What Private Clients look for – Choosing a Private Bank

Choosing the right private bank is a major decision and a very individual process. Clients are placing their wealth, assets and legacy in the hands of an institution and therefore need to make sure that the bank is reputable, stable and shares their values. It is prudent that individuals conduct adequate research before becoming a client of a private bank to ensure they are choosing the right fit for them. There are several factors that clients consider when selecting a private bank. These include but are not limited to:

  • Products and pricing

One of the most important factors client consider is the product platform and ultimately, how much it will cost them. High-net-worth individuals usually require a range of fixed income investments and mutual funds, bonds and some structured products. They tend to be less demanding than their UHNW counterparts, who might require more exotic solutions such as yacht and jet financing, corporate advisory services and alternative investments.

Some banks might offer a good investment platform, but little to no leverage; others might be able to offer leverage and high LTVs, but might have a weak investment platform and a limited choice of funds. Likewise, certain banks might be able to confidently cater to HNWIs, but cannot offer an UHNW investor the services they require. Some price-savvy clients might also switch banks if they can find a similar service for a cheaper fee.

  • Service

The relationship between private bankers and their clients is fundamental. Banks aim to build lasting relationships in the hope that the family of that client will continue to bank with them for generations to come.

When joining a private bank, clients will be assigned an individual relationship manager who will be that client’s first port of call. A good private banker will fully understand individual needs and aims, be trustworthy, look after their interests and be there when the client needs them. They should create solutions, not just sell products. The right private banker will understand their clients’ constantly changing needs and be able to advise them on their investment portfolios, overall financial planning, family matters, corporate finance and succession planning.

  • Client Segmentation

Some banks may have different client desks dedicated to particular individual sectors (for example, entrepreneurs, sports professionals and retirees). Most banks have dedicated desks focusing on specific geographies, such as Eastern Europe or UK Resident Non-Domiciled clients (UKRND).

  • Privacy

While the secrecy of private banking is slowly being eroded due to regulations like FATCA, clients consider private banks with offshore booking centres as a safe option for their assets (read more). Traditional locations include Liechtenstein, Jersey, the Isle of Man and Luxembourg.

  • Brand name

Clients looking to open their first private bank account might initially seek out a well-established brand, as there is a demonstrable track record and implied stability. In addition, there is an air of prestige associated with some brands and clients of a particular milieu may want the association as a status symbol.

  • Location

Banks located in countries which are both economically and politically stable will attract more clients as there are fewer external factors posing a risk to their fortunes. Switzerland, therefore, has long been an attractive option for HNWIs looking to protect their wealth. A distinction also needs to be made between a registered or licensed office and representative office. The latter may not be able to book assets in the country it is located and might not fall under the local jurisdiction.

  • Size of the bank

Larger private banks may be linked to other divisions in a group, such as corporate and investment banking (IBD). For some clients, this can be a good selling point, but others might not favour the ‘riskier’ side of investment banking. The latter might prefer a boutique private bank and simpler banking relationships. Nevertheless, the larger banks are better placed to offer a wider choice of investments.