What is Private Banking? Eligibility and Minimum Requirements

Private banking

Private banking might be a suitable fit for persons with a high net worth who wish to think about their financial possibilities for wealth accumulation. It can also be a means of gaining access to additional perks and privileges. So, read on to learn more about private banking services, wealth management, and their minimum requirements.

What Is Private Banking?

Private banking, often known as “relationship management,” matches banking clients with persons or teams who handle all of their financial tasks on their behalf within the bank. The customers are not required to walk into a branch and explain their circumstances to whichever teller is on duty at the moment. Instead, the client can contact their private banker directly for assistance or conduct transactions. The private banker is already familiar with the client’s individual financial status. Hence, the banker is well-positioned to provide recommendations and assist them in meeting their objectives.

While the concierge element of private banking is one of its selling features, it’s not the only service a private banker provides. A private banker can handle bill paying, arrange for specific products outside of the bank’s usual menu (such as a jumbo mortgage), and provide wealth management services in addition to being the main point of contact for private clients.

How Private Banking Functions

Consider private banking to be courting. Banks want their wealthiest clients to stay with them so that they can increase their AUM (assets under management) and profit. Hence, in exchange, banks focus on strengthening connections with these clients by providing them with particular privileges, discounts, and tools to assist them to manage their relatively complex wealth.
While the average person may have a simple checking or savings account with their bank, wealthy consumers are a very different matter. These individuals may have a specific account manager (or team of managers) who is well-versed in their accounts, personal situation, and overall financial picture. This person serves as the client’s contact, assisting them with bank account transactions and other wealth management services they require.

Private Banking Services

Private bankers from different banks may not provide the same services. However, many banks that offer private banking are likely to provide the following services and products:

  • Deposit accounts with preferential rates and pricing: Clients of private banking may be eligible for higher APYs on savings, CDs, interest-bearing checking accounts, and money market accounts. They may also benefit from decreased or waived account fees, as well as favorable loan and mortgage pricing.
  • Financial planning in general: A private banker can help customers through key financial issues such as determining how much house they can afford or when to begin saving for their child’s future college fees.
  • Wealth management and investment guidance: Private bankers frequently fulfill the role most commonly associated with financial planners and consultants by providing their customers with investment advice ranging from asset allocation to tax-loss harvesting to risk management.
  • Planning your estate: Clients can consult with private bankers about how to create an estate plan, while some areas of planning will necessitate a visit to another specialist, such as an estate attorney. Private bankers sometimes advise their clients to reputable professionals for this purpose.
  • Lending: Clients who want to buy a home, an investment property, or a luxury item can contact their private banker to get the process started. Even if the bank does not often lend for the type of purchase you are making, a private banker may be able to work out a loan for you.
  • Tax preparation: To lower your tax burden, your private banker may stay on top of key tax laws on your behalf.
  • Credit: Private banking clients are frequently offered low-interest credit lines by institutions.

Who Qualifies for Private Banking?

Unfortunately, not everyone who opens a checking or savings account has access to private banking. While minimum eligibility requirements differ by the bank, private banking is primarily reserved for high net worth people, defined by the Securities and Exchange Commission as possessing at least $750,000 in investable assets.

Any assets that are liquid or nearly liquid are considered investable. This includes funds in checking and savings accounts, certificates of deposit, money market accounts, equities, bonds, mutual funds, retirement accounts, and trusts. Although the minimum requirements for eligibility for private banking vary, $1 million is a common benchmark criterion.

Private Banking Minimum Requirements

The benefits of private banking may be enticing, but there are frequently stringent requirements to qualify. This is typically in the form of a minimum account balance. Here are a few samples of the minimum requirements for private banking from some of the largest banks in the United States.

Chase Private ClientMaintain a daily minimum balance of $250,000 or more
Bank of AmericaGenerally reserved for those with at least $10 million of investable assets
CitigoldMaintain a minimum combined monthly balance of $500,000
Wells FargoMinimum of $1 million in investable assets
Goldman Sachs$10 million minimum

Though each bank’s minimum requirements vary, the basic rule is that you must be wealthy to access private banking.

The Expensiveness of Private Banking

Banks can recuperate the costs of private banking in a variety of ways. Some banks rely on commissions from product sales to their clientele. Clients of these private banking services pay nothing out of pocket. However, they should be aware that the products are commission-based.

Banks may also charge fees for this banking instead of or in addition to product sales commissions. Private banking fees can be fixed or variable. Fixed fees are comparable to account maintenance fees in that your account is charged a monthly fee in exchange for private banking services. So, these set fees may be eliminated if you keep a particular balance or maybe a non-negotiable component of your institution’s private banking.

Some banks charge private banking customers a proportion of the assets under management rather than a fixed fee (AUM). This amount is typically around 1% of the AUM.

Is It Worthwhile To Invest In Private Banking?

It all depends on what you expect from your bank. Private banking, at its heart, provides essentially the same capabilities as a standard bank account. Customers do, however, receive priority customer service as well as access to other premium benefits such as a personal wealth advisor and higher spending and withdrawal limitations.
In requirements of disadvantages, these accounts may not offer the best interest rates. Also, you’ll often be charged a large monthly fee if you do not maintain the required minimum amount. Before you open a new account, make sure to research the best high-interest accounts available outside of private banking.

Wealth Management vs. Private Banking

Think of wealth management as a chunk of the pie that is private banking. It is one of the services provided by a bank’s private banking section, although it is not the only one.
Wealth management solutions often include broad wealth-related services such as investment management, portfolio analysis, tax preparation, and estate planning.
Private banking has these benefits as well, but it also includes day-to-day banking benefits such as special interest rates on checking and savings accounts, loan discounts, bill pay services, and more.

Advantages of Private Banking and Wealth Management

Here are some of the advantages:

#1. A committed representative

The most significant benefit of private banking is having a committed individual – or team of people – who is already familiar with your circumstances. So, depositing checks, initiating wire transfers, ordering checks, and other tasks can be made easier with this banking. Some of these may not even necessitate an in-person visit. It saves time because the private banker or wealth management team is familiar with your situation. Otherwise, you may have to explain your situation and preferences each time you visit the bank.

#2. The ability to connect with a specialist network

According to Foy, the private banker is the quarterback who connects you with other members of the team, such as a tax attorney or trust and estate adviser. Having your private banker or wealth manager arrange meetings with professionals might be a time-saving benefit.

“Having a broad and multi-disciplinary set of individuals with experience in a wide variety of vital financial sectors is the key to our company’s success.”

Joe Calabrese, national head of wealth advisory services at Key Private Bank.

#3. Individual attention

Benefits and services may be more detailed for ultra-high-net-worth individuals. “At some point, when you’re talking about a true white glove type of relationship, you might have concierge services that are doing more personal, philanthropic assistance,” Foy adds. “Even event planning or assisting with vacation preparations.” Outside of any specialized banking demands, it obviously overflows into [a] personal assistant.”

According to John McGowan, certified financial planner, adviser, and founder of Mandala Financial Advisors in Des Moines, Iowa, a client in the Midwest who had a second house in Florida.
“A hurricane was on its way, so their private bank relationship manager went over there to their house and made sure that they coordinated… someone to come in and board up all their windows,” McGowan adds.

#4. Benefits, freebies, and maybe a better price

Discounts in private banking could range from the possibility of a free safe-deposit box of a specific size to the possibility of free checks.
“You’ll get preferential pricing regardless of whether you’re talking about fees for asset management or other services you obtain from the institution,” Foy adds.
A lower annual percentage rate (APR) on a mortgage or home equity loan, or a greater annual percentage yield (APY) on a savings account or CD, are examples.

According to Calabrese, private banks frequently host events for their clients.
“We cover the spectrum,” Calabrese explains.
However, circumstances must be different than they have been in the past throughout the pandemic.
“We’re doing everything we can to develop virtual ways to engage with our clientele,” Calabrese says. This includes activities such as virtual wine tasting.

#5. Business Advantages

Corporate owners can benefit from having their own private banking or wealth management relationship with the same bank that they have their business account. This relationship may aid in the acquisition of commercial financing prospects, as well as discounts or benefits in business banking. “I believe company owners will make up a sizable portion of private banking clientele,” Foy predicts.

Disadvantages of Private Banking and Wealth Management

Be wary of the risks associated with private banking and wealth management.

#1. You may be losing interest.

If you must commit a significant amount of money to an account with a low annual percentage yield, it may be prudent to reconsider private banking. Also, alternatively, you can seek to deposit the majority of your savings in an account with a competitive APY. Albeit these rates are substantially lower with the Federal Reserve dropping rates to near zero in 2020.

#2. Expensive management fees

It’s a good idea to compare the costs of having your money managed by a wealth management business to the costs of other options. According to Foy, management fees are typically around 1% of investments and are levied annually.

#3. Private bankers change.

Turnover might also be a factor. If your private banker or wealth manager quits the firm, you’ll have to decide whether to stay or relocate with your representative.

Who Can Participate in Private Banking?

For employment as a private banker, a bachelor’s degree in business administration or another equivalent field is a prerequisite. To be considered for a position in this sector, a bachelor’s degree is typically required along with a significant amount of work experience.

What Benefit Does Private Banking Offer?

The main benefit of private banking is having a committed individual or group of individuals who are already familiar with your situation. Check drafting, starting wire transfers, ordering checks, and other tasks can be made simpler with private banking. Some of these might even be accessible without a physical visit.

What Distinguishes a Private Bank from a Bank?

These banks concentrate on wealth management for the very wealthy. This indicates that they are more concerned with increasing and preserving financial resources. While a commercial bank does keep your money secure, private banks are renowned for always keeping the money in the back locked up.

What Responsibilities Does a Private Banker Have?

Private bankers build relationships with clients while managing money and supervising financial activities for high net worth clients. They offer banking services such as interest services, secured and unsecured credit and investment management, as well as personal cash management.

What Causes Private Banks to Fail?

The main cause of bank failures is that banks carelessly disburse large sums of credit without considering the creditworthiness of the recipients or the bank’s ability to self-liquidate.


Private banking makes it incredibly easy to manage all of your financial affairs in one location. So, if you have the requisite investable assets and require the convenience of a single point of contact for all of your financial responsibilities, you should think about private banking.
However, it is critical to consider the potential expenses. Not only may private bankers come and go, negating the benefits of having a private banker, but this service may cost you more than the sum of its parts. Furthermore, you will have to keep all of your money in one place.
Before you sign up for this banking, make sure you’ve thoroughly studied the benefits, expenses, and other alternatives.

Private Banking FAQs

What is wealth management banking?

Wealth management is a financial counseling service that integrates various financial services to meet the demands of wealthy clients. A wealth management advisor is a high-level expert who manages the wealth of rich clients holistically for a predetermined price.

What does a private wealth banker do?

Private bankers operate in large retail banks’ private banking units, investment banks, and wealth management organizations. They typically serve high-net-worth people with tailored financial services (HNWIs). Private bankers are essentially personal financial consultants for the very wealthy.

Is private banking the same as wealth management?

Private banking offers investment advice and seeks to handle each client’s whole financial situation. Wealth management is typically defined as the advice and implementation of investments on behalf of wealthy clients.

What qualifications do you need to be a private banker?

Most financial organizations demand private bankers to have a bachelor’s degree or above. Undergraduate studies in accounting, finance, or business are most suited for a career in private banking. Although not required, a marketing degree can help a private banker advance in his or her profession.

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