What Is Private Banking?

What is Private banking?

Private banking consists of the personalized financial services and products offered to high-net-worth clients by a retail bank or other financial institution. These services are provided under one roof and include investing and portfolio management, tax services, insurance, and trust and estate planning. Private banking caters to the unique needs of HNWIs by providing them with customized solutions that help them grow and preserve their wealth. Private bankers work closely with their clients to understand their goals and objectives, and then provide them with the best possible financial solution to meet their needs. Private bankers also provide ongoing support and advice to their clients to help them navigate through the ever-changing world of finance.
It offers personalized attention to day-topping needs, increased limits, and better rewards in addition to many other investment and planning services tailored just for them. Think of private banking as a personalized banking and investment solution for building wealth. Private banking includes all the everyday financial services you would expect from a bank, but with one significant difference. Private bankers are assigned to handle your every need and ensure everything goes smoothly in this personalized approach! Private banking is the perfect option for those who want a more premium and personalized financial approach.

How do I find a Private bank? 

Most private banks only accept clients with at least $1 million to invest. You still face high fees even for those with $1 million to invest with a private bank or an independent financial advisor. At that level, most financial advisors will charge 1%-1.5% of assets under management fees, with your financial advisor spending 80% of his time getting new clients vs. helping manage your wealth.

Not to mention that unless you have over $10M in assets, most private banks won’t care as much for you, although they might still take you as a client. Therefore, you will not get the same priority and personalized service as someone with $10M+ in assets. More sophisticated strategies and alternative investments require large minimums of investment. All of the above makes it hard for the sub $10M accounts to have a true personalized banking and wealth experience. The $1M account will be left with a cookie-cutter investment and banking strategy you would have probably just done yourself via some Robo-advisory or buying a passive index fund. 

Other Private Banking Alternatives 

Incumbent Private Client Alternatives

However, there are cheaper options, such as The Chase Private Client, which charges a $35 monthly fee, but that fee can be waived with an average daily balance of $150,000 across your Chase accounts. The problem with Chase Private is that it still only offers 0.01% of interest APY yield on that $150,000 you will have sitting there. The experience is also relatively poor digitally, and the whole experience is still branch-centric. Its Robo-Advisory and wealth management services are pretty cookie-cutter without tax-loss harvesting and fees above 0.35 basis points on investable assets. Private banks today are expensive, outdated, high-friction, and complex, especially for those with less than $10M in assets.

Digital Alternatives 

Wealthfront / Betterment are great options if you want low-fee do-it-yourself cash management and a Robo-advisory solution. However, Wealthfront and Betterment do not offer a personalized approach to your investment strategy. It is less premium or personalized than a traditional private bank or financial advisor. You will have to trust their algorithm without a financial advisor to guide you and provide personalized banking and wealth support. 

Onyx Private is a hybrid between a traditional high-touch and white-glove private bank and a do-it-yourself digital Robo-advisory. Onyx is a modern private bank for the new generation. Onyx wants to unlock access to financial services that are only accessible to the ultra-rich. Imagine having $200,000 in wealth and being able to operate it just like the ultra-wealthy with over $10M; this is what Onyx is on a mission to accomplish. Onyx offers a unified and fully digital premium banking and wealth management experience with a white-glove 24/7 concierge service. By sometime next year, we hope to launch a fully digital yet human financial advisor membership plan at a fraction of the price of private banks, all inside your app with no minimums and access to a variety of personalized alternative assets and estate/tax/financial planning services. 

Until we start offering financial planning and a complete financial advisor, Onyx today is an excellent alternative for Chase Private Client. Our membership fees vary between $25 to $60 / month when billed annually; however, we provide a lot more bang for the buck. Onyx Private membership offers over $2,000 / year of benefits, so the fee pays for itself. Onyx provides a 3% high yield APY (compared to 0.01% Chase Private), and our investment fees are free for the first $50k investments. Then we charge 0.20% basis points (compared to 0.35%+ for Chase). In addition, we offer tax-loss harvesting and fractional direct indexing, which can add 1-2% per year of your investment gains, something that Chase only does with high minimums. 

Check out a detailed comparison here.

If you are interested in learning more about Onyx Private sign-up here and get 20% discount when you use code BLG020.

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