PALAWAN STATE UNIVERSITY

College of Business and Accountancy

Puerto Princesa City

P2308 - SPECIAL TOPICS IN FINANCIAL

MANAGEMENT

CHAPTER 1:
WEALTH MANAGEMENT

1st Semester - S.Y. 2024 - 2025

Prepared by:
ZIEDWRICK A. DICAR
Instructor I

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 PALAWAN STATE UNIVERSITY
College of Business and Accountancy
Puerto Princesa City

Introduction to Private Banking

Private banking consists of personalized financial services and products offered to the high-net-worth
individual (HNWI) clients of a retail bank or other financial institution. It includes a wide range of wealth
management services, and all are provided under one roof. Services include investing and portfolio
management, tax services, insurance, and trust and estate planning.
While private banking is aimed at an exclusive clientele, consumer banks and brokerages of every
size offer it. This offering is usually through special departments, dubbed "private banking" or "wealth
management" divisions.
Private banking is an elite service that generally features concierge-like attention to your finances,
plus other perks and customized financial services. In most cases, however, only high-net-worth customers
can access private banking. Services include investing and portfolio management, tax services, insurance,
and trust and estate planning. These “services” include everything from a dedicated account manager and
preferred interest rates on accounts to wealth management services and estate planning.

What is Private Banking?

Private banking, also known as “relationship management,” pairs banking clients with individuals or
teams that handle all of their financial tasks within the bank.
The clients can skip the teller and call their private banker directly to get help or complete
transactions. The private banker is already familiar with the client’s specific financial situation and is in an
ideal position to make suggestions and recommendations.
While the concierge nature of private banking is one of its selling points, that’s not all a private banker
offers. In addition to being the point of contact for private clients, a private banker can also pay bills, provide
wealth management services and arrange for unique products outside the bank’s standard offerings.
In short, private banking offers clients a single coordinator for nearly all their banking and financial
needs.

Do You Qualify for Private Banking?

Being the realm of the rich, private banking is not available to everyone who has a savings or
checking account. The specific eligibility requirements vary from bank to bank, but the service is reserved for
high-net-worth individuals. Some banks are happy with clients who have six figures in investable assets while
others demand eight figures.
Investable assets are any assets that are liquid or easily liquidated. They may include the money in
checking and savings accounts, bonds, retirement accounts, money market accounts, trusts, and stocks.
Understandably, many banking institutions don’t make their standards known.
It is possible to qualify for private banking even if you don’t meet the minimum requirements. A good
example of an exception to the rules is the children of wealthy individuals. Banking institutions are always

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College of Business and Accountancy
Puerto Princesa City

looking to the future, specifically wealth transfers. They want to make sure that funds stay with them even
after the wealth changes hands.
Young professionals who, based on their education and career path, appear to be on the track to
meeting minimum requirements may receive an exception. Commonly referred to as the emerging affluent,
they can prove valuable clients for the private bank and wealth management firms in the future.

Benefits of Private Banking

The concierge nature of private banking is one of the factors that makes it such an attractive product.
However, that’s not all it has to offer. Private bankers offer a one-stop shop for all of your banking needs.
That said, here are some of the benefits you can expect with private banking.
1. Dedicated Representative
The main perk of private banking is that you are assigned a dedicated representative, or a team of
people, whose job is to understand your circumstances and cater to your financial needs. The representative
makes it easier to initiate wire transfers, deposit checks, and more.
You will never have to worry about waiting on hold to talk to the next available representative.
Because your dedicated manager has intimate knowledge of your financial situation, you won’t have to repeat
your preferences every time you need something at the bank.
2. High Investment Returns
Banking institutions allocate the best-performing staff to the private banking division to manage the
finances of high-net-worth individuals. The result is higher investment returns for the clients.
The average rate of returns from private banking investments is 7% to 13%. Sometimes that rate
goes as high as 30%. The extensive resources offered by private banking allow clients access to investment
vehicles like high-performance hedge funds. You also get expert advice on investment options with high rates
of returns.
3. Access to a Network of Specialists
Your dedicated manager has got you covered and will connect you to the right specialists. They will
connect you to the best tax attorney, estate advisor, investment analyst, or any other specialist you need.
The ability to have your private banker set up meetings with these specialists can be a time-saving perk for
you.
For many private banks and wealth management firms, having a comprehensive and multi-
disciplinary team of professionals with expertise in different financial areas is the key to business success. It
allows them to provide the best wealth advisory services, which is key when dealing with high-net-worth
clients.
4. Perks and Discounts

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College of Business and Accountancy
Puerto Princesa City

Every private bank offers some perks for their clients as a reward for the large volume of business
they bring. Services like estate management, tax preparation, wealth management & investment advice, and
corporate checking will be offered at a discount.
The foreign exchange rates are attractive for clients involved in the export and import business.
Those involved in real estate will benefit from fast-tracked transaction processing through lead advisors. You
will get access to lines of credit at lower interest rates than regular clients.
If opening a savings account, the bank may give you a higher annual percentage yield. From time to
time, private banks host exclusive events so that they can interact with their high-net-worth clients. And even
with the ongoing pandemic, there are still virtual opportunities like virtual wine tasting to connect.
5. Business Benefits
If you are a business owner, a relationship with a private bank can help your business grow faster.
You can open your business and personal account with the same private bank, and enjoy lending
opportunities and other benefits.
Moving funds from one account to the other will be hassle-free. Not to mention, you get to enjoy
promos and discounts offered to regular clients.

Private Banking Services

How Private banking Works
Private banking takes a holistic approach to your finances. Whether you’re an executive,
entrepreneur, or owner of a family business, private banking considers the solutions that best fit your unique
needs. The private banker handles everything from involved tasks, like arranging a jumbo mortgage, to the
mundane like paying bills. However, private banking goes beyond CDs and safe deposit boxes to address a
client's entire financial situation. Specialized services include investment strategy and financial planning
advice, portfolio management, customized financing options, retirement planning, and passing wealth on to
future generations. While an individual may be able to conduct some private banking with $50,000 or less in
investable assets, most financial institutions set a benchmark of six figures' worth of assets, and some
exclusive entities only accept clients with at least $1 million to invest.

Source: Wall Street Mojo

Private Banking Services:

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College of Business and Accountancy
Puerto Princesa City

Private banking services vary from bank to bank. But you are likely to find the following services and products
from many banks offering private banking:
 Preferential rates and pricing on deposit accounts. Private banking clients may be eligible for higher
annual percentage yield (APY) on savings accounts, CDs, interest-bearing checking accounts and
money market accounts. They also may enjoy lower fees or waived fees on their accounts.
 General financial planning. A private banker can walk clients through major financial decisions, such
as deciding how much to spend on a house or when to start saving for a child’s education.
 Investment advice and wealth management. Private bankers often fill the role most commonly
associated with financial planners and advisors by advising their clients on investing, including
everything from asset allocation to tax-loss harvesting to risk management.
 Estate planning. Clients can confer with private bankers on how to set up an estate plan, although
some aspects of planning require a visit to another professional, such as an estate attorney. Private
bankers will often refer their clients to trusted professionals for that purpose.
 Lending. Clients looking to purchase a home, investment property or commercial property can contact
their private banker for assistance. A private mortgage banker with expertise in custom home lending
solutions may offer better options for complicated home acquisitions. The bankers may also provide
loans for luxury items. Even if the bank does not generally offer loans for your specific purchase, a
private banker may be able to arrange the loan you need.
 Tax planning and philanthropy. Private bankers may stay on top of important tax laws on your behalf
to reduce your tax burden. They may also provide access to professionals experienced in nonprofit
management and philanthropic strategy to develop a specialized investment plan for contributions.
 Credit and cash-flow management. Institutions typically offer their private banking client’s lines of
credit with low rates. Private bankers can also help derive cash flow from illiquid assets to manage
business costs and avoid loss from excessive cash on hand.
Advantages and Disadvantages of Private Banking

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 PALAWAN STATE UNIVERSITY
College of Business and Accountancy
Puerto Princesa City

Advantages of Private Banking

Private banking offers clients a variety of perks, privileges, and personalized service, which has become an
increasingly prized commodity in an automated, digitized banking world. However, there are advantages to
both the private bank clients as well as the banks themselves.
1. Privacy
Privacy is the primary benefit of private banking. Customer dealings and services provided
typically remain anonymous. Private Banks often provide HNWIs with tailored proprietary solutions,
which are kept confidential to prevent competitors from luring a prominent customer with a similar
solution.
2. Preferential Pricing
Private banking clients typically receive discounted or preferential pricing on products and
services. For example, they may receive special terms or prime interest rates on mortgages,
specialized loans, or lines of credit (LOC). Their savings or money market accounts might generate
higher interest rates and be free of fees and overdraft charges. Also, customers who operate import-
export ventures or do business overseas might receive more favorable foreign exchange rates on
their transactions.
3. Alternative Investments
If they are managing a client's investments, private banks often provide the client with
extensive resources and opportunities not available to the average retail investor. For example, an
HNWI may be given access to an exclusive hedge fund or a private equity partnership, or some other
alternative investment.
4. One-Stop-Shop
In addition to the customized products, there is the convenience of consolidated services—
everything under one financial roof. Private banking clients received enhanced services from their
private banker that acts as a liaison with all of the other departments within the bank to ensure that
the client receives the best possible product offerings and services.
5. Assets and Fees for Banks
The bank or brokerage firm benefits from having the clients' funds add to their overall assets
under management (AUM). Even at discounted rates, the private bank's management fees for
portfolio management and interest on loans underwritten can be substantial.

Disadvantages of Private Banking

Although there are many advantages to private banking, drawbacks do exist to this exclusivity.
1. Bank Employee Turnover

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College of Business and Accountancy
Puerto Princesa City

Employee turnover rates at banks tend to be high, even in the elite private banking divisions.
There may also be some concern over conflicts of interest and loyalty: The private banker is
compensated by the financial institution, not the client—in contrast to an independent money
manager.
2. Limited Product Offerings
In terms of investments, a client might be limited to the bank's proprietary products. Also,
while the various legal, tax and investment services offered by the bank are doubtlessly competent,
they may not be as creative or as expert as those offered by other professionals that specialize in
various types of investments. For example, small regional banks might provide stellar service that
beats out the larger institutions. However, the investment choices at a smaller, regional bank might
be far less than a major player such as JPMorgan Chase & Company (JPM).
3. Regulatory Constraints for Banks
Lucrative as private banking can be, it can pose challenges for the institution, as well. Private
banks have dealt with a restrictive regulatory environment since the global financial crisis of 2008.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, along with other legislation
passed in the U.S. and around the world, has resulted in a higher level of transparency and
accountability. There are more stringent licensing requirements for private banking professionals that
help ensure customers are appropriately advised about their finances.

Organizational Challenges in Private Banking

1. Managing regulatory requirements
Private banks must scrutinize transactions and carefully document the origin of clients’
funds, a growing formality that is not always welcomed by private clients who have traditionally
valued their privacy. Yet this strict compliance is necessary to maintain the good reputation of our
financial market and, more broadly, our country.
2. The private banking “conductor”
The entire banking sector is undergoing a period of historically low-interest rates and rising costs,
which are placing margins under stress. Against this background, private banks can no longer base their
growth on standard low-margin services. To stay competitive, it must strengthen its appeal by looking
beyond classic asset management and offering solutions for complex wealth and family situations, cross-
border financing, private equity, etc. More than ever, private banking advisers need to take on the role of
“conductors” who are able to harmonize the bank’s offer and, if necessary, direct clients towards the
most relevant specialist.
3. The digital revolution
While personalized support is still very important to private banking clients, they are also
becoming more mobile and connected. They want to be able to continue their banking experience online,

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College of Business and Accountancy
Puerto Princesa City

securely, from any location, and at any time. Private banks must pursue significant investment in new
digital communication channels in order to meet their clients’ growing demands in this area.

Security and Secrecy Requirements

A security requirement is a statement of needed security functionality that ensures one of many
different security properties of software is being satisfied.
Security requirements provide a foundation of vetted security functionality for an application. Instead
of creating a custom approach to security for every application, standard security requirements allow
developers to reuse the definition of security controls and best practices.
Secrecy Requirement
Secrecy is a higher level of interest by the data owner in limiting knowledge of certain information.
The Attributes of Secrecy
• Utilization—The information must be used for a purpose
• Advantage—The information provides benefit to the owner that is denied to those not having it
• Value—The information has inherent worth
• Uniqueness—The information is not generally known nor can it be derived independently
• Active security—The information is protected by means beyond those used for nonsecret
information (e.g., classified systems, armed guards)

The Private Banker

A private banker is a banking professional who offers concierge-like financial services to affluent
individuals. They often work within a separate division of a large bank or are part of a smaller bank that
specializes in private banking services.
Private bankers work in the private banking divisions of large retail banks, investment banks, and
wealth management firms. They provide personalized financial services primarily to high-net-worth
individuals (HNWIs). In essence, private bankers are personal financial advisors for the very rich. Private
bankers work at large retail or investment banks, or wealth management firms, providing specialized services
to the ultra-wealthy. Private bankers define financial goals with clients, develop a plan to execute the goals
with the firm's other experts, then build and manage the client's portfolio so as to try and reach those goals.
Many private bankers start as entry-level financial analysts or financial advisors before moving on to
becoming private bankers. Private bankers are financial professionals who provide concierge banking
services. They are experts on the benefits a private bank can offer. They also know how to navigate channels
and advocate for clients when necessary.
Most financial institutions hire only certified private bankers licensed by the Financial Industry
Regulatory Authority (FINRA) or the North American Securities Administrators Association (NASAA). Like a

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College of Business and Accountancy
Puerto Princesa City

resort concierge, a private banker helps you maximize your banking experience with minimal stress. They
provide guidance and suggestions based on the financial institution’s products and partnerships. They may
also earn bonuses or commissions on financial products they recommend.

Who needs a private banker?

The typical private banking client is someone who requires a range of services that go beyond just
checking and savings accounts and span into investment portfolios, trusts, business accounts, and complex
loans, says Jay Pelham, president of Kaufman Rossin Wealth, a wealth management firm in Miami.
Clients are usually high-net-worth individuals. According to a 2021 Credit Suisse report, there are 22
million millionaires in the U.S., so that is the potential market size for private banking. But for some wealthy
customers, a standard banking relationship with a financial institution may be a better fit, says Pelham, who
has worked with private banks during his 30-year banking career and who still advises clients who use private
banking services. Here are some ways to know if you might want to consider private banking.

What does a private banker do?

A private banker helps craft a financial strategy and reduces friction when connecting you to
additional banking resources. Private bankers should be well-versed in your financial situation and familiar
with your short- and long-term financial goals.
Private bankers closely monitor the performance of your accounts and educate you on investment
risk. During major life changes and tumultuous seasons in the market, private bankers explain your options
and work with you to refine your plan. Your private banker can also coordinate any borrowing needs and
provide you with preferred interest rates and customized terms for various loans.
Private bankers can support business owners with credit increases, succession planning, risk-
protection strategies, and cash flow solutions. And they may inform you of changes to tax regulations or
connect you to external legal advisors.
Another aspect of a private banker’s role is generating new business and promoting financial
services. While certified private banker looks after your finances, they are also considering the banks and
their own financial interests.
In addition to investment advising and portfolio management services, many private bankers oversee
deposit and cash management services, credit and lending services, tax planning services, trust services,
retirement products, and annuities and insurance products.
Many private banking divisions in large banks handle virtually all aspects of clients' finances. A
private banker often works with relatively few clients to provide the focus and personalized service that private
banking clients often demand. In some firms, private bankers focus on managing client portfolios while
relationship managers handle other client needs.
To understand what a private banker do, this financial professional provides personal service to high
net worth (HNW) and ultra-high net worth (UHNW) clients. They typically work for large financial institutions,

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College of Business and Accountancy
Puerto Princesa City

and these institutions assign them, specific clients, to work with. Private bankers analyze a company or
individual's financial circumstances to make recommendations and implement strategies to increase their
wealth. They work with affluent individuals with extremely high net worth, including business owners, c-level
executives, and entrepreneurs.
Some primary responsibilities of a private banker include:
1. Courting clients
Private bankers may be responsible for contacting prominent businesses and individuals to attract
new high-net-worth clients to their institutions. While they may not be responsible for researching the initial
prospects themselves, private bankers may benefit from leveraging their own networks to find potential new
clients. Aside from meeting with clients in their offices, private bankers may escort potential clients to dinner
or use other ways to entice them to work with the financial institution.
2. Maintaining client relationships
Private bankers are responsible for building and maintaining strong relationships with their clients
and between the clients and the banks. It's essential that they gain the trust and respect of their clients and
provide them with accurate recommendations. Private bankers may be responsible for answering requests
from clients at any time to help preserve these relationships. Similarly, they may collaborate with financial
institutions to organize and implement client appreciation events to ensure high client retention rates.
3. Evaluating client circumstances
Private bankers evaluate each client's financial position to manage their complex financial matters.
They research a client's total assets, such as bank account balances, business, and property interests and
the value of their investment portfolios. In their evaluations, they account for their client's personal finance
goals, debt obligations and potential compliance issues.
4. Making recommendations to clients
Based on their evaluations, private bankers prepare and provide recommendations for clients to
increase the value of their assessments. They recommend how clients can position their investments and
savings, so they're able to achieve their personal objectives. These recommendations typically relate to
assets like certificates of deposits (CDs), conventional savings accounts or non-traditional alternatives for
preserving capital.
Some private bankers may specialise in certain types of recommendations. For example, they may focus on
financing options or retirement planning. Others may specialise in estate planning to assist clients with their
best options for establishing a trust and securing life insurance. Another option includes clients with efforts
to reduce their tax obligations, such as philanthropic donations.

Where to find a private banker

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College of Business and Accountancy
Puerto Princesa City

If you have substantial assets in your current bank, your bank will probably find you. The large
national banks with well-known names generally have private banking divisions and are likely to reach out to
those with large balances. Smaller banks often find clients through word-of-mouth, he says.
If you are in the fortunate position of being able to choose whether to use a bank’s private banking
services, consider the relationship you want from that institution. Your current banking relationship may
suffice if it meets your needs and you already have a strong team of financial advisors. But if you have
substantial assets and will rely heavily on your banker’s advice, a private banker could be an important part
of your team.

How to become a private banker

Here are the steps to follow for how to become a private banker:
1. Earn a degree
Most financial institutions seek candidates who have earned a degree from a university. Focus your studies
in an area like accounting, business, finance or another similar field. You may also be able to complete
training programs that prepare you for a career in the finance industry.
2. Pursue professional development options
Some financial institutions may require or prefer that you obtain a relevant professional certificate. The
Institute of Banking and Finance Singapore (IBF) works closely with the Monetary Authority of Singapore
(MAS) to provide programs and examinations related to financial practitioners' professional competencies. A
common examination for private bankers to complete is the Client Advisor Competency Standards (CACS)
Assessment. This prepares private bankers who work in client-facing roles to provide financial advisory
services to individuals.
3. Gain relevant experience
Pursue opportunities to gain experience in the financial industry. This may involve beginning your career
working as a financial analyst or a similar profession, or you may obtain a position as a junior private banker
at a financial institution. As you begin your career, it's important to focus on becoming successful at managing
large portfolios. This may be helpful as you seek more advanced roles because some institutions require you
to have experience with overseeing specific dollar amounts of portfolios.
4. Consider another degree
As you advance in your career, consider pursuing an additional degree. Earning a higher-level degree may
provide you with more career opportunities and demonstrate your expertise. Select a similar field of study as
your initial degrees, such as accounting, business, or finance.

Private Banker Skills

Working as a private banker requires developing a specific skill set. It's important to have a mixture of both
hard skills, which are the technical skills related to this particular job and soft skills, which are traits related to

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College of Business and Accountancy
Puerto Princesa City

your natural talents and habits. In general, you may learn hard skills through formal training, whereas soft
skills are innate abilities. However, it's possible to develop soft skills over time through experience.
Here are some important skills to develop if you hope to become a private banker:
1. Industry knowledge
Working as a private banker requires an excellent understanding of finance and the banking
industry. It's essential that you understand credit and lending practices and various banking and financial
systems. It's also important that you're able to analyze financial information, so you can create and
implement recommendations for your clients. Keeping up with current events may also help you maintain
a good understanding of the industry and ensure you follow all compliance requirements.
2. Interpersonal skills
Interpersonal skills help you understand other people and build relationships with them. Excellent
interpersonal skills are an essential requirement for becoming a private banker because your work
involves working with all types of clients. These skills can help you develop strong connections with your
clients and earn their trust, helping you have beneficial long-term relationships with them.
3. Communication skills
Communication skills include the skills that allow you to receive, process and share
information through both verbal and written methods. It's essential to have excellent communication
skills, so you're about to speak with clients and form relationships with them. This is also helpful, so
you're able to provide your recommendations to them and explain why you made these decisions.
4. Networking
Networking refers to meeting new people and building relationships with them. Networking
is often important to help you create beneficial professional connections, but it may also help you
create an excellent client base. It's important to have good networking skills to seek potential new
clients, develop relationships with them and potentially use these connections to meet more people.
5. Analytical thinking
Analytical thinking refers to the ability to analyze a situation and the factors that affect it. It's
important for you to have great analytical thinking skills as a private banker, so you can expertly
analyze your clients' financial matters and provide the proper recommendations. This skill may also
help you consider situations from other perspectives, which may be beneficial when trying to
determine what decisions your clients may choose.

Private Banker Work Environment

Private bankers can work in many areas of the financial services industry. However, they primarily
work for larger financial institutions. They typically work in traditional office settings, and they may work during

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Puerto Princesa City

standard business hours during a normal workweek. However, their work may also require working nights
and evenings, such as if they accompany a potential new client to dinner.
References:
What Is Private Banking? (thebalancemoney.com)
What Is Private Banking And How It Works – Forbes Advisor
https://www.investopedia.com/terms/p/privatebanking.asp
Private Banker: Career Path and Qualifications (investopedia.com)
In Private Client Business, Personal Traits Are Essential | eFinancialCareers
What Is a Private Banker? Should You Have One? – NerdWallet
https://www.thebalancemoney.com/what-is-a-public-bank-5235618
https://www.investopedia.com/terms/p/privatebanking.asp
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