In today’s financial world, business owners understand that managing a family’s finances requires the same diligence and foresight as managing a company’s. Private bankers are a key resource in this process. With thousands of financial products and services available today, having a trusted resource to aid in navigation is crucial.
For example, private bankers can save their clients time by customizing personal or business loan structures, reducing turnaround times for products such as construction or bridge loans, and making it easier to meet crucial fiduciary deadlines. In effect, they become extensions of their clients’ businesses and families — and their chief financial advisers as well.
Smart Business spoke with R. Scott Wolfsen of MB Financial Bank N.A to get some insight into the benefits of private banking and the reasons owners should consider it.
What is private banking?
It is a comprehensive, advisory approach to personal financial management that gives clients a single point of contact for all of their personal financial needs.
Private bankers work closely with their clients to provide customized credit and cash management services that typically include checking and money market accounts, certificates of deposit, lines of credit, and first and second home mortgages. They also act as the liaison between clients and the other specialized wealth management services within the bank such as investment management and personal trust.
Why do business owners establish relationships with private bankers?
While the initial contact between banker and client may be driven by a specific loan or deposit need, business owners quickly see the advantage of having an established, trusted adviser to mitigate the difficulties associated with the complex financial environment in which they operate today. From buying that vacation home to saving for retirement, private bankers will bring together a team of competent, experienced professionals all working toward the client’s long-term goals.
Can’t business owners get the same type of service from their commercial bankers?
The private banking relationship is a supplement to — not a replacement for — the commercial banking relationship. While the typical business owner’s personal finances are often closely tied to his or her business, the personal needs and solutions are unique. The private banker works closely with the commercial banker to ensure that all the client’s financial needs are met as conveniently and completely as possible.
How does private banking benefit business owners?
The private banker provides a single source for a vast array of wealth management services and finds solutions based on a comprehensive understanding of the business owner’s ultimate goals and objectives. Having an established, trusted relationship often means shorter response times, faster solutions and greater flexibility in meeting the client’s needs. Most institutions also have customized products for the private banking customer with preferred rates, structure, or fees based on the total relationship.
What criteria would a business owner use when selecting the private banking institution best suited to his or her needs?
While similar, each institution will approach the private banking business in its own unique way. The important thing is to find an organization where you are comfortable with the culture as well as the people. For business owners, this often means banking where the company banks. Using a single institution for both business and private banking services ensures that all of their financial advisers are working toward a common goal with the most comprehensive information available.
Are there minimum requirements clients must meet before seeking private banking services?
The qualifications for private banking will differ from institution to institution but will generally include parameters for income, net worth, investable assets, and/or loan amounts. Most banks look for clients with personal income over $250,000, assets available for investment of $500,000, or personal lending needs over $1 million. That said, commercial banking customers not meeting these standards individually will often qualify based on the commercial relationship with the bank.
Business owners interested in establishing a private banking relationship should speak with their commercial banker to see what services are available.
Is there anything intangible that contributes to a strong, long-term private banker-client relationship?
The most significant intangible factor that guides the relationship is communication. Private bankers recognized that each business owner is unique with respect to their goals and objectives, their resources, and their time frame. Private bankers learn as much as they can about their clients, from special family needs to business succession plans. By working together on an ongoing basis and communicating regularly, the banker can ensure that the business owner’s financial needs are met both today and in the future.
R. SCOTT WOLFSEN is first vice president with the Private Banking Division of MB Financial Bank N.A. Reach him at (847) 653-2154 or [email protected].
