During uncertain economic times, business owners often find that a private banker’s holistic approach to their financial needs might provide the difference between success and failure. Private bankers are most effective when they take a 360-degree view of a client’s personal and business goals before recommending customized solutions.
Most personal bankers have the ability to offer products and services that meet clients’ needs for business succession planning, tax planning, investment growth, business financing or estate planning, but that’s only part of the success equation. A personal banker with little authority or autonomy to act or your behalf might compromise the results you need. It’s important for clients to inquire not only about the availability of services, but how the financial institution is structured, before selecting a private banker.
“Some financial institutions merely use private bankers as a means to gather assets, and some bankers only look at the personal investment side of the financial equation,” says Mark Rhein, Senior Vice President of Private Banking at Fifth Third Bank (Tampa Bay). “Clients only stand to benefit from a personal banking relationship when the banker understands what you’re striving to accomplish in all areas of your life, has an intimate knowledge of how those needs are intertwined and is empowered to act on your behalf.”
Smart Business spoke with Rhein about how CEOs can achieve a competitive advantage through a private banking relationship.
What is private banking?
Private banking is a comprehensive, advisory approach to personal financial management that gives clients a single point of contact for all of their 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, mortgages, credit cards, as well as investment management for stock and bond portfolios. They also act as the liaison between clients and the other specialized wealth management service within the bank, such as trust and estate-planning services.
What business advantages does a private banking relationship offer to CEOs?
Private banking should offer you quick and easy access to a local expert who can use his or her intimate knowledge of what you’re striving to accomplish in your business to tailor a comprehensive customized solution. For example, let’s say you want to launch a company expansion into Hong Kong. Your banker must comply with all banking regulations regarding the transfer of funds in and out of the country. Your private banker should be familiar with your sources of income and the regulatory environment surrounding wire transfers to and from Hong Kong and should be able to expedite the flow of international transactions. Through this type of service, CEOs can expand their business more quickly, and having a single contact for communications and accountability gives CEOs peace of mind.
Why does the hierarchy and structure of the banking institution matter?
When the bank utilizes a locally based operating model, the personal banker has much more autonomy to act on behalf of his clients and use his knowledge of the local marketplace to make customized recommendations. In fact, at Fifth Third Bank, while we use the same global products as other institutions, we just tailor them so they have a local feel. Having an established, trusted local relationship often means shorter response times, faster solutions and greater flexibility in meeting the client’s needs.
Why is a holistic view to account management beneficial?
Individuals who qualify for private banking are multidimensional people, so they need multidimensional solutions. For example, let’s say you are planning to retire in the next few years and perhaps you’re trying to save for your children’s or grandchildren’s educations. Given those objectives, you’ll need to create an effective business succession plan that will pass your company along to your children, while still providing a retirement income for you and your spouse. Achieving those goals might require greater asset protection, more insurance or the ability to save a greater portion of your income through tax reduction strategies.
What are the financial qualifications for personal banking?
Most individuals that qualify for private banking have a minimum of $350,000 to $400,000 in annual household income and $1 million in investment assets. There’s no fee for using the service and clients often benefit from preferred rates on savings and lending programs. Of course, one of the main benefits is the personalized service. At Fifth Third Bank, our personal bankers even make house calls on weekends and evenings, so we can accommodate the busy schedule and needs of our local CEOs.
MARK RHEIN is Senior Vice President of Private Banking for Fifth Third Bank (Tampa Bay). Reach him at email@example.com or (813) 306-2497.