High net-worth individuals benefit from private wealth management since it provides professional advice. It is a service that aids them to manage their money efficiently in areas like financial planning, investment management, taxes, inheritance, pensions, and family trusts.
Take the example of private banking, which is very different from retail banking. The term “private” implies that this is a kind of banking tailors to individuals’ needs and has more personalized service. It can entail other services like investment advice and management on behalf of the client.
Private banks often concentrate on two services: Advisory or Discretionary. The advisory service focuses on informing clients on investment opportunities and letting them decide on what is suitable before the investment is made.
With the discretionary, the bank offers clients a comprehensive solution for handling their money. The client discusses with a private banker on various strategies for growing their financial portfolio.
Historically, private banking was a reverse for the uber-rich, those with the financial muscle – assets worth more than $10m. Today, it remains to be an essential industry for professionals with a high net-worth. But most private banks are open to doing business with clients with anything with upwards of half a million dollars in financial assets. Interestingly, some high-street banks have a unique service for specific customers with a much as $50,000. There are many roles in wealth management, if this is a career that you wish to pursue visit Hanover for your next step.
How Does Private Wealth Management Make Money?
Banks generate revenue from the private wealth management services they offer business and professions in ways like:
a). Monthly charges for the services
b). Sale of financial products to the clients
c). Placing a percentage fee on services renders based on the assets’ value, which is the most common arrangement
Private wealth management services providers often focus on three crucial things: (1) Investing money, (2) managing client relationships, (3) Support functions. Back in the day, the standard approach was to juggle both investment and relationship management. The private banker would handle money matter on the client’s behalf while striving to build a robust inter-personal relationship. Today, many banking institutions have separated the two roles.
- Private Banking: Investment
When it comes to investing, a private banker might offer the client expert advice on making sound investment decisions. Conversely, the banker could opt to invest the money on the client’s behalf. In some situations, the banker can liaise with other specialists and include various products in the bank to further their objectives in aiding in the growth of the client’s financial portfolio. A private banker may suggest investing in shares, it’s important to weigh up if it’s the right time to buy shares in certain companies based on how they have been doing recently – for example now is a great time to be looking to buy zoom shares as they have been hugely successful throughout both lock downs and not just for business calls. Everyone is using Zoom nowadays to keep in contact with family, host quizzes, even go on Zoom speed dates – Zoom are big business at the moment.
- Private Banking: Relationship Management
When it comes to relationship management, things take more of a sales and marketing approach. It entails developing and maintaining a stable association with clients while selling them the bank’s financial products and services. It might require frequent travel and close contact with clients. Meeting the client’s needs is at the core of this strategy as the banker comes up with a bespoke solution.
- Private Banking: Supporting Roles
The professionals tasked with the support functions in private wealth management are there to ensure the business runs smoothly. Their role is to make sure everything is done efficiently, in a timely and controlled manner. It could entail accounting, human resources, and ensuring compliance with legal rules and regulations.