In term of definition, wealth management is a higher-level
professional service that includes financial and investment advice, accounting
and tax services, retirement planning and legal or estate planning for only one
set fee. While private banking is just a personalised financial and banking
services that are offered high net worth individuals.
However, there are slight differences between the services
provided by wealth management and private banking. Wealth management is a wider
category compared to private banking as it consists of making client’s
portfolio to be as perfect as possible, considering what the client’s opposed
to, or comfortable with, the amount/type of risk the client can take, and
invest client’s assets according to the client’s financial goals and plans that
they want to achieve in the future. For private banking of a financial
institution either private or government, it provides only one solution and
only requires one staff to provide personalised care and help manage high net
worth individuals’ finances.
Firstly, the approach. Wealth manager people working in
wealth management focus more on financial advice and concern in the depositing
and withdrawal of funds, maintaining client’s asset for the client, conserving
part of client’s asset, strengthening of portfolio and transfer of wealth to
the future/next generation. He will discuss with the clients and begin to draw
up a financial plan accordingly that will meet the needs of client family and
the required specialists for the plan to be achievable. Furthermore, wealth
manager will observe and check the progress of the client financial plan
frequently with the clients to make the required adjustments to the plan.
Private banking offers high net worth individuals with existing bank packages
that only one staff in the financial institution will be involved.
Secondly, multiple choices versus one choice. Wealth manager
being a company alone without being control by the government, able to offer
a customized service for its client and promote the different products from
different institutions that meet the clients’ needs. Thus, the client will be
able to make a decision on the different products that most suited their
current situation and needs. For security reason, it is often that client uses
products from multiple institutions. While for private banking, the bank only
offers one product which they are working with. Hence, for wealth management,
the client will have more options to choose and decide for their needs but for
private banking, clients do not have other option but the one offered by the
Thirdly, the investment strategy. Since wealth management is
an independent company, it has more benefits of flexibility, reactivity and
loyalty compared to private banking as it is governed by the government. Wealth
management only acts for the best interest of its client since they are
independent in the choice of the underlying assets such as stocks, futures, a
commodity, a currency or an index on which derivative’s price is based that
are part of the client portfolio. Whereas private banking has lesser independent
and transparency due to slower and heavier process. As the bank has rules and
regulation from the government to follow.
relationships with the clients. For wealth management, it starts off with
understanding the reality and the worries of the client to carry out the design
and execute the plan that will accomplish client’s goals. Wealth manager will
always be focused on ensuring safety and peaceful life for the client and his
family. During the procedure, wealth manager will question and reflect
sensitive issues to the clients that they are normally unaware of. This
procedure enhances the relationship between the clients and wealth manager
forming a trusting relationship after long years of collaborations. As for
private banking, the service that the bank offer, require lesser connection and
understanding between the client and the staff and take up lesser time. Since
the service are ‘packages’ that are adjusted to the level of risks the client
is willing to take either greater or lesser and the number of client’s
In addition, the cost of the services. In wealth management,
the client can modify the cost as he/she has a wider range of service and
providers such as banks, insurance companies and other more without having the
worries of meeting up several entities. Since the wealth manager will represent
the clients to meet up several entities that will help to achieve the client’s
goal. The clients need to choose from a range of products from different
financial institutions since the cost of the product from different financial
institutions differ. The client will be able to choose a service or product
that he/she is affordable and comfortable with. Furthermore, the client could
enjoy the service that is provided by the asset manager that helps to discuss
settlement, while for private banking it doesn’t. For the client in private
banking, they are not able to optimize the cost of services as they are only
offered with one service.
Finally, the main difference between wealth management and
private banking is that private banking does not always offer the services of
investing client’s asset while wealth management does. Wealth management staff
includes financial advisors that will help the client to improve their financial
position by giving advice/suggestions. Furthermore, financial advisors also
help the client in investing assets that will be able to generate high returns.
While private banking can guide the client to some possible investment options.
However, not all banks involved in helping the client to invest their assets.
Those high net worth individuals that use private banking normally open a
deposit account or others.
In conclusion, wealth management does not always offer the
same services provided by the private banking such as opening a bank account
for the client. However, the wealth manager can advise which kind of bank
accounts to be open at the bank that is suitable for the client. Furthermore,
wealth management spends more time with the client to discuss client’s worries
and plan on his assets. While private banking only helps the client in
protecting and helping client’s increasing assets and save and plan for
retirement and passing wealth to the future generation. In addition, not all
individuals can enjoy the services for private banking, they must have $50,000
or less in investable assets or some exclusive bank that only accepts the
client that have at least $500,000 worth of investable assets.