What is the Difference Between Private Banking and Wealth Management?

source: privatebankerinternational

Although both come with varying features and significance, private banking and wealth management are highly necessary for the life of high-net-worth individuals. Private banking helps affluent persons with credit facilities, risk-protection policies, succession planning, and cash flow solutions.

On the other hand, in the case of wealth management, wealth managers give their customers holistic financial guidance, enabling them to enhance and protect their wealth. If you are still wondering about the difference between private banking and wealth management, continue reading.

Private banking, aka relationship management services, is chiefly meant for high-net-worth individuals. The services comprise custom financial services alongside product solutions offered by retail banks or other financial institutes.

They offer extensive wealth management services and consultancy on tax services, investment, portfolio management, trust, insurance, and estate planning. Many private bankers are responsible for managing money and supervising various financial activities for high net-worth persons while developing good relationships with their valued clients.

Wealth management is a crucial part of financial management that combines financial and investment advice, estate planning, and tax and accounting services. It offers specialised investment services to address the requirements of wealthy customers.

During the procedure, a wealth manager collects various information regarding your needs and financial profile in the first place. After this, they form a personalised strategy that allows for preserving the prevailing wealth and simultaneously accumulating a sizeable amount.

The protective nature of private banking is a significant factor which makes it a smart product. Mentioned below are some important advantages of private banking:

• Personalised Service: When it comes to private banking, every customer is allotted a private banker who helps them understand the latter's financial position and recommends practical financial advice suiting their needs. Furthermore, customers can easily fetch their respective bankers whenever necessary and access their specialised knowledge and experience regarding private banking services in greater detail.
• Privacy: All transactions and dealings with high-net-worth individuals (HWNI), like private banking, are strictly confidential. This helps avoid various fraudulent activities and prevents third-party competitors from selling similar sorts of products to the same people. Keeping personal details secret provides the client peace of mind and a sense of security. 
• Attractive Benefits and Perks: Several financial institutions provide exclusive perks and benefits to their customers, like unique event invitations, discounts, savings from check-cashing fees, easy accessibility to funds, and so on. Services such as tax preparation, wealth management, estate management, and investment advice are all rendered at a discount or special offer. 
• Business Benefits: Prospective business entrepreneurs having a healthy relationship with a private bank can help streamline their business growth. To avail these benefits, you need to open an extensive personal or business account with a similar private financial institution and enjoy their attractive opportunities and various customary assistance. You will also enjoy multiple promotional offers and discounts as a regular client. 
• Reasonable Interest Rates and Reduced Fees: Usually, private banking customers can access reasonable interest rates and reduced fees on different financial products and services such as savings accounts, mortgages, Certificates of Deposit, money market accounts, personal loans, credit cards, etc. However, remember that savings and investment accounts may come with increased interest rates. Apart from providing securities and special offers, private banking also facilitates quick access to lines of credit at reasonable interest rates.

Wealth management services are provided to High-Net-worth-Individuals (HWNI), which comprise investment and financial betterment. Some of the notable advantages of wealth management are discussed below: 

• Setting Goals: Proper wealth management helps in setting clear and manageable financial and personal goals. Creating goals is not very easy since here you have to decide what exactly you want, what you need from the future, how you will manage your finances until your goals are achieved, and so on. 
• Helps in Creating Financial Plans: Making a scheduled and structured wealth management plan will help you generate a proper financial plan. In the entire procedure, a financial planner will assist you in computing and maintaining the expenditures accordingly. While formulating the wealth management plan, wealth managers will verify your prevailing financial status and give the best advice to attain your future goals successfully.
• Helps Reduce Financial Stress: A well-organised plan for wealth management gives peace of mind to individuals and keeps them safe from various financial risks and uncertainties. However, while making this plan, it is sensible to hire a wealth manager. Wealth advisors may even help you get an insight into the prevailing market conditions so that you can manage your funds sensibly and take investment decisions seamlessly and timely.
• Provides Financial Security: Another prominent benefit of wealth management is that it provides adequate financial security for you and your family. During the process, wealth managers may assist you in formulating a structured legacy and estate plan to protect your loved ones in your absence. Based on your goals and financial background, you can opt for life insurance policies, wills, trusts, gifts, etc.
• Implementing and Monitoring Investments: The fifth factor that makes wealth management unique is that the wealth managers will be responsible for carrying out and monitoring every investment strategy. Furthermore, they are involved in managing every transaction on your behalf. However, you must also monitor and check whether the plan is moving in the right direction. From the above thoughts, you should clearly understand the difference between private banking and wealth management. On the one hand, private banking involves offering services regarding financial management to HNWIs. On the other hand, wealth management mainly involves advising and implementing investments and savings on behalf of wealthy clients.