There is a lot of benefits to
investing in certain investment options such as banks. However, some financial
institutes also offer certain investment options, such as private banking.
However, private banking is not available for everyone. It is a suite of
special services offered to rich people or in bank jargon high net worth
individuals. What is regarded as an HWNI is said to be over 1.5 crores in
assets? As you would expect, there a multitude of advantages to private banking
they include the following:
- Privacy
This is perhaps the biggest
advantage of private banking. As the word suggests,
private banking would imply privacy. A major disadvantage of anonymous dealings
is that many illegal dealings also take place. Also, such deals take place that
competitors cannot offer, and thus, it is even more important to keep the
transaction private.
- One-on-one service
One-on-one service is another
critical benefit of private banking. Private banking allows a customer to go
directly to a banker without going through the customer relations staff first.
This is especially important when wealth management or investment decisions of
high importance need to be made. Therefore, unique solutions to the client’s
situation can be thought out.
- Discounted services
It may seem unfair but if you opt
for private banking you can get discounted services as well. Among the
discounted services, tax preparation and planning, traveler’s checks and corporate
checking are included. It has even been said that services such as real estate
management can be addressed. All of these services are processed without any
hassles for the customer because of the fact that they are highly prioritized
as well.
- Very high returns
This is the biggest advantage of the
private banking setup. It leads to an average rate of return on investments of
7 to 13 percent. However, it can be as high as 30 percent annually. However, it
is crucial to note that the main reason for this is the fact that only private
bankers have access to high-return investment opportunities. The biggest
example of these is hedge funds.
However, it is also worth noting
that private banking also has a lot of disadvantages, including the facts that
recruiting and training staff for this type of banking is very difficult and
expensive. Secondly, there are regulatory restrictions and finally, it also
takes a lot of time and effort and money to explain the analyses to the client.
However, the advantages do outweigh the disadvantages, therefore making it one
of the ideal investment options.
