While private banking and wealth management share some common ground, some nuances affect the types of services high net worth (HNW) clients can receive.
What Are Private Banking and Wealth Management?
Wealth management is the broader of the two and focuses on optimizing HNW clients’ portfolios. This means the advisor balances the client’s aversion or acceptance of risk while investing to meet their financial goals. Investors can apply wealth management principles to portfolios of any size, but they typically work with HNW clients as they have more complex and diverse portfolios.
Firms that offer wealth management services meet with HNW clients to go over acceptable risks and then develop an investment plan. These advisors will typically invest in a variety of stocks. However, unlike private banks, wealth management firms can’t open bank accounts on their clients’ behalf. They also don’t typically offer concierge financial services; however, they can make recommendations on what type of account to open as well as which private bank would be best for their assets.
Private banking, in contrast, provides financial services to HNW clients. The institutions are much like standard banks except many set a benchmark of at least six figures ($100,000 or more) when working with clients. As the name implies, private banking tends to be more exclusive. These banks aim to assist HNW clients in managing significant amounts of cash or other assets.
One of the primary objectives for private banks is to help protect and maintain HNW clients’ wealth. This includes saving for retirement, how their wealth will pass down to beneficiaries, and more. Private banks also offer concierge services meaning their HNW clients don’t have to wait in lines or use a teller. They always have access to an employee familiar with their account and they generally receive enviable rates.
Much like wealth management firms can’t open bank accounts on their clients’ behalf, private banks don’t typically invest for their clients. They can offer investment advice, but their focus is on banking services.
HNW clients often struggle with uncertainty regarding investment options or diversifying their portfolio. Skilled advisors can help HNW clients navigate their risks while maximizing their investment. Contact the experts at MMA Florida for advice and insight on managing HNW clients’ risk profiles in the state of Florida.