- Large commercial banks bring economies of scale, a commitment to technology, competitive lending rates, and interest-bearing accounts.
- Commercial banks aren’t always the right option for individuals and businesses with complex financial structures and unique service needs.
- A private banking relationship at a local or regional bank may help you navigate the complexities of your business and personal situation while providing a high level of customer service.
If you’re like many accomplished business owners and professionals, you’ve been so busy working that you didn’t notice how complex your financial life has become. That’s one of the downsides of success—you’ve accumulated substantial assets from a wide variety of sources and now you are responsible for monitoring, growing, and protecting those assets. Suffice it to say, your situation is way too complicated to do-it-yourself, and probably beyond the grasp of most brokers and robo advisors.
Some of your friends and professional colleagues may suggest private banking as a solution. Private banking is not the right choice for everyone, but you may want to consider it if you have a complicated financial structure and you prefer a hands-on relationship with your banker.
When it comes to private banking, there are generally two options:
- A large commercial bank
- A local or regional bank in your area
As with so many decisions in life, there are pros and cons to each. Let’s take a closer look:
Large Commercial Banking
Large commercial banks dominate the banking and lending environment and there are a lot of good reasons for that. They bring economies of scale, a commitment to technology, and many times, they are price leaders in lending rates and interest-bearing accounts. However, these banking behemoths also have their limitations. Lending decisions may be centralized in different parts of the country, turnover can be high, and your small business or personal situation may not be large enough to warrant a great deal of your banker’s attention. Throw in the complexity of your small business, your asset structure, and your complicated income sources, and it can be a challenge to navigate the banking structure in a large financial institution.
Small Local/Regional Banking
Private banking at a local or regional bank offers an approach that’s more like the overall wealth management solutions we provide to our clients at Soundmark:
- A single point of contact and a designated team that understands your goals and your overall asset structure, income structure, and business structure.
- An emphasis on client service that allows you the freedom to focus on what is most important.
- Tailored banking services and solutions based on your unique needs.
- Coordination with other advisors to ensure the highest levels of service with solutions that are in line with your goals.
- Localized lending decisions based on you and your business’ unique situation.
Lower Minimum Balances
Also, larger banks often require clients to keep substantial amounts of cash or investments in their accounts if they want to qualify for private banking services. Local banks typically require lower minimum account balances and offer more flexibility. This is especially important for clients who are business owners, or who hold assets in real estate, company stock through their employer, or who have funds in 401(k)s and other retirement accounts that may not be able to be moved. Local banks can also be a good solution for clients who like working with independent advisors, but who still want private banking services.
The Right Solution for You
You’ve worked very hard to get to where you are today. You owe it to yourself, your family, and your employees to find the best possible solution to meet your needs.
If you or someone close to you has concerns about the various moving parts of their financial life, don’t hesitate to contact me. I’m happy to help connect you with the appropriate resources for your situation.