Private Banking Vs. Wealth Management

Jordan Dechtman | May 21, 2025

Do you know the difference between private banking and wealth management? If not, that’s OK. Many people don’t understand the difference — or even recognize that there is a difference at all.

In this article, we’ll break down:

  • the key differences between private banking and wealth management
  • the pros and cons of both, and
  • who should utilize which service

By the end of this article, you’ll have a much better understanding of the differences in private banking vs. private wealth management. Ultimately, that can help you decide which of these services is right for you.

Words to Know: Assets Under Management & HNWIs

Two terms that often arise when discussing private banking and wealth management are assets under management and high-net-worth individuals (HNWIs).

Typically, when people talk about assets under management (AUM), they’re referring to the total market value of investments managed by a financial institution on behalf of their clients. Specific assets may include:

  • stocks
  • bonds
  • mutual funds
  • exchange-traded funds (ETF’s)
  • hedge funds
  • private equity
  • real estate
  • commodities, and more

In the big picture, AUM refers to a very broad range of assets. Nearly every asset an institution or advisor might manage for their clients falls into the AUM category.

People who have liquid assets of at least $1 million after accounting for their liabilities are referred to as HNWIs. There is a subgroup within this category as well: ultra-high-net-worth individuals (UHNWIs). Exact definitions of UHNWIs vary, but Investopedia suggests a lower limit of a $30 million net worth.

HNWIs, and especially UHNWIs, tend to have more complex financial portfolios. Effective management of those portfolios requires than does the average person’s portfolio. This is where the foundational demand for private banking solutions and wealth management services comes from.

The Quick Truth about Private Banking & Wealth Management

We’re about to dive into the differences between private banking and wealth management. However, know that there is a great deal of overlap between the two services. Understanding what sets wealth management and private banking apart is especially important when choosing an option on the individual level.

What Is Private Banking?

Private banking is a financial service provided by banks for individuals with a net worth of over $1 million. This suite of services can be seen as the white-glove, high-touch service level of banking. The key fact to note here is that private banking centers on bank-related financial activity – lending, deposits, managing accounts, and similar offerings.

Private banking, at its core, remains focused on the transactional elements of banking. These include foundational processes like deposits, lending, and other traditional banking services. In addition to offering these transactional services, private banking clients may be provided services such as:

  • personalized service from a dedicated banker;
  • access to prime rates*, higher APYs**, discounted or waived fees, and customized product offerings;
  • direct assistance or introductions to professionals who can assist with broader financial needs;
  • offer access to unique investment opportunities and preferential terms on loans

Private banking is offered primarily to affluent individuals and brings a concierge-like feel to banking. Banks generally want to attract clients with significant assets, so they go the extra mile in providing service and support through private banking.

As is so often the case, we have to consider the pros and cons. Private banking can be fantastic, but not all that glitters is gold.

Potential pros of private banking

Dedicated service. As a private banking client, you’ll be assigned a dedicated banker. This individual will get to know you and your financial goals. Having a knowledgeable confidant can be helpful if you would rather not manage your finances on your own or appreciate the opportunity to benefit from their insight.

Preferred treatment. Private banks often offer their clients preferential treatment regarding loan terms, interest rates, and access to unique investment opportunities.

Ease and Access. One of the biggest perks of private banking is the level of convenience and access it provides. Having your investment, insurance, and tax planning all under one roof makes communication a breeze.

Potential cons of private banking

High minimums. To qualify for private banking services, you usually need a high net worth and liquidity for investment options, often with high minimum deposits.

Generalist experienceGenerally speaking, many of the bankers who offer private banking services are generalists in financial matters. They may be exceptionally well-versed in the ordinary, day-to-day processes of banking. However, they may not have the same level of overall knowledge and experience as wealth managers.

But, let’s face it, finances are rarely ordinary. You might be better off working with a specialist in the areas that are most important to you.

Fees. Private banking services often have higher fees than traditional banking products, quickly eating into your returns. Make sure you understand the fees associated with any private banking services before committing to them.

Lack of Flexibility. When you utilize private banking services, you often lose the opportunity to pursue opportunities outside of that bank’s operations. When a particular fund or product isn’t available through the bank, you may need to settle for an accessible alternative.

Examples of Private Banks

There are two primary approaches to private banking.

First, some banks work with the general population and assist HNWIs with high-level private banking services. These are main street banks that don’t cater specifically to wealthy individuals.

However, when they identify a customer has a sizable net worth, the bank may introduce them to the benefits of private banking. These are brands like Chase Private Client or Bank of America Private Bank.

The second approach to private banking would be the Goldman Sachs of the world. These private banks cater exclusively to affluent individuals. They do not manage accounts or assets for people who cannot meet their minimum deposit requirements.

What Is Wealth Management?

Private banking services are typically only available to high-net-worth individuals. However, wealth management eligibility will be determined by several factors, such as total assets under management (AUM).

Theoretically, anyone with investable assets can qualify for wealth management. Generally speaking, wealth management services are more valuable for anyone with investable assets of $250,000 or more. It is considered the more advanced option when weighing investment advisor services.

At its core, wealth management is about helping people grow and protect their assets. What services you’ll receive will vary from one wealth management firm to another. That’s by design, as these firms tend to have a strong foundation in the general nature of wealth management along with special areas of deep knowledge.

However, you’ll usually have a wealth manager who gets to know you and your investment goals and strategies over time. This is your point person.

In addition to helping you with your general money management, they can also coordinate with other professionals in your network. Or, they may work with financial professionals employed by the firm itself to provide services such as:

Additional services such as philanthropy planning, family office services, and Medicare planning may also be available depending on the wealth manager. How beneficial these services are for you will primarily be based on your unique financial needs and goals.

In the big picture, the private banker vs wealth manager distinction isn’t too difficult to understand.

Wealth managers tend to focus on growing and protecting your assets, ideally with a holistic approach. Private bankers are more focused on traditional banking services that are tailored to the needs of their HNWI clients. It’s often a broader scope for wealth management and a narrower one for private banking.

A wealth manager shares recent updates with clients in a face-to-face meeting.

What wealth management advisors can and cannot do

There are some important limitations on what wealth management advisors can do. For example, they cannot:

  • guarantee any results
  • provide legal services or advice without a license to practice law
  • perform accounting duties
  • act as a depository or provide transactional banking services

What they can do:

  • help you create a plan to pursue your financial goals
  • build a balanced and diversified portfolio
  • coordinate with other professionals to provide a well-rounded suite of services
  • stay aware of market trends and news
  • monitor strategies and progress toward financial goals

What services do wealth managers offer?

The services offered by wealth managers will vary based on the firm, but they typically include:

Investment management. This is the primary service provided by private wealth management professionals. They strive to help you grow your assets and protect your investments through various investment strategies.

Financial planning. Wealth managers can help you plan for your short-term and long-term financial goals. Areas of financial planning they assist with may include budgeting, retirement planning, estate planning, and more.

Tax planning.Minimize your tax liability through various strategies that can be employed by and between your financial and tax advisor.

Insurance consulting. An experienced wealth manager will understand the marketplace’s different insurance products and services. From short and long-term disability to financial products, they can help you identify the insurance solutions you need to protect your assets and loved ones.

Estate planning.Wealth managers and tax professionals can help you plan for the distribution of your assets after your death.

Philanthropy planning. Wealth management professionals can help you plan for charitable giving during your lifetime and after your passing. They can help to maximize the impact of your donations and secure tax advantages from them as wel

Family office services. Wealth managers can provide various services to families with complex financial needs, such as bill paying, estate administration, and more.

Medicare planning. Some experienced wealth managers can help you plan for the financial element of your health care needs as you age.

Who should use wealth management services?

Wealth management services are most beneficial for anyone with $250,000 or more in investable assets. However, wealth managers can customize services to meet your unique needs and goals.

If you’re not sure if wealth management or private banking is better for you, it’s a good idea to have some conversations to learn more about your options.

First, speak with a financial advisor at a wealth management firm to get more information. Then, talk with a banker about their private banking offerings. Compare what each provides and the priorities of each time of service.

A good way to determine the value difference between wealth management vs private banking is to speak with the professionals that offer each. This first-hand experience can help you make a more informed decision.

We believe it is crucial to entrust your financial success to specialists who have the experience to help you grow and protect your wealth. The most important thing is that you do your due diligence. Ultimately, you want to find the services that will guide you toward your financial goals with confidence.

Private Banking vs. Wealth Management: Which Service Does What?

There are some key differences to be aware of when it comes to private banking vs. wealth management.

Private banks typically focus on deposit-taking, lending, and other traditional banking services. They do often offer some kind of investment component, but options may be limited to those the associated financial institution provides.

Wealth management, on the other hand, is a broad term that can encompass everything from investment management to financial or estate planning and more. Wealth managers ideally take a holistic approach to their mission, taking banking into account but not largely limiting their services to that area.

Private wealth management vs. investment banking

Let’s clear up one more common question related to these types of financial services: What is wealth management vs. investment banking?

We know that wealth management is a wide-ranging discipline centered on growing and protecting client assets. Investment banking, in its standard definition, is a type of banking used by organizations to raise capital and access specialized advice for detailed and involved business transactions.

The good news is that investment banking is not a common need for individuals, even those with a high net worth. Most HNWIs don’t need to use the services of investment banks in their personal financial lives. These wealthy individuals may use investment banking for business purposes, but this is largely separate from managing their personal finances.

Simultaneous private banking and wealth management

If you’re considering private banking vs. wealth management, there is no reason you can’t consider utilizing both services, even simultaneously.

These services can complement each other when they’re used effectively. In other words, you don’t have to only choose private banking or wealth management as you build your financial strategy. Having access to both holistic financial planning and preferred status with a financial institution can lead to some useful advantages.

While wealth management and private banking can offer financial planning services, private bankers typically do not provide the comprehensive suite of services that wealth managers do.

Wealth management professionals are better suited to help you plan for your financial future because they have a more holistic approach that considers all aspects of your financial life. However, it’s very convenient to be able to discuss money management and investment strategies when you are at the bank managing your money.

Takeaway: Private Banking vs. Wealth Management

Wealth management and private banking services deliver convenience and opportunity to the affluent. Their specific goals and the services they provide are distinct. There is a noticeable crossover between the two, but the differences are clear.

Private banking centers on traditional banking services geared toward clients with a high net worth. Wealth management’s high-level objective is to protect and grow your assets in line with your needs and goals, both now and in the future.

When deciding which is right for you, it’s essential to consider those personal needs and goals.

Private banking could be a good fit if you’re primarily interested in traditional banking services like deposits and loans. If you’re looking for someone to help you manage your investments and grow your wealth, wealth management may be the way to go. Of course, you can consider using both services if all of those benefits are important to you.

Discover the benefits of wealth management with a complimentary assessment with Dechtman Wealth Management. Schedule your complimentary, no-obligation consultation, and we’ll help set you on a path to stability and growth.

*Prime rates are the interest rates at which banks lend to customers with good credit

**APY (annual percentage yield) is the real rate of return earned on an investment

Create a Plan for Achieving Your Financial Goals

Schedule Complimentary Assessment

man taking notes during a meeting

Dechtman Wealth Management is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.

This is not an offer to buy or sell securities, nor should anything contained herein be construed as a recommendation or advice of any kind. Consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. No investment process is free of risk, and there is no guarantee that any investment process or investment opportunities will be profitable or suitable for all investors. Past performance is neither indicative nor a guarantee of future results. You cannot invest directly in an index.

These materials were created for informational purposes only; the opinions and positions stated are those of the author(s) and are not necessarily the official opinion or position of Hightower Advisors, LLC or its affiliates (“Hightower”). Any examples used are for illustrative purposes only and based on generic assumptions. All data or other information referenced is from sources believed to be reliable but not independently verified. Information provided is as of the date referenced and is subject to change without notice. Hightower assumes no liability for any action made or taken in reliance on or relating in any way to this information. Hightower makes no representations or warranties, express or implied, as to the accuracy or completeness of the information, for statements or errors or omissions, or results obtained from the use of this information. References to any person, organization, or the inclusion of external hyperlinks does not constitute endorsement (or guarantee of accuracy or safety) by Hightower of any such person, organization or linked website or the information, products or services contained therein.

Click here for definitions of and disclosures specific to commonly used terms.

Form Client Relationship Summary ("Form CRS") is a brief summary of the brokerage and advisor services we offer.

HTA Client Relationship Summary

HTS Client Relationship Summary

Securities offered through Hightower Securities, LLC, Member FINRA/SIPC, Hightower Advisors, LLC is a SEC registered investment adviser. brokercheck.finra.org