Preferred banking usually requires a private banker, only supporting a client with their banking. In general, wealth management focuses on investments, fund management, and other specialist fields. Specialists in wealth management can include tax specialists, insurance specialists, specialists in estate planning, and other specialists on the team.
Typically, private banks and wealth management companies need a minimum balance. These may include only deposits with the bank for private savings, or it may also include portfolios, individual retirement plans – or individual retirement accounts – or other forms of investable assets.
Pros of private banking and wealth management
- A dedicated representative
A committed individual – or a team of people – who already knows the situation is the greatest benefit in private banking. Private banking will make it simpler to deposit checks, facilitate wire transfers, order checks, and more. Many of these do not even require a visit in person.
- Personal attention
The advantages and programs may be even more comprehensive for individuals with ultrahigh net worth. "At some point, you may have concierge services that provide much more personal, philanthropic support as you move up.
- Ability to connect with specialists
The private banker is the quarterback who links you to other team leaders, such as a tax advisor or a trust and estate consultant. Getting the opportunity to set up meetings with experts with your private banker or investment manager can be a time-saving benefit.
- Perks
Priority banking may provide discounts, ranging from the possibility of a specific size free safe deposit box to the possibility of free checks. It can include a lower annual percentage rate (APR) on a mortgage or home equity loan, or an improved annual percentage yield (APY) on a savings account or CD.
- Business benefits
Business owners may also take advantage of having their premium banking or wealth management arrangement with the same bank as their account. In the business banking side, this partnership may help to secure commercial lending incentives or discounts or benefits.
Cons
- High fees
Comparing the fees for handling the assets at a wealth management firm against other alternatives is wise. Usually, management fees are about 1 per cent of investments, typically paid annually.
- Lose interest
If you have to allocate a large amount of money to an account with a low annual percentage yield, think twice about privilege banking may make sense. Or at least you can target at putting the bulk of the savings into an account that earns a healthy APY.