FEATURE: Private – no entry
Are private banks nothing more than the financial safe-havens of the super rich – or are they more inclusive than they appear? Kate O’Raghallaigh finds out
They pride themselves on delivering higher levels of customer service and on offering products specifically geared towards satisfying the needs of those with ‘complex’ finances – but are private banks really all that different from the more mainstream ones? Well, actually, yes. As it turns out, class division is alive and kicking, and its chosen location is the consumer banking industry.
While the average Joe Bloggs consumer normally has to put up with endless queues, debatable customer service levels and switchboard operators, private banking customers can expect to receive extra special attention. Replace tellers stuck behind glass screens with one-on-one service, and helplines with the mobile phone number of a personal banking manager, and this will give you an idea of the main differences between the worlds of private and mainstream banking.
Many high street lenders such as RBS, Natwest, Lloyds and HSBC have private banking facilities and there are also a range of banks such as Coutts (which can boast the Queen as a client), Investec and Butterfield Bank, which cater solely for the financial elite. However, according to Nick Gill, spokesperson for Coutts, different private banks offer varying levels of service. He says: “Some private banks offer a full banking service, which means they offer current accounts, debit cards and chequebooks, as well as wealth management and tax planning, while others only focus on managing a client’s assets.”
But how do you get in? According to Amy Mankelow, spokesperson for Lloyds TSB Private Bank, clients don’t have to wait to be specifically invited to use the service. She says: “Most of our wealthy clients already have a regular banking relationship with us, so it’s usually just a case of making them aware of the facility. We also approach people who have sufficient earning potential to avail of private banking in the future, as we want to have as diverse a range of clients as possible.”
In many case though, the entry requirements are pretty formidable. Coutts looks for clients with at least £500,000 of investable assets, while Lloyds TSB Private Banking requires customers to have at least £100,000 in savings or investments and a hefty salary on top of that. Mankelow says: “To qualify for our private banking service, clients have to have at least £100,000 in savings or investments and earn in excess of £250,000 a year. Some clients fall into one category or another, however many have both. For those who have in excess of £1m in savings, we offer an ultra elite, Mayfair banking service.”
What really makes the private banking service stand out so much from its mainstream counterpart is the private banking manager (or relationship manager, as they are often called) facility – an independent IFA employed to oversee a client’s finances to an extremely high level. Private banking managers also offer advice on tax planning, wills, trusts and Inheritance Tax planning.
The services of such an individual normally come with a monthly fee and standard banking services, such as current accounts, cheque books and debit cards may also come with a modest fee, however the fee itself, if applicable, varies depending on the bank.
At Coutts for example, clients have a personal relationship manager as well as a private banking assistant. Gill explains: “We organise our clients into groups and assign each one to a relationship manager. This way, each client’s manager will have expertise in the client’s particular area. Our client groups include land owners, professionals and entrepreneurs. For all our clients, we also have round-the-clock team, who can help clients any time of day or night.” Coutts customers have to maintain an average of £5,000 in their account in order to use this service.
So, while they aren’t necessarily welcoming minimum wage earners with open arms, private banks, at the very least, give hope to those of us who may have lost sight of the ever elusive fact that, at least in some areas of life, you really do get your money’s worth.