Priority Vs. Private Banking: Which Is Right For You?

Personal Finance

Priority Vs. Private Banking: Which Is Right For You?

Learn the difference between priority and private banking, and find out which is right for you.

Published on 14 November 2017

If you compare the different tiers of consumer banking to the classes on an airline, personal banking is similar to economy class, priority banking would be business class, while private banking would be first class.

How much money you have to deposit or invest with a bank will determine which category you fall into. In turn, this decision will impact the level of personalised attention you will get from your banker, and the amount of fees you will have to pay, and the preferential rates and range of services you will receive.

What is priority banking?

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Priority banking is the middle tier of consumer banking. It is targeted at the mass affluent, meaning you can qualify to be a priority banking customer by depositing or investing at least US$200,000 in a bank. The minimum investment amount might vary from one financial institution to another, but it typically stays in the low six-figure range.

The benefits of being a priority banking customer vary from bank to bank, but, generally speaking, being a priority banking client gives you access to market insights, financial expertise, and investment tools necessary to make your money work for you. You will be serviced by a relationship manager, who can connect you to the relevant specialist with the bank in the blink of an eye to help you make a more informed decision about your finances.

You will also be given the VIP treatment by way of a range of special services, which may include private ATM lobbies, concierge services, and, airport lounge access. Then there are the lifestyle privileges such as birthday treats, air miles, and – with one Singapore bank – even a medical concierge. Also, as a priority banking customer you may be eligible to receive fee waivers on certain transactions such as international ATM withdrawals and fund transfers.

What is private banking?

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The highest and most exclusive tier in the consumer banking world, you qualify to be a private banking customer by depositing or investing at least US$1 million in a bank. Clients in this bracket are known as high net worth individuals (HNWI), and they are given all the benefits of priority banking and more.

Each private banking client is serviced by a relationship manager and sometimes even an investment advisor. These individuals will work together with you to decide how to make your money grow, based on your investment goals, risk profile, tastes, and preferences. As a private banking customer, you will also be given access to “family office” services such as estate planning as well as tax, trust, and philanthropic advisory services.

It is not uncommon for private banking clients to constantly be invited to presentations on economic opportunities and forecasts, and be sent research reports from the bank’s analysts and researchers. Lifestyle perks can range from credit cards with unlimited spending limits to private jet access and travel concierge.

Key differences between priority and private banking

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  1. Assets under management (AUM): Priority banking has a lower minimum investment amount of around US$200,000, compared to private banking at around US$1 million.
  2. Relationship manager (RM) to client ratio: Given the more sizable minimum AUM required to be a private banking client, the RMs tend to service a smaller number of customers than in priority banking. This translates into more personalised attention, with frequent consultations to review your portfolio and ensure it is in line with your financial goals.
  3. Suite of services: Since there are larger amounts of assets being managed, the suite of services offered in private banking are typically more varied and robust. These could include everything from wealth planners to insurance experts, foreign exchange traders, and research analysts.

Which is right for you?

Your decision on the amount assets you want to invest or deposit in a bank will likely determine whether you become a priority or private banking client. Investors typically make up their minds based on what the bank offers, and can even be clients of multiple banks across different tiers.

Another important factor to consider when choosing between private and priority banking options is the amount of fees you will have to pay – this will vary from bank to bank, and private banking services often come with higher fees.

Take the time to research each bank and the services and benefits they offer, the fees they charge, and their overall investment strategy before determining which bank and banking tier – personal, priority, or private – is right for you.