What Is Private Banking And How Does It Work? (2023)

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Private banking is an elite service that generally features concierge-like attention to your finances, plus other perks and customized financial services. In most cases, however, only high-net-worth customers can access private banking.

Here’s what you need to know about private banking to decide whether it can help you reach your money goals.

What Is Private Banking?

Private banking, also known as “relationship management,” pairs banking clients with individuals or teams that handle all of their financial tasks within the bank.

The clients can skip the teller and call their private banker directly to get help or complete transactions. The private banker is already familiar with the client’s specific financial situation and is in an ideal position to make suggestions and recommendations.

While the concierge nature of private banking is one of its selling points, that’s not all a private banker offers. In addition to being the point of contact for private clients, a private banker can also pay bills, provide wealth management services and arrange for unique products outside the bank’s standard offerings.

In short, private banking offers clients a single coordinator for nearly all their banking and financial needs.

What Is a Private Banker?

Private bankers are financial professionals who provide concierge banking services. They are experts on the benefits a private bank can offer. They also know how to navigate channels and advocate for clients when necessary.

Most financial institutions hire only certified private bankers licensed by the Financial Industry Regulatory Authority (FINRA) or the North American Securities Administrators Association (NASAA).

Like a resort concierge, a private banker helps you maximize your banking experience with minimal stress. They provide guidance and suggestions based on the financial institution’s products and partnerships. They may also earn bonuses or commissions on financial products they recommend.

(Video) What Is Private Banking

How Private Banking Works

Private banking takes a holistic approach to your finances. Whether you’re an executive, entrepreneur or owner of a family business, private banking considers the solutions that best fit your unique needs.

What Does a Private Banker Do?

A private banker helps craft a financial strategy and reduces friction when connecting you to additional banking resources. Private bankers should be well-versed in your financial situation and familiar with your short- and long-term financial goals.

Private bankers closely monitor the performance of your accounts and educate you on investment risk. During major life changes and tumultuous seasons in the market, private bankers explain your options and work with you to refine your plan. Your private banker can also coordinate any borrowing needs and provide you with preferred interest rates and customized terms for various loans.

Private bankers can support business owners with credit increases, succession planning, risk-protection strategies and cash flow solutions. And they may inform you of changes to tax regulations or connect you to external legal advisors.

Another aspect of a private banker’s role is generating new business and promoting financial services. While a certified private banker looks after your finances, they are also considering the bank’s and their own financial interests.

Private Banking Services

Private banking services vary from bank to bank. But you are likely to find the following services and products from many banks offering private banking:

  • Preferential rates and pricing on deposit accounts. Private banking clients may be eligible for higher APYs on savings accounts, CDs, interest-bearing checking accounts and money market accounts. They also may enjoy lower fees or waived fees on their accounts.
  • General financial planning. A private banker can walk clients through major financial decisions, such as deciding how much to spend on a house or when to start saving for a child’s education.
  • Investment advice and wealth management. Private bankers often fill the role most commonly associated with financial planners and advisors by advising their clients on investing, including everything from asset allocation to tax-loss harvesting to risk management.
  • Estate planning. Clients can confer with private bankers on how to set up an estate plan, although some aspects of planning require a visit to another professional, such as an estate attorney. Private bankers will often refer their clients to trusted professionals for that purpose.
  • Lending. Clients looking to purchase a home, investment property or commercial property can contact their private banker for assistance. A private mortgage banker with expertise in custom home lending solutions may offer better options for complicated home acquisitions. The bankers may also provide loans for luxury items. Even if the bank does not generally offer loans for your specific purchase, a private banker may be able to arrange the loan you need.
  • Tax planning and philanthropy. Private bankers may stay on top of important tax laws on your behalf to reduce your tax burden. They may also provide access to professionals experienced in nonprofit management and philanthropic strategy to develop a specialized investment plan for contributions.
  • Credit and cash-flow management. Institutions typically offer their private banking clients lines of credit with low rates. Private bankers can also help derive cash flow from illiquid assets to manage business costs and avoid loss from excessive cash on hand.

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(Video) What is Private Banking vs. Retail Banking (14 mins)

Private Banking Minimum Requirements

Not all private banking is equal. Banks like Chase, HSBC and Wells Fargo advertise enhanced service-based checking accounts using the terms “private client” or “premier accounts.” However, these accounts are not true private banking.

Eligibility requirements for bona fide private banking vary from bank to bank. But the services are generally reserved for high-net-worth individuals, which, according to the Securities and Exchange Commission, means people with at least $750,000 in investable assets.

Investable assets include any liquid or nearly liquid assets you own, such as money in your checking and savings accounts, CDs, money market accounts, stocks, bonds, mutual funds, retirement accounts and trusts. Although the minimum amount for private banking eligibility varies, $1 million is a common benchmark requirement.

However, some private banks require investable assets of $5 million or $10 million for account consideration. And even within those banks, those assets will not grant you access to the most exclusive products from the bank.

The Cost of Private Banking

There are a variety of fee structures for private banking. Some banks that sell products to their private banking clients rely on commissions from those sales. Clients of these private banking services do not pay anything out of pocket, but they should be aware of the products’ commission-based nature.

Banks may also use fees to pay for private banking—either instead of or in addition to commissions. Fees for private banking may be fixed or sliding. Fixed fees are similar to typical account maintenance fees you’d pay for a checking account. You may be able to avoid fees by maintaining a minimum balance, or the fees may be nonnegotiable.

Some banks use a sliding fee instead of fixed fees, charging private banking customers a percentage of their assets under management (AUM). This percentage is generally around 1% of the AUM.

Private Banking Advantages and Disadvantages


  • Single point of contact. Private banking provides access to a dedicated private banker who can address concerns, troubleshoot financial challenges and refer you to experts within your bank. That can increase banking privacy and reduce the number of times you need to explain your finances.
  • Benefits for business owners. Juggling your personal and company finances can be challenging, but a private banking relationship can help you find the balance between maximizing your personal finances and growing your business.
  • Access to alternative investments. Private banking can open the door to exclusive hedge funds and private capital opportunities.


  • Lack of transparency. Due to the elite nature of private banking, a complete list of services and fees isn’t always available. Finding the best fit for your needs may be difficult without a full picture of products.
  • Potential conflict of interest. Although some private banks claim to follow a fiduciary standard, few certified private bankers are fiduciaries. That means your banker may prioritize their interests ahead of yours. According to a 2021 study from the accounting and consulting firm Crowe, 62.4% of financial institutions have pay-for-performance incentives.
  • Private bankers are generalists. While a certified private banker may be able to connect you to a private mortgage or investment banker, you could receive better service if you assemble your own team of financial advisors, CPAs, mortgage brokers and business consultants.

Is Private Banking Right for You?

Having at least $250,000 in investable assets is the minimum you’ll need to qualify for private banking. But even if you have that kind of money, this service may not be right for you. There are several important caveats to the perks offered by private banking.

Consider the cost of private banking compared to the same services from other providers. Make sure you know how your institution’s private banking fees measure up. Ask yourself if a certified financial planner or investment advisor will charge you a smaller percentage of assets under management than your private banker.

(Video) What Is The Difference Between Private Banking And Wealth Management

Similarly, determining how much you can expect to spend on a CPA and estate attorney can help you decide if your private banker costs more or less than creating a team of experts for yourself.

Private Banking vs. Wealth Management

The line between private banking and wealth management can be blurry. Merrill Wealth Management, a Bank of America Company, provides access to both Merrill Investing and Bank of America banking services. Merrill Wealth Management even outsources its philanthropic solutions to Bank of America’s Private Bank, but they are still separate services.

Both private banking and wealth management offer financial planning and investment management, and each may include portfolio management, tax and estate planning. Yet while some wealth management programs operate within large banks, wealth management firms aren’t required to operate under banking charters as private banks are.

And, wealth managers often lack access to all of a client’s financial accounts. Meanwhile, many private bank clients rely on their certified private banker to manage their day-to-day funds, overseeing checking, savings, CDs and investments.

Bottom Line

If you have the necessary investable assets and need the convenience of a single point of contact for all of your financial responsibilities, you may want to consider private banking. But before committing, carefully consider the benefits, and interview several banks to determine their offerings.

Private banking isn’t the best option for everyone. Still, it works well if a bank’s services fully meet your expectations and you’re comfortable working with an evolving team over a long duration.

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Frequently Asked Questions (FAQs)

What is a private banking account?

A private banking account is typically an account or combination of accounts that total at least $1 million in assets. Due to the unique needs of these high-net-worth individuals, financial institutions offer a range of financial services in one location, called a private bank. These services include investing and portfolio management, trust and estate planning and insurance and tax services.

Which private bank is best?

Similar to retail banking, the best private bank depends on your needs. Silicon Valley Private Bank has a division of private bankers who understand the needs of company founders. But it may fall short of your needs if you need support with succession planning. The Digital Banker provides a list of the best private banks in various categories, including the top private banker for key demographics.

What is the difference between commercial and private banking?

(Video) Private Banking vs Private Wealth Management

Commercial banking provides financial services to corporations, municipalities, nonprofit organizations and other institutions. Private banking offers personal services to individuals or families. Private banking may include business services, including succession planning and commercial loans for private clients who operate a business.


How does private banking work? ›

Private banking, also known as “relationship management,” pairs banking clients with individuals or teams that handle all of their financial tasks within the bank. The clients can skip the teller and call their private banker directly to get help or complete transactions.

What are the questions asked in private bank interview? ›

  • Tell something about yourself.
  • Tell something about your previous job.
  • What is your passion?
  • Why do you want to join Axis bank?
  • What have you learned from your mistakes?
  • What challenges are you looking in this job position?
  • What is your biggest weakness?
  • Why should we hire you?

Is it a good idea to have private banking? ›

"Though expensive, private banking is often worth the price for individuals who demand a high degree of service, want ongoing professional advice for no extra charge and have their assets held in sophisticated structures that require professional management,” Frederick says. Dedicated help.

How much money do you need to open an account at a private bank? ›

How does private banking work? Opening a private bank account is like opening a regular checking account, except you need to qualify with a minimum asset balance of typically $1 million or more, which is managed by a particular financial institution.

What is private banking in simple words? ›

Private banking consists of personalized financial services and products offered to the high-net-worth individual (HNWI) clients of a retail bank or other financial institution. It includes a wide range of wealth management services, and all provided under one roof.

Who benefits from private banking? ›

Private banking is typically intended for high-net-worth individuals and families with substantial assets and investable wealth. Eligibility criteria for private banking can vary among financial institutions, but clients usually need a minimum investment threshold.

What is different about private banking? ›

Private banking is a service offered by banks and other financial institutions to high-net-worth individuals. It typically involves providing tailored services such as investment advice, asset management, and financial planning. Wealth management is a holistic approach to managing a client's financial needs and goals.

What is the objective of a private banker? ›

The main role of a private banker is to help clients manage their money. Traditionally, this involves helping them invest wisely while avoiding risks that might reduce the value of their assets.

How do I clear my private bank interview? ›

A candidate aspiring for private bank job is expected to have a good command over latest issues and trends of banking sector. Also get a general overview of economy. Reading financial newspaper would also help you to confidently face the questions in banking interview.

What is an example of a private bank? ›

ICICI Bank Ltd. Jammu & Kashmir Bank Ltd. Karnataka Bank Ltd. Kotak Mahindra Bank Ltd.

Which is the best private bank? ›

Best Private Bank Stocks In India #1 – HDFC Bank

Established in August 1994, it was the was the first private bank in India. The bank provides banking and financial services like retail banking and treasury operations. As of March 2023, the bank served over 83 million customers across 7,821 branches and 19,727 ATMs.

Is bank of America a private bank? ›

The acquisition of U.S. Trust was completed in 2007 and significantly strengthened Bank of America's position in the private banking business and its ability to cater to some of the nation's wealthiest clients.

What is the best private bank in the US? ›

JPMorgan also takes the awards for the world's best private bank for ultra-high-net-worth individuals, and for investment research.

What documents are required to open private bank account? ›

ID Proof
  • PAN card.
  • Aadhaar card.
  • Voter ID.
  • Passport.
  • Driving license.
  • Employee ID.
  • Any photo ID card issued by the Central/State government.
  • NREGA job card.
May 4, 2023

How do I set up private banking? ›

You will need to get licensed as a business and apply for a banking charter from the state in order to open your bank. It's important to make sure that you are properly registered with all of the necessary government agencies before you start operations.

Who is the owner of a private bank? ›

Private banks are banks owned by either the individual or a general partner(s) with limited partner(s). Private banks are not incorporated. In any such case, creditors can look to both the "entirety of the bank's assets" as well as the entirety of the sole-proprietor's/general-partners' assets.

How much money do I need for Wells Fargo private bank? ›

Who qualifies for Wells Fargo private banking? A Wells Fargo banking customer qualifies for Wells Fargo Private Banking when they have at least $1 million invested in their Wells Fargo accounts, for banking and investments.

What is high net worth private banking? ›

What is ultra-high net-worth private banking? Ultra-high net-worth private banking is wealth management for wealthy individuals and their families as well as their family offices, foundations and businesses.

Where do private banks get their money? ›

Profits: Banks are in business to make a profit like other firms. They earn profits primarily from interest on loans and securities they hold.

How do private banks get money? ›

Private banks make their money via various fees, interest, and investment. The primary source of income is from lending money to others using the excess reserves from deposits made by other customers.

Do billionaires use private banking? ›

Most high-net-worth individuals bank just like regular people, with a few exceptions. As a bank's private client, they get access to many services that ordinary people do not. The main difference here is that they might be eligible for better interest rates.

What is the minimum assets for wealth management? ›

Any minimums in terms of investable assets, net worth or other metrics will be set by individual wealth managers and their firms. That said, a minimum of $2 million to $5 million in assets is the range where it makes sense to consider the services of a wealth management firm.

Is private banking same as personal banking? ›

The services of personal banking include saving accounts, personal loans, mortgages, credit and debit cards, and also online banking. Whereas, private banking services include estate management, financial planning advisory, retirement planning, investment planning, etc.

What are the 7 private banks? ›

So here is the list of top private banks in India and also the best Private banks in India.
  • HDFC Bank – Largest Private bank in India. ...
  • ICICI Bank. ...
  • Axis Bank Ltd. ...
  • Kotak Mahindra Bank Ltd. ...
  • IndusInd Bank Ltd. ...
  • Yes Bank Ltd. ...
  • IDFC First Bank Ltd. ...
  • Federal Bank Ltd.
Mar 5, 2023

What is a professional summary for a private banker? ›

A private banker is a financial and wealth expert administering tailored investment strategies to clients and supervising their finances. They are responsible for providing specialty wealth-advisory services, managing clients' portfolios, equities, tax planning, annuities, insurance among other things.

What to do after private banking? ›

Private Banking Exit Opportunities

If you're in a Relationship Manager role, your main options are to stay in that role, move to a different firm, or eventually start your own firm.

What answer should I give for tell me about yourself? ›

Every good answer to “tell me about yourself” should consist of: Work - This should make up about 80% of your answer. Focus on your previous experience and accomplishments here. Academic - 10-15% of your answer should then be about your academic background (university, academic achievements, etc.).

What's your greatest weakness? ›

Answer “what is your greatest weakness” by choosing a skill that is not essential to the job you're applying to and by stressing exactly how you're practically addressing your weakness. Some skills that you can use as weaknesses include impatience, multitasking, self-criticism, and procrastination.

How do private banks create money? ›

Banks create new money whenever they make loans. The money that banks create isn't the paper money that bears the seal of the Federal Reserve. It's the electronic money that flashes up on the screen when you check your balance at an ATM. Banks can create money through the accounting they use when they make loans.

How do I start private banking? ›

A bachelor's degree in a business discipline or another relevant subject is a basic qualification to work as a private banker. However, in most cases, a bachelor's degree must be combined with substantial work experience to qualify for a position in this field.

What is the cost of private banking? ›

It is usually around $100+ a month. Some banks will waive the $100 monthly private banking fees if your household has over $3 to 5 million in investable assets.

Do millionaires use private banks? ›

Millionaires also bank differently than the rest of us. Any bank accounts they have are handled by a private banker who probably also manages their wealth. There is no standing in line at the teller's window. Studies indicate that millionaires may have, on average, as much as 25% of their money in cash.

Is private banking for the rich? ›

Private banking is a set of wealth management services offered to individuals with high net worth. Most of the big names in global banking have separate private banking divisions, and there are standalone private banks. Private bankers help high-net-worth clients manage their money.

What is the main source of income for private banks? ›

They can earn money from: income from securities they trade; and. fees for customer services, such as checking accounts, financial and investment banking, loan servicing, and the origination, distribution, and sale of other financial products, such as insurance and mutual funds.

Who prints money in the US? ›

The Bureau of Engraving and Printing produces United States currency notes, operates as the nation's central bank, and serves to ensure that adequate amounts of currency and coin are in circulation.

Do banks lend money they don't have? ›

As noted above, banks lend first and look for reserves later, but they do look for the reserves. Attracting new customers is one way, if not the cheapest way, to secure those reserves. The banks don't need your money; it's just generally cheaper for them to borrow from you than it is to borrow from other banks.

What is the best private bank? ›

One of them is JPMorgan Private Bank, and this year our panel of international experts name it the world's best private bank. JPMorgan also takes the awards for the world's best private bank for ultra-high-net-worth individuals, and for investment research. All three decisions are well deserved.

How do I start a private bank in USA? ›

How to Start a Bank: The Complete 7 Step Guide (2023)
  1. Case example: Bank of America.
  2. Step 1: Know the Business.
  3. Step 2: Write a business plan.
  4. Step 3: Raise capital.
  5. Step 4: Get a charter.
  6. Step 5: Apply for FDIC approval.
  7. Step 6: Check for any other necessary permits.
  8. Step 7: Get customers.

What skills do you need for private banking? ›

Primary duties include managing clients' financial circumstances and providing them with financial recommendations. Most private bankers have at least a bachelor's degree and are licensed. Private bankers should have a great understanding about the banking industry, and good interpersonal and communication skills.

How much money do you need for private wealth? ›

Because of its comprehensive nature, wealth management is typically reserved for individuals who are at least above the high-net-worth threshold. This is generally seen as someone who has at least $750,000 in investable assets or a $1.5 million net worth.

How much is a Chase private bank? ›

There is a $35 Monthly Service Fee for Chase Private Client Checking OR $0 when you have at least one of the following each statement period: an average beginning day balance of $150,000 or more in any combination of this account and linked qualifying (a) deposits / (b) investments OR, a linked Chase Platinum Business ...


1. What is Private Banking & Wealth Management
(Deutsche Bank)
2. Do You Have What It Takes to Be a Private Banker?
(Wall Street Journal)
3. Private Banking | Banking Products and Services Course (Part 3 of 9)
(Corporate Finance Institute)
4. Why Private Bank Money Creation is Dangerous
(Money & Macro)
5. Banking Explained – Money and Credit
(Kurzgesagt – In a Nutshell)
6. Day in the Life of a Private Client Advisor | Wealth Management | J.P. Morgan


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