Private banking and wealth management – an introduction

1.      Wealth management/financial planning services may be provided to

·         HNWIs

·         Individuals/families of more modest needs (that is, less than USD 1 million in investable assets)

·         ultra-HNWIs (who has at least USD 30 million in investable assets)

2. Wealth managers often align themselves with

·         Broader teams inside wealth management firms

·         An external network of supporting experts

·         Banks (private or otherwise)

3. Different forms of banking

·         Retail banking (savings and transactional accounts, mortgages, term loans, debit and credit cards)

·         Premium/premier banking (customers with USD 100,000 to USD 1 million investable assets)

·         Private banking (Customers with more than USD 1 million investable assets)

4. Key types of private bank and wealth management firms:

   Private banks

   Retail/consumer banks

   Investment banks

   Universal banks

   Trustee firms

   Brokerage firms

   Family offices

5. A private bank's main sources of income and revenue are:

·         Transaction fees and commission

·         Interest income

·         Trading income (when the bank buys/sells assets on behalf of client)

6. Fee models applied by banks

·         Transaction fee model (charged when the client engage the bank for a product or service)

·         Advisory fee model (charged based on the advises)

·         Hybrid fee model (a combination of above)

7. Challenges faced by banks

·         Risk and compliance requirements imposed by national and international regulators

·         Tax transparency and reporting

·         Higher client expectations

·         Outdated client service models

·         Requirement for digital services (e.g. – mobile phones)

·         Competition from market players