance (CEPF).She has written about personal finance for over seven years. Before joining the Business Insider team, she was a freelance finance writer for companies like SoFi and The Penny Hoarder, as well as an editor at FluentU. You can reach Laura Grace at ltarpley@businessinsider.com.Learn more about how Personal Finance Insider chooses, rates, and covers financial products and services »

I'm an enthusiast and expert in the field of personal finance, particularly in banking services. My depth of knowledge extends across various aspects of the financial industry, from understanding the intricacies of private banking to evaluating the pros and cons of different banking products.

Let's delve into the concepts mentioned in the article:

  1. Private Banking Overview:

    • Private banking is an exclusive financial service tailored for individuals with a high net worth.
    • Customers are matched with private bankers who provide personalized attention and may offer perks like discounted loan rates or exclusive event invitations.
  2. Distinction from Wealth Management:

    • Private banking is distinct from wealth management. While both cater to high-net-worth clients, private banking focuses on personalized banking services, whereas wealth management includes a significant emphasis on building investment portfolios and financial planning.
  3. Qualification for Private Banking:

    • Eligibility criteria vary among banks, but generally, a high net worth is required. For instance, Citibank requires a minimum of $1 million across various accounts, while PNC Bank sets the bar at $50,000.
  4. Pros of Private Banking:

    • Specialized Attention:

      • Assigned private bankers provide dedicated services, eliminating the need to wait on hold.
      • Personalized attention leads to a deep understanding of the client's financial situation.
    • Perks and Discounts:

      • Private banks offer various perks, such as sign-up bonuses, discounted loan rates, and fee refunds for ATM withdrawals or foreign transactions.
      • Exclusive events are often organized for private clients.
    • Business Account Perks:

      • Business owners may open personal and business accounts with the same private bank.
      • Business accounts come with private bankers trained to work with businesses.
  5. Cons of Private Banking:

    • Low Interest Rates:

      • Private banks require substantial balances, but they may offer low interest rates on savings compared to other options like high-yield savings accounts.
    • Management Fees:

      • Private banking typically involves higher management fees, including monthly service fees for accounts and a percentage of investments.
  6. Choosing a Private Bank:

    • Many large, traditional banks like Bank of America, Chase, JP Morgan, and Wells Fargo offer private banking services.
    • Selection criteria include a comfortable fee structure and perks that align with the client's needs, such as reimbursing foreign transaction fees or discounted interest rates for private clients.
  7. Considerations for Individuals:

    • Whether to opt for private banking depends on factors like comfort keeping a large sum with a bank and confidence in long-term cost savings.
    • Alternatives, such as high-yield savings accounts and other investment options, should be considered based on individual financial goals.

In conclusion, the world of private banking offers a range of benefits and considerations, and making an informed decision involves weighing the personalized services and perks against potential drawbacks like low interest rates and higher management fees.

Private banking provides wealthy clients with personalized bankers and perks like exclusive events (2024)
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