In a world of digitised banking and impersonal services, many may be tempted to turn to priority banking and private banking to seek the personal touch that banking services seem to have lost in the face of technological developments.
In Singapore, priority banking is a great reflection of your affluence and status, skipping queues, swanning into VIP airport lounges and dialling your own bank manager are signifiers of someone successful. But private banking is a tier above priority banking. This level of banking is reserved for only the most High Net Worth Individuals by invitation only and it comes with its own suitably exclusive range of benefits.
Here we uncover the differences between priority and private banking schemes and explain which might be more suitable for your financial level and needs.
Priority banking is ideal for you if you are a relatively affluent customer who can afford to deposit and spend large sums of money with your bank. Sometimes known as Premier banking, to qualify your assets can be in the form of cash savings, fixed deposits or investments including bonds, shares, unit trusts, ETFs an REITs.
It is in a bank’s best interests to attract affluent individuals who have large transactions to make as their financial investments in the bank allow the bank to continue operating and serving all customers of all wealth levels.
In return for your sizeable financial investment in the bank, you will be treated as a VIP member. This often begins with better banking rates. Lower interest rates, foreign exchange rates, low or non-existent fees and cheap loans are designed to allow you to hold on to even more of your money. You will also be assigned a personal banking manager dedicated to your finances and able to handle any banking transactions you may require.
Meanwhile, some banks offer priority queueing, priority parking or even priority-only bank branches to save you waiting with the ordinary people. Many accounts even come with non-banking perks such as travel discounts, money off leisure activities and airport lounge access. With a priority bank account, you can feel like one of the elite.
With varying levels of financial requirements, you may be able to become a priority customer with as little as S$70,000. That said, the lower the income threshold, the less exclusive the benefits of the account tend to be. Just because you can become a priority customer, doesn’t mean that you should. Seek financial advice to determine if it will be a worthwhile investment and what your return is likely to be.
Private banking is the level up from priority banking and offers HNWI clients the chance to benefit from a wide range of wealth management services in return for depositing and transacting with one bank. These services can include investments, portfolio management, tax advice, insurance and trust and estate planning.
All the typical services such as checking and savings accounts will be provided, but the delivery is highly personalised. Clients will be assigned a relationship manager or private banker to handle their enquiries and transactions. Their assistance can be called upon to pay your bills or arrange a new mortgage but you will also be able to rely on their advice for investment strategising, financial planning, portfolio management, retirement planning, business strategy and inheritance organisation to minimise taxes paid. Essentially, your relationship manager will help you decide on customised solutions for any aspect of your financial life.
One of the other key perks of private banking is described within the name. Private banking clients can rely on the privacy of their dealings and transactions. This is to protect the modesty of the customer but also prevent other banks from poaching highly valuable clients.
Beyond this, private banking customers can expect preferential offers and pricing on interest rates, mortgages, loans, credit, fees and overdraft charges. They may even be offered access to an exclusive hedge fund or private equity partnership as a means of investing their wealth.
To qualify for this level of care, banks usually require a minimum of six figures’ worth of assets, but some of the most exclusive banks will only welcome you into their priority banking scheme if you can invest more than S$1 million.
Private banking customers enjoy the convenience of having all their financial affairs managed under one roof. However, this can mean that staff lack the expertise of independent advisors and may even work under a conflict of interest as it is the bank that pays them, not the customer. There is also reported to be a high staff turnover amongst financial advisors, so you may not receive as consistent a level of service as you might expect.
You will need more money in assets to invest to qualify for a private banking account. It is more likely that this will occur in the form of an invitation from your existing bank rather than an application as is the case with priority banking.
Private banking customers receive all the privileges common to priority bank accounts. But there are some notable additions in the fields of financial strategy, investment strategy and tax avoidance. The level of financial care on offer to private banking customers is far greater and more valuable than with priority banking.
The other main difference is that private banking offers privacy that might be very appealing to particularly HNWI or those who are famous.
Whether you are eligible for either, consider carefully if the perks are worth the investment in a single institution.
(By Sally Fox)