The banking industry serves a broad range of individual and business customers. Banks and credit unions employ private bankers to provide an additional level of service for high and ultra high net worth (UHNW) clients. Akin to a financial advisor, a private banker provides in-depth analysis on an individual or company's financial circumstances and makes recommendations based on specific investment, estate planning and charitable objectives.
Private bankers are typically employed with a large financial institution, while financial advisors or wealth managers serve outside the banking environment.
The most prevalent job duty of a private banker is managing their clients' financial circumstances with a focus on maintaining a strong relationship between the client and the bank. Private bankers begin managing clients' complex financial matters by evaluating their current financial position. This review involves gathering information regarding total assets, such as property and business interests, balances of bank accounts, and the value of all investment portfolios. Private bankers account for a client's debt obligations and personal financial goals.
After gathering and evaluating information about a client's financial situation, a private banker makes recommendations on how to position investments and savings to achieve the client's objectives. These recommendations often include detailed portfolio positions for a client's investment accounts and the allocation of assets among certificates of deposit (CDs), conventional savings accounts and other non-traditional alternatives intended to preserve capital.
Recommendations from private bankers may also focus on estate planning needs, such as establishing a trust for a spouse or heirs, or obtaining the appropriate amount of life insurance to protect heirs from paying excessive estate taxes.
HNWIs often need to reduce tax obligations. As such, private bankers make suggestions regarding tax efficiency in short- and long-term investments and earned income. To help offset some tax liability, private bankers often suggest that clients consider the financial benefits of philanthropy. Some private bankers also vet the charities to ensure a donation would provide a tax deduction.
Private bankers are typically assigned to clients of a specific bank branch. Unlike financial advisors, they do not have the responsibility of continuous prospecting. However, for smaller banks or credit unions, a private banker may make phone calls or otherwise reach out to prominent individuals or businesses to attract new HNWI clients to the financial institution. Private bankers, in partnership with and supported by the bank, may also be responsible for implementing client appreciation events to ensure a high level of retention for the bank.
Education and Training
Most financial institutions require private bankers hold at least a bachelor's degree. Undergraduate work best suited for a career in private banking focuses on accounting, finance or business, but a degree in marketing may also benefit the career. Positions in financial institutions with a large number of UHNWI clients may require a master's degree in finance, accounting or business. Ongoing training is provided on the job, generally represented by working with a tenured private banker or a wealth manager at the financial institution.
Because private bankers often provide detailed advice surrounding a client's investment portfolio, positions may require certain Financial Industry Regulatory Authority (FINRA) or North American Securities Administrators Association (NASAA) licenses. The FINRA licenses typically required to offer investment advice and implement investment strategies include the Series 6 and the Series 7, while NASAA licensing guidelines may require a Series 63 or Series 65 license.
Each of the FINRA and NASAA licenses involve completing a proctored exam, along with ongoing continuing education requirements. These and other industry designations and professional certificates assist in establishing credibility with HNWI clients.
A private banker's greatest responsibility is to maintain relationships with HNWIs to ensure their assets remain with the financial institution. An individual working as a private banker must establish rapport with individuals quickly and build trust with potential or current clients. Therefore, interpersonal and communication skills are required.
Additionally, private bankers must be able to analyze financial information to create and implement recommendations. A strong understanding of financial markets and economic conditions is also part of the skill set necessary to be successful as a private banker.
A private banker's compensation is typically comprised of a base salary plus commissions based on an assets under management (AUM) fee. According to Glassdoor, the average annual base pay for a private banker is $79,715, with another $23,000 per year in additional compensation such as fees, bonuses and commissions. Total annual compensation ranges from $60,000 to $186,000. Private bankers with a small book of clients tend to earn a lower income than private bankers with a large, established book of business. Similarly, private bankers who work in regional banks or credit unions are less likely to be on the higher end of the salary scale than those who work for larger national financial institutions.