Private Bank or Independent Wealth Manager?

Imagine this: You have just sold a business, received an inheritance or experienced a liquidity event, and suddenly find yourself in possession of significant capital. The question then arises: Who is best placed to protect and grow your assets? Is it a private bank or an independent wealth manager? Here is a brief overview of the two options.

Private Banking: An Integrated “One-Stop Shop”

As well-known and recognized institutions in the financial world, private banks are often the first choice for individuals seeking advice or management services. This system holds certain advantages, notably institutional stability and a wide range of products and services. However, the model also presents a few disadvantages.

• Service Concentration: Private banks offer essential services for managing your capital in one place. They also offer integrated services, such as Lombard loans, wealth planning, tax services, and philanthropy, as well as an international network.

• Convenience and Credit: If you are looking for complex financing solutions (such as a tailor-made mortgage), the bank’s balance sheet can prove to be a powerful tool.

• The “House View”: However, your advisor’s room for maneuver may be limited, whether by institutional directives or incentives to favor in-house products. This can create a conflict of interest between the bank’s objectives and your own.

• Advisor Turnover: In large structures, it is not uncommon for advisors to change positions or firms every three to five years. With each transition, you must restart the process, re-explain your goals, and patiently rebuild the relationship.

The External Asset Manager (EAM): Between Independence and Agility

The independent wealth manager model is primarily characterized by the separation of advice and custody. Your assets are deposited in a major bank, but an independent entity manages them. Although the range of services is generally less extensive than that of a private bank, this model is much more responsive and agile.

• Objectivity: Since independent managers are not forced to prioritize internal investment products, they align their management and investment solutions exclusively with your interests. They can select the products and custodian banks they prefer.

• Flexibility: By relying on the services of an independent manager, you benefit from a vital practical advantage. If you are no longer satisfied with the services or fees of your custodian bank, you can transfer your assets to another bank without changing your relationship or your strategy.

• Transparency: While operational capacity varies depending on the size of the independent manager, they often offer increased transparency regarding fees.

• Continuity: Independent managers, by definition, have an entrepreneurial profile that commits them to a certain level of stability. This means the advisor you speak with today will likely be the same one tomorrow and the day after, ensuring a long-term vision and enduring service.

In addition to these criteria, you should consider your profile, the complexity of your financial situation, and how important it is to you to have a trusting relationship. These elements should largely inform your choice. It is also important to consider how important personalization and freedom of action are to you. Ultimately, isn’t the quality of the relationship more important than the service?