Private banking: for whom, for what, how?Posted on: June 6, 2020, by : cashadmme
Private banking offers high-end personalized management to individuals, families and entrepreneurs who hold significant financial assets or wealth. Two types of establishment coexist in the French banking landscape: on the one hand, the so-called retail banks, which each have several million customers and offer standard investments accessible to the general public; on the other, private banks open to wealthy clients or at the very least with significant financial outstanding or future assets.
What is a private bank?
There is no legal definition of private banking in English. It is a specialized financial institution which can be an independent bank or a bank backed by a banking network. All the major banks have their private banking hubs either by creation or by the purchase of an existing family business: 1818 private bank for the BPCE group, Social General private banking, LCL Private banking, creditNord private bank, etc.
According to its history and its specialization, a private bank will offer more or less numerous services. In all cases, these are financial asset and portfolio management services, sometimes including real estate investments, to which are added personalized services adapted to the client’s situation or wishes. Brief of tailor-made heritage advice. “Private banking supports its clients in the management, enhancement of their financial assets, the organization and transmission of their wealth”, explains Benoit Peligny, director at Lombard Osier.
The necessary acceptance of financial risk
If you are allergic to risk, stay wisely in your traditional bank branch. The wealth advisers of a private bank will offer you active management of your investments with the hope of significant financial gains, necessarily with a good dose of risk.
Wealth management vs private banking?
The entry ticket, the minimum amount of financial assets necessary to access the service, varies according to the services offered: wealth management, private bank, or both. The wealth management service is more comprehensive, the wealth advisor more available since it manages between 30 and 70 clients only. The private banking service differs from wealth management by a less global approach and, above all, each wealth advisor has many more clients to manage, sometimes more than a hundred.
For example, the following three private banks only practice wealth management: Edmond de Rothschild, accessible from an amount of financial assets set at least one million Euros, Lombard Osier, accessible from three million Euros, and HSBC private banking, accessible from three million Euros as well.
Certain private banks, subsidiaries of banking networks, have substantially softened the financial conditions of entry and welcome customers from 250,000 Euros in assets, but in this case, they do not benefit from the wealth management service. At BNP Paribas private banking, for example, the client with 250,000 Euros in financial assets can access the services of private banking, but to benefit from the services of the wealth management division, they must display a financial heritage of at least 5 million Euros. Note the original approach of the Private Bank Cholet Dupont which requires no minimum credit at entry, and practices a policy of welcoming customers on a case by case basis. This makes it possible to welcome clients or their children with future financial heritage.
Package or invoice for the service, the services of a private bank are not cheap, go there only if the game is worth the effort.