How Do Rich People Pick Their Banks?
Rich people don’t just put their money anywhere. Unlike regular consumers, they are likely to be more selective of where they choose to bank. Since they tend to have more assets, they’re especially drawn to more personalized services with more features, account options and access to a private banker, which are all perks that most banks offer when your assets grow.
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Below are some of the ways the rich choose their banks and where to place their wealth.
Private Banks
Private banking caters to wealthy individuals, providing them with a range of financial and wealth management services. What this means is that compared to regular banks these offer a high level of personalized attention and service, working closely with clients to understand their financial goals and helping them create custom solutions.
These banks might provide investment advisory, estate planning, tax optimization and risk management. These services are especially appealing as they help the ultra-rich grow and preserve their wealth.
Private banks also offer high-value financing for assets like aircrafts, yachts and real estate, with some banks even offering asset and lifestyle management rather than just financial products.
Another reason rich people will choose private banking is for privacy reasons. Private banks keep strict confidentiality for their clients and they take cybersecurity seriously.
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They Go With Big Names
Rich individuals opt for well-known brands to meet their banking needs.
Established and well-known banks have a long history and a strong reputation for financial stability and security. Rich people often prioritize trust and reliability when selecting a bank to safeguard their assets.
Many well-known banks also have a global presence, making it easier for wealthy individuals to access their funds and financial services from anywhere in the world. This is particularly important for those who do a lot of international business or travel frequently.
Specialized Services
Private banks such as TD Wealth Private Client Group provide wealthy individuals with a dedicated relationship manager who helps with all of their banking and financing needs. This bank also has a lower threshold than most banks, at $750,000.
Banks such as Wells Fargo’s The Private Bank require a $1 million account balance to open with them, but they offer a team-based approach for wealthy clients, meaning a whole team will be dedicated to their account.
Investment Management
When it comes to banking and investing, the rich and ultra-rich are less risk-averse and aren’t afraid to place the bulk of their wealth in the market. A typical millionaire household in the United States, for example, holds 65% of its wealth in stocks, 25% in bonds, and 10% in cash, according to a study by Vanguard. Many rich individuals keep their wealth in stocks, mutual funds and retirement accounts.
Placing wealth in the market offers high liquidity, allowing investors to buy and sell assets relatively easily. This liquidity ensures that the ultra-rich can access their wealth when needed. Many rich individuals may also hold index funds since they earn decent returns and you don’t have to spend time managing them.
When selecting their banking, rich people will prioritize savvy investment management that isn’t always found at private banks; an advisor can help them define an investment strategy and align financial goals.
Enhanced Perks
Banks like Morgan Stanley offer enhanced perks for their wealthy customers. Clients with at least $2 million invested get perks such as special travel rates, discounted concert tickets and cash back on new car purchases. Meanwhile, Citi Private Bank offers eligible clients services such as aircraft financing, investing, escrow, agency services, art advisory and finance and philanthropic strategies.
Networking Opportunities
Networking is a crucial skill for building wealth. Private banks such as UBS Wealth Management have specialized services for ultra-rich individuals and their families, with a $100 million minimum. Not only do they give access to wealth advisors who help with curating portfolios, estate planning and legacy plans — they also provide something most typical personal banks won’t: exclusive networks that allow customers to get in touch with other rich clients who share the same interests and passions.
Wealthy people often seek to leverage their existing personal and professional relationships. They understand that their current network can introduce them to valuable opportunities when it comes to investments or business partnerships. For this reason, they’re more likely to put their money in banking institutions where they can expand these connections.
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This article originally appeared on GOBankingRates.com: How Do Rich People Pick Their Banks?
