Not all banks are open to the public. Behind the front doors of the nation’s biggest banks are little-known private banks that are only available to high net worth individuals (HNW).

If you want to talk to these banks, you’ll generally need assets of $3 million or more, although some will accommodate those with assets of $1 million. If that’s not a problem, keep reading for the lowdown on these banks. If that’s not you, take a look anyway. When you make your first million, you’ll know where to go. 

Key Takeaways

  • High net worth (HNW) individuals, often defined as those with assets of at least $1 million in investable assets, have much more complex banking needs than your typical individual.
  • HNW individuals often eschew traditional banks and opt for private banks not available to the public; some of these banks are small, but many are the private arms of the largest banks in the world.
  • For a fee, HNW clients get access to a team, which might include a private banker, an investment adviser, a portfolio manager, an estate planner, and a tax adviser among others.
  • Private banks offer their HNW clients specialized investment and banking guidance but also offer perks such as the occasional trip, concert, golf tournament or other entertainment opportunities.

Using a Private Bank

As your net worth rises, your financial picture becomes more complex. High net worth individuals aren’t keeping their fortune in a single bank account. It’s in the form of investments, relatively illiquid assets such as a business or real property, trust or other forms of inheritance and, of course, cash.

A private bank is set up to address the wide range of services someone with a high net worth needs in order to manage larger amounts of money.

Often, an HNW individual will have a single account manager, who oversees a team of professionals based on the client’s needs. These professionals could include an investment adviser, a portfolio manager, an estate planner, a trust officer, an insurance specialist, and a tax adviser, as well as a private banker who manages the client’s cash accounts and any other banking services that may be needed.

Private banks will work with a client’s outside financial advisers to create a financial plan that not only maximizes the earning power of their money now but also after they pass away.

The Frills

The more money you have, the plusher the red carpet these banks will roll out for you. Barclays, for instance, offers a service it calls Little Book of Wonders. The bank partners with luxury brands giving clients up to five complimentary experiences per year in certain lifestyle areas. Kids might experience being a zookeeper for a day and adults could get a private tour of the Crown Jewels or the Churchill War room, for example.

HSBC Private Bank touts its high profile sports sponsorships as part of its perks. Wimbledon and big-name golf tournaments are just a few of the tickets you’re likely to get by banking there.

Having a personal banker isn’t such a bad perk either since everything from depositing a check to getting a loan is handled for you. Chase Private Client, the private banking arm of Chase Bank, offers a list of perks including no service charges or fees on pretty much anything, no foreign exchange fees, a dedicated mortgage lender and a business banker if you need one. All perks are extended to family members when they are joint owners on the account. This is true of other private banks that have a bank holding arm.

And although the days of hiding your money in a Swiss bank account aren’t what they once were, expect some innovative strategies that the retail customer probably won’t know about. 

Education and Other Priorities

But HNW clients are looking for more than sports tickets and exclusive trips. According to Douglas DiVirgilio, an executive at Bank of America Private Bank, (formerly U.S. Trust), clients are highly concerned with the level of financial literacy of their offspring. That's why many private banks have financial education tools on topics such as buying a home, starting a business and making charitable contributions.

Younger HNW clients are also concerned about socially responsible investments, DiVirgilio asserts, citing client interest in socially responsible investment options. Examples would include strategies that review companies based on their equality, social justice, anti-discrimination, human rights, and global labor practices.

$1 million

The minimum most banks will require to classify a client as high net worth. Over $10 million is considered to be ultra high net worth.

How Much You Need

Some banks offer “private” services with investable assets as low as $50,000 but to get the true private banking experience, you’ll need at least a couple of million dollars. Some banks will work with as little as $1 million, while others require at least $3 million. Investable assets include cash, investments including brokerage and retirement accounts, and some other assets. The value of your home doesn’t count.

The more you have, the more private and exclusive the services that are available to you. At some banks, if you have more than $10 million, putting you around the ultra high net worth range, you gain access to the bank’s specialty asset management service. At other banks, the high net worth ranking doesn't start until $25 million. If you want to own timber, real estate, oil, and gas interests or farm and ranch land, you can. Banks will have managers who specialize in complete turnkey services. You don’t have to know how to harvest wheat to own farmland.

There are 4,375 commercial banks in the U.S. as of December 2020, according to the St. Louis Federal Reserve; UBS, Morgan Stanley, Merrill Lynch, and Wells Fargo are among the most prominent private banks.

Size Matters

In the early days of private banks, these banks were independent entities often shrouded in secrecy. With the tumultuous recent history of the banking industry, private banks still maintain their exclusivity but align themselves more closely with their parent brand. Clients find comfort in larger banks with massive amounts of assets under management.

The top private bank in the world is UBS; Morgan Stanley is second. Other U.S. banks include Bank of America/Merrill Lynch (number three), Wells Fargo (number four), Citibank (number seven), J.P. Morgan (number eight), and Goldman Sachs (number nine). 

If you prefer to bank more locally, many regional banks have private arms.

The Bottom Line

Private banks often cater to generations of family members. They pride themselves on retaining the best talent because they know that their clients prefer to deal with the same people for as long as possible. HNW individuals don’t like change when it comes to their money.

If you’re shopping for a private bank, start with your current bank but call the private arms of a few others, too, to find out how they’ll roll out the red carpet for you. If you’re working with a financial advisor, ask for his or her recommendations. Financial advisors often have the inside scoop on the best private banks in the area.