Private Banking

Private Banking (PB) is a set of services provided by banks and institutions for high-net-worth individuals (HNWIs) or ultra-high-net-worth individuals (UHNWI)

Author: Rohan Arora
Rohan Arora
Rohan Arora
Investment Banking | Private Equity

Mr. Arora is an experienced private equity investment professional, with experience working across multiple markets. Rohan has a focus in particular on consumer and business services transactions and operational growth. Rohan has also worked at Evercore, where he also spent time in private equity advisory.

Rohan holds a BA (Hons., Scholar) in Economics and Management from Oxford University.

Reviewed By: Patrick Curtis
Patrick Curtis
Patrick Curtis
Private Equity | Investment Banking

Prior to becoming our CEO & Founder at Wall Street Oasis, Patrick spent three years as a Private Equity Associate for Tailwind Capital in New York and two years as an Investment Banking Analyst at Rothschild.

Patrick has an MBA in Entrepreneurial Management from The Wharton School and a BA in Economics from Williams College.

Last Updated:September 19, 2023

What Is Private Banking?

Private Banking (PB) is a set of services provided by banks and institutions for high-net-worth individuals (HNWIs) or ultra-high-net-worth individuals (UHNWIs).

There are some specific private banking firms, and most investment banks have a private banking service they can offer to their clients.

PB is considered to be a front-office role and people working in PB need to have extremely good interpersonal and client skills above all else, as relationships count more than almost anything else.

Private banking clients do not have to step into the branch and explain the situation to a different person each time. Instead, the client can call the private banker directly to ask for help or make a transaction.

Private bankers are already familiar with the client's specific financial situation to make suggestions and help clients reach their goals.

Key Takeaways

  • Private Banking (PB) caters to high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) and offers a suite of tailored financial services.
  • Private Banking operates with dedicated relationship managers who oversee everything from bill payments to crafting bespoke investment strategies for clients.
  • Private Banking provides a range of exclusive benefits and personalized services that are increasingly valuable in today's digital banking landscape, especially for those meeting minimum wealth criteria.
  •  While there are clear advantages, prospective clients should weigh the potential downsides, which vary within the industry, before committing to private banking services.

How Does Private Banking Work?

A relationship manager or a private banker is assigned to each client, providing personalized services to all matters. The private banker handles everything from paying bills to investment strategies

What is the Purpose of Private Banks?

  • One-stop-shop for clients

Private banks provide investment-related advice with the purpose of addressing the entire financial circumstances of each client. Private banking services aim to assist clients in protecting and preserving their assets.

  • Assets and Fees for Banks

From the bank’s perspective, the bank benefits from having the clients' funds added to their overall assets under management (AUM). Private banks’ management fees can be substantial to their stream of income. 

Banks have been unable to demand greater loan rates to expand their profits in an environment where interest rates in certain countries have remained low.

As a result, fee income has grown in importance as banks look for other sources of revenue.

Traditional banking products like loans and deposits are gradually becoming not the only source of income and banks are leaning towards more service-oriented and fee-based alternatives like private banking.

What Does the Structure of Private Banking Look Like?

To understand the working dynamics of private banking, having a good overview of different aspects that support the functioning of the industry would support a solid comprehension of how PB works and what are the main drivers of its functionality.

1) Costs Structure

Different banks have different billing methods for their customers. Banks live entirely on the fees they receive from selling third-party products.

They receive commissions from those sales. Clients do not pay anything out of pocket, but they acknowledge the products’ commission-based nature.

There are other private banks that follow a mixed model. Complete advisory banks charge customers a percentage of assets under management.

A recent trend in the industry is moving towards a consulting fee model as fee margins may decline in the future. Banks may also use fixed or sliding fees in addition to commissions from the sale of products. Fixed fees are where your account is charged a monthly amount in exchange for services.

On the other hand, sliding fees are where the bank charges customers a percentage of the assets under management (AUM). 

2) Product Platform

PBs sell all third-party products in an open-architecture product platform and only sell their own products in a closed-architecture product platform.

The needs of today’s clients usually entail a diverse range of products that drive banks to cater towards an open-architecture product platform that sells products from other banks.

Such products include foreign exchange, commodities, fixed income, equities, deposits, and real estate investments.

3) Client Acquisition/Lead Generation

PB operates heavily on lead generation. Different entities have varying ways of acquiring new clients. While some banks rely heavily on their wholesale banking referrals there are a few others that have strong tie-ups with their retail and corporate banking divisions.

Most banks do have a revenue-sharing mechanism in place within divisions.

It is either a one-time charge to the division or an annuity that the division gets for a client referral. Many banks believe that the primary source of leads must be client referrals.

Clients would refer friends when they are satisfied with the service provided by the private bank. Generating a good number of leads through client referrals demonstrates the good health of the private banks.

Types of Services Offered to Clients

Services offered at different banks vary. Some of the most common services include:

  • Financial planning: The dedicated private banker guides clients through major general financial decisions, such as estate or education planning, charitable donations, inheritance, retirement, etc.

  • Investment advice and wealth management: Private bankers’ role will be similar to financial planners and advisors advising their clients on investing, such as portfolio investment ideas, wealth protection through asset investment such as gold and risk management. 

  • Taxes, Credit, and Lending:  Private bankers keep up with major tax laws and regulations on behalf of their clients in order to decrease their tax burden and provide tax avoidance advice.

  1. Meanwhile, clients interested in purchasing a home, an investment property, or a luxury item could contact their private banker.

  2. Even if your bank doesn't often lend for the type of purchase you're making, a private banker may be able to help you get the loan you need.

Furthermore, institutions frequently provide low-interest loan lines to their customers.

  • Estate planning: Private bankers can advise clients on how to set up their estate plans, while some aspects of the process will necessitate a visit to another specialist, such as an estate attorney. For this reason, private bankers frequently recommend their clients to trustworthy professionals.

Wealth Minimums/ Who Qualifies for Private Banking?

Not every individual who opens a check or savings account has access to PB.

Although specific eligibility requirements vary from bank to bank, services are generally reserved for HNWIs, and some banks have a higher bar than others.

  • Based on The Securities and Exchange Commission (SEC), the definition of HNWI means individuals who own investable assets of at least $ 750,000.
  • Investable assets are those that are liquid or nearly liquid, including checks and savings accounts, money market accounts, stocks, bonds, investment trusts, retirement accounts, and money in trusts. The minimum eligibility also varies from one entity to another.

For example, you'll need a minimum of $1 million in checking, savings, retirement, and investment accounts to become a private client with Citibank. However, PNC Bank only requires $50,000.

Usually, financial institutions set a minimum of an amount of six figures of owned assets for clients to be accepted, and some entities only accept at least the amount of $1 million for them to become their clients. 

Why Use Private Banking Services? Is it Worth It?

PB services also afford you increased privacy. And with the special access to favorable rates, discounts, and higher interest rates on your savings, money market, and CD accounts, the conveniences, and perks offered look pretty attractive to a high net-worth individual.

  • You want to do your banking in one place, one-stop shopping for financial affairs

  • Concierge services and dedicated employees

  • Favorable rates, discounted charges

  • Perks and privileges

PB’s value proposition includes a one-bank approach, unbiased advice, a strong research and advisory team, and a unified platform.

Many banks leverage the “parent brand” to gain a client’s trust and confidence.

Most modern private banks follow an open product platform and hence claim their advice is unbiased. They believe there is no incentive to push proprietary products, and the client gets the best of what they offer.

A few banks claim to have a “strong advisory team” that is reflected in the products they offer the client. A couple of banks also define their value proposition on their unified platform, their ability to comply with all regulations, yet serve the client without restrictions.

Private Banking Advantages

PB offers customers a variety of benefits, privileges and personalized service that is becoming an increasingly valuable commodity in the world of automated, digital banking.

When considering services within this particular section of the banking world, one might want to know all the advantages and benefits that might be attractive to individuals who own assets within the general wealth minimum average. 

1) Confidentiality/Privacy 

Confidentiality is the main advantage of private bank services. Customer transactions and services provided are conducted with anonymity. Private banks often provide customized proprietary solutions, which are kept confidential to prevent competitors from attracting a high-profile client with a similar solution.

2) Preferential Pricing on Deposit Accounts

PB clients typically receive discounted or preferential pricing on products and services. For example, they may receive special terms or prime interest rates on mortgages, specialized loans, or lines of credit (LOC).

Their savings or money market accounts might generate higher interest rates and be free of fees and overdraft charges. Also, customers who operate import-export ventures or do business overseas might receive more favorable foreign exchange rates on their transactions.

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, and they may receive preferential pricing on loans and mortgages.

3) Alternative Investments 

If they are managing a client's investments, private banks often provide the client with extensive resources and opportunities not available to the average retail investor. For example, an HNWI may be given access to an exclusive hedge fund a private equity partnership or some other alternative investment.

4) All-in-one 

In addition to the customized products, there is the convenience of consolidated services—everything under one financial roof.

Clients of private banks receive enhanced services from their private banker who acts as a liaison with all of the other departments within the bank to ensure that the client receives the best possible product offerings and services through a single point of contact.

5) Specialized attention

When you sign up as a client in PB, you're assigned to a banker. You'll speak with this person each time you need a service.

Not only does this mean you won't have to wait on hold over the phone to speak with the first available representative, but it also means the banker will become knowledgeable about your specific financial situation.

6) Perks and discounts

Different banks have various perks for clients, such as large sign-up bonuses, discounted loan rates, or refunds on fees for ATM withdrawals or foreign transactions. Exclusive events are also usually thrown for clients.

Business owners may also be able to open personal and business accounts with the same private bank. This is possible when the private banker is trained to work with businesses.

7) A dedicated representative

The biggest advantage of PB is having a dedicated person – or a team of people – who already knows your circumstances.

PB can make it easier to deposit checks, initiate wire transfers, order checks and more. Some of these might not even require an in-person visit. Because the private banker or wealth management team knows your situation, it saves time.

Otherwise, you may have to repeat your situation and preferences every time you need something at the bank.

Private Banking Disadvantages

Although there are many advantages for the clients, drawbacks do exist to this exclusivity.

The disadvantages that prevail within the industry are the aspects that prospective clients consider and evaluate before deciding if they know what they are signing up for. 

1) Professionals Retainment 

Employee turnover rates at banks tend to be high, even in the elite PB divisions.

There may also be some concern over conflicts of interest and loyalty, the private banker is compensated by the financial institution, not the client—in contrast to an independent money manager.

If your private banker or wealth manager leaves the financial institution, you’ll have to choose whether to stay with the firm or move with your representative.

The convenience of dealing with a single banker who knows your situation may not be a given with PB. That’s because retail banks often have high turnover, so there’s no guarantee you’ll keep the same private banker or team for the long haul.

Since the convenience of having a single point of contact is one of the major selling features of the industry, consider turnover when deciding on becoming a client.

2) Limited Products Offered

A client's investing options may be restricted to the bank's proprietary products.

Furthermore, while the bank's legal, tax, and investment services are undoubtedly competent, they may not be as innovative or as knowledgeable as those provided by other specialists who specialize in specific sorts of investments.

Small regional banks, for example, may give excellent service that rivals that of larger institutions. A smaller, regional bank, on the other hand, may have fewer investment options than a major player like JPMorgan Chase & Company (JPM).

Though private bankers provide a one-stop shop for practically all of your financial needs, you may not receive the best service possible. Financial planners, estate attorneys, and CPAs may be able to provide you with similar or superior counsel, direction, and access to investments.

Furthermore, having a team of specialists rather than relying on PB allows you to keep your money where you want it instead of needing to house the bare minimum to qualify for PB.

3) Regulatory Constraints for Banks

Several big financial firms went bankrupt and collapsed as a result of the 2008 Global Financial Crisis. As a result, governments have enacted stronger rules requiring banks to be more transparent and accountable.

The licensing of PB professionals has become increasingly restricted as a result of these laws. This has impacted both the type of services they supply and their career advancement in some circumstances. 

Banks were prohibited from keeping assets as a tactic of tax evasion in several nations. Previously, many HNWIs stashed their assets in tax havens to keep their riches hidden from government authorities. This technique has been curtailed as a result of new banking laws.

Institutions may face difficulties as a result of PB. Since the global financial crisis of 2008, private banks have had to deal with a stringent regulatory environment.

Transparency and accountability have increased as a result of legislation passed in the United States and around the world. For PB professionals, the licensing standards have become more severe to guarantee that customers are properly advised about their money.

4) Low-interest rates

Private banks demand that you store a significant amount of money in a variety of accounts and investments. This implies you'll most likely have tens of thousands, if not hundreds of thousands, of dollars in your savings account.

Savings accounts at many private banks give poor interest rates. Keeping money in a high-yield savings account bank could earn you a lot more. To someone with a few thousand dollars in the bank, the differences may not seem significant.

However, if you have a substantial sum of money in savings, maintaining it in a low-rate account could cost you thousands of dollars.

Consider whether the discounts you'll obtain on particular products will equal the money you'll lose by settling for a low interest rate before creating a private bank account.

5) Management fees

PBs usually charge greater management fees than traditional banking. This could be in the form of monthly bank account servicing fees (although in certain entities, it is possible to waive these fees).

Alternatively, a private bank may charge a percentage of your investments, which might add up to a substantial sum if you retain a significant amount of money with them. Make sure you understand the fee structure before enrolling as a client.

Finally, the price of PB could be higher than the price of similar services from other providers. Make sure you understand how your institution's costs compare to the cost of similar services provided by other organizations.

Consider whether a licensed financial planner or investment advisor will charge you a lower proportion of your assets under management (AUM) than your private banker.

Knowing how much a CPA and estate attorney will cost you will help you evaluate whether hiring a private banker is more expensive or less expensive than assembling your own team of professionals.

Developments in the World of Private Banking

The globalization of the economy and technological developments such as the internet and mobile phones mean that banks have to innovate their value proposition and look for new markets.

For example, the growth of HNWIs is low in traditional markets like Europe, compared to Asia where the number of millionaires has grown to 3.6 million.

Banks also provide a sampling of the services at a lower price point than traditional PB. These are called premium banking or priority banking services.

They are meant for mass-affluent customers. The accounts do not generate as much revenue, but they contribute a sizable revenue to the bank.

The products offered to premium banking customers are the same as that for PB clients with the exception that they do not include hedge funds or facilities to manage one's business accounts. In other words, it is similar to wealth management on a much smaller scale.

To take advantage of foreign market growth potential, private bankers must navigate through the complexities of local rules and compliance.

  • Real-World Examples

UBS, Credit Suisse, Morgan Stanley, Citibank, and are some examples of financial institutions with PB operations.

  • Private Banks Rankings 

As of 2019, the rankings of the PB divisions of large enterprises based on Assets Under Management conclude: 

By AUM (Wikipedia 2019)

  1. UBS Global Wealth Management
  2. Morgan Stanley Wealth Management
  3. Bank of America Global Wealth and Investment Management
  4. Credit Suisse Private Banking & Wealth Management
  5. J.P. Morgan Private Banking
  6. Citi Private Bank
  7. BNP Paribas Wealth Management
  8. Goldman Sachs Private Wealth Management
  9. Julius Baer Group
  10. Raymond James

Career in Private Banking

At most firms, professionals in private banks are split into Relationship Managers (RMs), Assistant Relationship Managers (ARMs), and Investment Professionals (IPs)/ Investment Advisors (IAs). Depending on the institution, the PB division could also have portfolio managers. 

Relationship Managers maintain existing client relationships and find new clients, while Investment Professionals manage clients’ portfolios, report on performance, and research and recommend new products.

There are strong correlations between the roles, but a position in PB is primarily a salesperson's job. 

If client interactions and catering to their needs above others aren’t your strong suits, you should not work in this field.

Groups are also often divided based on the net worth of clients or demographics.

For example, one team might focus on tech startup CEOs, another might focus on mid-level financiers in hedge funds or private equity, and another group might work with small-business owners.

Careers in PB have limited optionality in terms of their exit opportunities.

Roles in Most Banks/Education and Qualifications

A quick and easy distinction is when banks use "Private Bank" in their division names, they offer the base salary + bonus comp structure with the exception of GS.

For example JPM Private Bank, Citi PB, DB PB, HSBC (offers a graduate program in PB), BofA PB, and CS PB. I'm not sure if the wirehouse model even exists outside of the US so UBS/CS and others should offer a similar structure if you are based in Europe/APAC. - (Analyst 1 in AM - Other | Anonymous)

Private banker positions typically require a bachelor’s degree, with qualifications of licenses from the Financial Industry Regulatory Authority (FINRA) Series 6 & 7, or North American Securities Administrators Association (NASAA) Series 63, 65 to provide clients with investment advice.

What are the salary structures?

New GS PWM analyst salary: $90k, new JPM PB analyst salary: $100k… GS NPWA salary: $150k (business school hire / 2 years after BDP) waiting to see what GS BDP 1st-year associates’ salary shakes out to be this January.

Historically 1st-year JPM PB associates make $110-125k. - (Analyst 3+ in IA | Anonymous)

First-year JP Morgan PB Associate is $125k base, plus bonus. Base scales up very slowly ($5k tranches). First-year Goldman Sachs PWM Associate is $150k base, plus bonus.

Bonus structures between the two firms as well as how they operate from a comp perspective are entirely different.

There is a lot of noise in the JPM PB associate ranks about this base, especially because first-year analysts are starting at $100k now out of undergrad. Generally, the expectation rightly or wrongly is that PBs need to keep in line with IB counterparts at the base level.

Bonuses at the associate level are going to be dependent on what year you are, if you have sales targets, what your results are, multipliers based on office/team, etc.

What is it like to work in PB? 

Unlike Investment Banking which is highly transactional, PB is relationship-led. You have to develop strong business relationships to understand your client's needs but also learn to work with top accountants, lawyers, and financial advisors who you'll go to for specialist advice.

PB offers less stress and better working hours in comparison to other divisions in the banking world like investment banking or sales and trading. In a regular week as a private banker, you could expect 40 hours of working hours.

You could also be exposed to a working environment with less stress generally since the work involves courting clients or reviewing portfolios rather than cramping live deals and market figures.

What makes a great private banker?

1)     Care about everything a client cares about that the bank doesn’t!

2)     Focus on being interesting, not intelligent

3)     Treat it like your own business & share your business plan with clients

4)     Build a community

5)     Cold approaches work if its researched, personal and authentic

6)     Understand your differentiators (hint – it is not “we care about our clients and give them a personal service.”)

7)     Build a small number of key introducer relationships

8)     You have to be prepared to fight with the CEO for your clients

9)     Build internal relationships

10)  You have to be a jack of all trades so don’t pretend you are a master

11)  Respect PAs

12)  Your manager is not the best banker

13)  Risk cannot be determined from a questionnaire
- David Newman, Chief Commercial Officer/Co-Founder at Delio. LinkedIn. December 30, 2020.


All of your financial tasks may be managed in one place with private banking. PB services are what affluent clients contemplate using if they have the appropriate investable assets and need the convenience of a single point of contact for all of their financial duties.

However, it is critical to be aware of the potential costs. Not only will you see private bankers come and go, reducing the value of having one, but this service may also cost you more than the sum of its components. Clients are usually required to hold all of their funds in one location.

A career in PB will also have its pros and cons, such as fewer working hours and less stress while having different rankings in terms of their compensation base salary structure in comparison to other banking divisions. 

Here is a website that advertises private banking vacancies for those looking for the same.

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