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Private Banker vs. Wealth Planner: how to pick a wealth management partner

Friday, May 12, 2023

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Private Banker vs. Wealth Planner: how to pick a wealth management partner Financial Analyst
Private Banker vs. Wealth Planner: how to pick a wealth management partner

Financial Advice | Financial Planning | Investing

The more you explore wealth management creation, the more complex it seemingly becomes. Similarly, the more wealth you accumulate, the more complex it gets. Two common choices when seeking professional help are private bankers and wealth planners.

Whilst they’re both useful to high net-worth individuals, they offer very different things. In this article, we will compare the two, discuss their differences, and dig into whether they compete or complement one another.
 

Scope of services

The fastest way to understand who private bankers are is to look at the services they offer. Private bankers typically work for large banks and offer a range of services, such as managing investment portfolios, providing credit solutions, and delivering personalised banking services. They focus on growing and preserving their clients’ wealth, and their expertise lies in navigating the intricacies of the financial markets. 

Unlike private bankers, wealth planners offer a broader range of services that encompass all aspects of a person’s life, including their family and business. These services include financial planning, retirement planning, tax planning, estate planning, and risk management. Wealth planners aim to create a comprehensive financial strategy tailored to their client’s unique circumstances and goals, acting as someone to turn to when in need of guidance.

Whilst private bankers offer personalised lending solutions and other products, wealth planners address a broader range of services with wealth-building. There certainly are some things that private bankers have over wealth planners, such as a concierge-like banking service to exclusive and bespoke banking products. Of course, wealth planners have access to exclusive investments, but this is different to a private banking experience.

There is a lot of overlap between the two services, particularly in regard to portfolio and risk management. Both manage your portfolio and assets too, but the degree of the overlap will depend on the specific providers in question. 
 

Fee structure

Wealth planners often charge a flat fee or a percentage of assets under management (AUM) as their main source of revenue. This fee structure aligns the adviser’s interests with those of their clients, as they are incentivised to grow and protect the client’s wealth. The more wealth the client has, the bigger the fee for the adviser – capitalism at its finest.

What isn’t so harmonious is that private bankers usually generate revenues through transactions, such as selling a new product or buying and selling assets in your portfolio. This may raise some eyebrows as to what their incentives are, though it’s hardly an uncommon practice within the industry. Though, some fee structures within private banking also include annual fees for managing your assets.
 

Client relationship

Private bankers typically have a more transactional relationship with their clients, focusing on specific financial products and services at hand. They may not have the time or resources to develop a deep understanding of their client’s overall financial picture, though this may suit some clients who simply want access to exclusive banking products.

This is perhaps the greatest point of difference between the two. Wealth planners strive to establish long-term relationships with their clients. They take time to thoroughly understand the client’s goals, risk tolerances, and personal circumstances. 
 

Independence

Wealth planners are typically independent advisers who work for themselves or independent firms. This means they are not tied to any specific financial institution or product, so they can offer unbiased advice and recommendations that are truly tailored to their client's needs and goals.

On the other hand, private bankers usually work for large banks, which means they may be influenced by the institution's product offerings and incentives. This can limit their ability to provide impartial advice and may result in clients being offered only the bank's proprietary products, which may not always be the best fit for their needs.

By working with an independent wealth planner, clients have the freedom to explore a wide range of financial products and investment opportunities, without being limited by the products offered by a specific institution. This can lead to better outcomes and more effective financial planning, ultimately helping clients achieve their goals more efficiently.
 

Is it possible to have both?

After exploring the many differences between the two services, it may give the impression that it’s possible to use both services. After all, they are two different services. However, this isn’t necessarily the case because there’s still an overlap: they’re both working on growing and protecting your wealth.

More specifically, it’s complex to have two different, unpartnered services managing your assets. Not to mention the possible doubling up of fees that this may encounter, it is a logistical mess. However, if you have an established relationship with one, it may be possible to scope out a more refined and limited set of services with the other that does not conflict. 

Usually, this is easier done when initially having a long-term relationship with a wealth planner. Then, the potential benefits of using specific private banking products can be fleshed out. An example would be to use a private banker for personalised banking and bespoke lending solutions, and a wealth planner for comprehensive tax, retirement, and investment planning. In fact, a wealth planner can be an unbiased sounding board for products that your private banker is proposing. 
 

Final considerations

With the growing distrust of banks, it’s understandable that private banking services suffer from scepticism. Whilst concierge-like banking can be powerful in many ways, it does not serve as an adequate replacement for holistic wealth planning. That being said, it is evident that one cannot exist without the other and the concept of money is that it gives you choice; so do not manage your wealth one-dimensionally.

Our team of accredited advisers listen closely to the goals of our clients and collaborates on a financial plan that delivers robust solutions for today and future generations. If you are seeking guidance from experts to help create a positive change in your financial life, speak with us to help create the strategy that fits you.


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