Today, private banking is a popular concept and already has made its influential place among investors to assist them in managing their investments, tax procedures, and many more areas along with the regular banking & financial services. If you are also a businessman and looking for availing of private banking services, this blog can help you to avoid the possible risks by making you aware of its certain pros & cons. But before we start, let’s understand what private banking is.
What Is Private Banking?
The concept of private banking revolves around a set of more personalized banking & financial services/products that are being provided to individuals with high net worth by banks or FIs. You can understand it by the term “Private” that stands for more personal services than regular banking. It includes investments, tax planning, portfolio management, and estate planning & many more.
Pros of Private Banking
The clients enjoy several benefits when they use private banking. As more & more banks are getting digitized, it is quite easy to get in touch with an expert to consult on various banking matters. Some of the pros of private banking are here as follows:
- Privacy - The biggest benefit of getting private banking services is a high level of privacy. Be it private banking’s clients, their financial evaluations, or personalized services offered to them, all related banking data is kept private, confidential & anonymous. It is essential as it helps private bankers avoid exposing/revealing the offered services from their competitors.
- Investment Options - Clients that apply for private banking get a plethora of investment opportunities through private bankers. Apart from this, they are also provided with suitable & appropriate resources & products to manage their financial activities better.
- Personal Interaction Than Others - As we have mentioned earlier, customers with private banking services get personal attentiveness from the bankers who work closely to determine investment goals. Not only it eliminates the frustration of being on hold over a phone call to communicate with the available authorized person but also you get the assistance of bankers who are aware of your financial situation.
- Perks & Discounts - Private banking clients also get many valuable & noticeable perks & discounts from banks such as discounted loan rates, or refunds on fees for ATM withdrawals or some foreign transactions, etc. Many private banks also arrange exclusive events for their private clients.
- Positive Outcomes - The private bankers are experienced experts who are passionate about fulfilling your investment goals and make smart decisions for their clients focused on positive returns on investments.
Cons of Private Banking
Additionally, there are some disadvantages also of availing of private banking services. Here they are as follows:
- Uncertainty - The concept of private banking tends to witness a high turnover rate. It means that often the particular private banker that has been assigned to handle your investment requirements may change and you are bound to repeat the same process and build a relationship with them to understand their personalized service.
- Low-Interest Rates - It often happens under private banking where you need to put your money in various accounts & investments. That means, you have several saving accounts and many private banks pay low-interest rates on those savings. Instead of doing this, you could get much more interest by keeping your money with a bank that doesn’t offer private banking.
- Dispute of Interests - You need to understand one more fact that the private bankers are paid by their banks or financial institutions that employ them rather than being directly paid by their clients. This could invite disputes of interests where they need to think about whether to favor your interest or their banks.
- Management Fees - Private banking is generally associated with a higher management fee than regular banking. You may need to pay it either as a monthly service fee for bank accounts or a percentage of your investments which raises a pretty much attractive amount to them as you provided quite a large piece of investment to the institution. So before availing of private banking, be aware of its fee structure.
- Limited Services - Although private banking provides you access to good investment deals, it could generally be restricted to the proprietary products of the banks. Additionally, the private banking services, be it an investment, tax, or anything else, will be professional ie. you will get perhaps less creative services.
Looking for private banking services? There are several banks & financial institutions out there providing innovative & exceptional private banking services to a plethora of individuals. Go through them carefully and choose the best after considering these pros & cons.
