Private Banking Vs. Wealth Management: What’s Right For You?

Several people consider private banking and wealth management as interchangeable terms. However, the two have significant differences and it’s essential to understand the differences to choose the right one for you. Get into the details of both private banking and wealth management to determine which one is the best for you.

Private Banking

The concept revolves around retail banking services for individuals with high net worth. Private banking meets the specific needs of clients but not by offering detailed financial advice on long-term financial plans or investments. If you opt for private banking, you will have access to specialized services and bank employees. But you won’t be working closely with a financial advisor.

To become eligible for private banking, one needs to possess a minimum value of investable assets. The minimum value varies across banks, but in the UAE, it is usually not below $200,000. Some concierge services included under private banking are as follows:

• Never having to wait on hold
• Access to invite-only products like credit cards
• Lower interest rates on loans

But in the end, private banking is just an expansion of the normal banking services. Private banking clients can hold savings, checking, investment, or retirement accounts. The major difference between private banking services from normal banking services is that you will get easier access to financial services.

Who Uses Private Banking Services?

Private banking services are desired by every individual because who wouldn’t love the efficient customer support and enhanced product offerings. However, if the services were so easily available, they wouldn’t have been called private.

Banks usually offer these services to all their affluent clients. Therefore, you might not have to put in much effort other than maintaining big figures as your account balance. If you aren’t able to enjoy private banking services at your bank, you can try looking for other banks where you might qualify. There’s no downside to these services as you don’t have to pay any extra charges.

Wealth Management

Wealth management is more of an individualized approach to managing financial situations. Wealth management services have two sub-categories:

• Investment Management

Investment management is popular for people who aren’t willing to look after their investments. A wealth manager focuses on investing your money in exchange for a fee. The fee of wealth managers is usually a percentage of the client’s total assets.

Wealth managers will analyze your overall financial profile before making investments on your behalf. Clients who are against risks will see their assets in stable and upward investments. Clients willing to take risks will see their assets being invested in individual stocks.

• Financial Planning

Financial planning is a more personalized segment of wealth management and takes into consideration the individual situation of clients. A financial advisor works intimately with their clients to create a strategy that can meet individual financial goals.

For instance, you want to retire at the age of 40 and want to cover the college expenses of your two children. A financial advisor will determine how much you need to save and how much you spend on living expenses. The professional will also curate investment plans without compromising your financial goals.

Financial planning can also help in dealing with one or more specific issues. For instance, you might get help with debt consolidation.

Who Uses Wealth Management Services?

Opt for wealth management services when you want someone to manage your investments, plan your finances, or both. If you only want someone to manage your expenses, private banking services are also useful for it.

Private banking clients consider wealth management when they need specific advice regarding handling their finances. However, the difference between wealth management and private banking is that the former isn’t reserved for the wealthy.

Ending Note

Private banking offers a plethora of services to provide an enriching experience to high-value clients. Wealth management is more comprehensive to help clients invest and plan their financial future wisely.

Both services are likely to attract similar clients. You should know that one service is not necessarily better than the other. Understand how each type of service works and focus on your requirements to understand which one is the most suitable for you.

About Xanara

Xanara is a private banking and wealth advisory focused on developing and implementing transparent and client-centric, financial solutions that are backed by expertise. We understand the weight of our solutions and act with the utmost care, resilience, and most importantly, integrity.