Have you ever wondered how wealthy and busy Aussies run bank errands?
If you’re no stranger to long banking lines, banking rush hours (and days), and the hassle of offline ATMs, you may think that business executives and wealthy professionals undergo the same trial.
That’s true—if they opt for retail banking designed for the mass market.
Private banking, on the other hand, is a specialised one-on-one service offered to clients through a dedicated banking assistant or team. It extends personalised financial services to private banking clients, going as far as managing your investment decisions.
Australian banks offer private banking services to high-net-worth clients—people with frequent bank transactions but barely have any time due to their nature of work, security, or health conditions.
Common private banking clients include:
- Business executives
- Business owners
- Real estate Investors
- Wealthy retirees
How is Private Banking Different from Retail Banking?
Major banks and lenders assign a separate banking department to manage and transact with high-income and high-net-worth clients.
In private banking, you will have a designated banker who pays extra attention and advice to help you grow your money. That means you don’t have to speak with call centres and multiple bank branches when you need assistance.
Think about Batman’s Alfred or Tony Stark’s Jarvis—but for banks. It’s like your special friend at the bank who takes care of your money and helps you manage it.
Additionally, private banking features different credit divisions, each with financial specialists trained to understand complex financial structures that commonly apply to wealthier individuals. These cases commonly involve a higher level of risk.
For example, a retail banker who typically manages low to mid-level net-worth clients may not understand how to process complex deals that involve wealthier individuals with multiple businesses and assets held in multiple trusts. In most cases, we will often see these deals being declined.
Is Private Banking More Expensive than Retail Banking?
Getting a higher and more personalised service straight from banks doesn’t come without a price. After all, you’re hiring a banking specialist to manage your account.
The math adds up. Highly experienced bankers managing a few wealthy clients means higher interest rates to offset the service costs.
Besides, banks offer private banking as an exclusive service, and by appointing your account manager to get you the best deals available, they often get away with charging more.
By doing so, private banking rates cannot match (or even beat) discounts offered through retail banking with the help of a mortgage specialist.
Am I Eligible to be a Private Bank Client?
Every major bank varies. But on average, you must make at least $250,000 annually and have about $2.5 million in lending or deposits to qualify for private banking.
We offer financial solutions for complex deals.
If you’re interested in cutting the cost of your loan repayments, we highly recommend seeking a mortgage broker. Our senior mortgage brokers at Mortgage Pros understand the needs of high-net-worth borrowers and know which lenders offer the lowest rates for large loans.
Speak with our brokers at 1300 030 388 or complete our assessment form and we’ll discuss which loan solution best fits your unique finance needs.
What are the pros of private banking?
The role of a private banker cannot be understated. Private banking offers a range of benefits for individuals with significant financial wealth and assets.
Some of the key advantages include:
Personalised financial advice
Private bankers provide personalised financial advice and wealth management strategies to help clients achieve their financial goals. They take the time to understand each client’s unique financial situation, risk tolerance, and objectives.
The financial value that a private banker provides can be quite substantial; finding the right private banker is key to maximising wealth while mitigating necessary risks.
Bespoke investment solutions
Private bankers offer bespoke investment solutions and portfolios to meet clients’ specific needs and preferences. This may include priority access to exclusive investment opportunities and asset classes.
Risk management & ongoing assessment
Private bankers help clients manage risk by diversifying their portfolios and providing insights into risk mitigation strategies. They can also offer advice on hedging against market fluctuations to improve greater wealth protection in times of high volatility.
Are there cons of private banking?
Price isn’t your sole obstacle when opting for private banking. Policies, inclusivity, and account management often play a role in determining whether or not private banking suits you.
Having a separate bank for each product
If you need a facility to take care of your home, business, and investment loans, getting the best deals for all of them is rare in a single bank.
In many cases, you might find that one bank is the right choice for your home loan, while another offers better commercial or investment loan rates. Link each one to a private bank, and you may manage multiple loans from different banks.
Talk about complex!
Unique lending policies
Because each bank has its own ideas about what’s risky and safe, we often think it’s helpful to match your financial situation with the right lender.
For instance, if Bank A considers your target commercial property low-risk, getting a loan from Bank A makes perfect sense. If you’re planning an investment that Bank C thinks is a good opportunity than Bank A, you may want to put your money there.
While many lenders have room for discussion and may adjust their lending policies to cater to different loans, it’s more convenient to go with banks that offer the exact solutions that you need.
Lack of risk diversification
We strongly advise against putting all eggs in one basket. If push comes to shove and you experience financial hardship, your bank may act ahead on this risk and take control of your situation.
For instance, say you have your home and personal loans tied up in one bank. When that bank performs an annual review and frowns upon your current financial health, it may request you to pay off your debt.
If you used your home as security, your property is at imminent risk! National Consumer Credit Protection Act (NCCP Act) only protects consumers borrowing money for personal or household reasons.
By using your home as security for commercial debt, the loan won’t be covered by the NCCP Act and other consumer protection laws. In other words, your bank may bypass government regulations and take ownership of your home to recover the money you owe them.
We advise diversifying your loans across different banks to mitigate this risk. But that also means using private banking for each loan will cost you more.
What if I switch to a mortgage broker?
Having different loans managed by multiple private banks will potentially cost you more than partnering with a Mortgage Pros specialist. Using a mortgage broker to manage your loan lets you access the following benefits:
Credit expertise and exclusive deals
Mortgage brokers specialise in finding the best loan options that fit your unique needs. We’ll take you through our panel of lenders so you can compare different offers in one sitting.
Save more with better rates
Most high-income clients accept the first bank that approves their loan application. With Mortgage Pros, you get a vantage point of Australia’s banks and find better rates by comparing lenders.
Your partner mortgage specialist will also discuss every option fit for your needs so you can make informed decisions and potentially save money over time.
This is where we stand out the most. Instead of having a private banker for each bank you owe, our mortgage broker will streamline your lending process. They will do the leg work of shopping and negotiating with your lenders so everything is straightforward, and you don’t need to deal with multiple bankers.
Access specialist services without extra cost
While you would pay extra to access private banking services, the lenders pay our Mortgage Pros brokers and not you. For transparency, we get a commission from your lender once they approve your loan.
This setup saves you more since you’re not paying them directly for their services. Plus, we’ll get you the best mortgage rates competing with retail banking rates and not with private banks.
Speak with our mortgage brokers today
Mortgage brokers have all the answers if you’re looking for a better alternative to private banking.
Call us at 1300 030 388 or fill out our online assessment form, and our senior mortgage specialists will take you through bespoke lending options tailored to your unique needs.