Is private banking really worthwhile?

[limster]

As much as people here wants to think such PB stuff is pointless.. but hey... why are PBs still around and those ppl who use PBs are likely richer than anyone here?

The same people who think PB is pointless probably also think that owning a Lambo or Ferrari in Singapore is pointless..... But those who own Lambo and Ferrari are probably not interested in their opinion

 

[hwmook]

The same people who think PB is pointless probably also think that owning a Lambo or Ferrari in Singapore is pointless..... But those who own Lambo and Ferrari are probably not interested in their opinion

That is true. If I got too much money, I also want to waste money to buy a lambo.

 

[Suleyman]

The basic steps on IBKR are:
1. Select the fund
2. Decide the sizing
3. Choose to buy or sell

If this is difficult, I don't know what to say.

It's not difficult. It's time consuming. Not the execution (step 3), but step 1 & to some extent, 2. Unless you tell me you decide which fund to buy based on how lucky the ticker symbol makes you feel, it's a fair amount of time you need to read up, compare & decide which fund & how much to buy (just consider how much time you spend reading hwz money mind as a start lol). That's time (& interest) that the typical wealth banking customers do not have.

 

[duhduhduh]

I know it's old thread but are SCB fees jumping up that much on PB level? Also what is the requirement for SC SG Private Bank, does someone know?

SC PB schedule of fees is showing trading fees much higher e.g. 0.4% up to 1% on foreign exchanges (min. US$150), annual custody fees of 0.2% (waived for non PB customers), US$5,000 annual account maintenance fees (for fail below US$2M).

To me it seems it's much better to stick to Priority or Priory Private.

Edit: so it looks like SC PB is US$2M required:
https://av.sc.com/corp-en/content/docs/pvb-singapore-schedule-of-fees-and-charges.pdf

Let me know if I am missing something - What is the point of PB today when there is Interactive Broker?

If you are on PB, you will not even want to trade all these plain Vanila.

You are likely to go for things like PE funds, Hedge funds, customised structured products.

For instance if a PB customer wants to get some equity shares, they dont even go and buy to select fund/size. They do it via structured product (which charges a diff fee) and they get the execution of the shares at a lower strike price much lower than the market price (in the instance of an accumulator). They can do othe realms of products like FCNs to get coupon payment without even owning the shares (thus save on custody fees and exchange fees)

And also PB got some offerings that is very interesting for them to do some tax planning. For instance, peasants like us can only do Irish domiciled ETFs, but the people at PB can do something more and some PB can set up vehicles purely just for this kind of purposes.

 

[stiwipl]

If you are on PB, you will not even want to trade all these plain Vanila.

What if I want to trade "plain Vanila" but don't want to pay 0.2% custody fees? On US$2M invested 0.2% custody is US$4000. I don't want all these bells and whistles structured funds with 5% entry fees and 2% management fees

 

[reddevil0728]

What if I want to trade "plain Vanila" but don't want to pay 0.2% custody fees? On US$2M invested 0.2% custody is US$4000. I don't want all these bells and whistles structured funds with 5% entry fees and 2% management fees

Then you don’t need pb for that lor…

 

[duhduhduh]

What if I want to trade "plain Vanila" but don't want to pay 0.2% custody fees? On US$2M invested 0.2% custody is US$4000. I don't want all these bells and whistles structured funds with 5% entry fees and 2% management fees

Then you are not the kind of person who PB is targeting. why are you even signing up for a PB a/c? for the status? for the freebies/angbao? Or you just want to flaunt your wealth because you get a dedicated advisor? If someone does send you the invite, then you can just politely reject them. Because your current needs and what they offer do not match at all.

But bear in mind that a PB provides a suite of services and not limited to investment products. They also have mortgage/insurance financing and wealth planning for the next generation of the family. So it is not just an "upgraded" tier of investments. Do not confuse private banking with your privilege banking/treasures banking.

In a PB, there are also different categories, the HNW, UHNW and also those family office. Those at the extreme regions will not bother about 1% fees or what because they don't trade these vanilla at all.

I mean from your responses - I am sorry but you are likely to fall into the segment whereby you just nice meet the PB criteria, but you are not "rich" enough to be of the upper class in your PB. Because a true damn wealthy person will go pass into thinking about the fees, but they think of the full picture of what they can get overall. tax savings, better services, and to get that cheap leverage facilities offered. Some of the clients can range in the extreme ends and some of them can actually get all your custody fees or 1% transaction fees waived to 0 due to their negotiation power with the RM.

If you are just met the criteria to open a PB a/c, then I suggest just close it and return to privilege banking/treasures banking, it is the same concept, big fish in small pond and small fish in big pond. You hold more power over the Retail banking RM who will want your 1million portfolio as compared to a RM in a PB.

 

[thelittlemonkeye]

This is what PB is about. Think big families like Bosch/Li Ka Shing/Rockefeller:

 

[duhduhduh]

Oh btw, different banks, different region has different entry requirements for a PB a/c hor.

E.g in India to open a PB is USD 1mio.
in China to open PB is also similarly to USD 1mi (or less, 6 million RMB)
in Singapore should be min USD 5mio

You try US banks... the minimum to open is so much higher.

 

[thelittlemonkeye]

You try US banks... the minimum to open is so much higher.

If a person/family hits the requirement for US banks, why would they choose the others . So other banks no choice lor. But that being said, most of these people don't only use one bank

 

[reddevil0728]

This is what PB is about. Think big families like Bosch/Li Ka Shing/Rockefeller:

Those families you mentioned is not pb already. Is family office

 

[reddevil0728]

If a person/family hits the requirement for US banks, why would they choose the others . So other banks no choice lor. But that being said, most of these people don't only use one bank

I think the issue here is people here who don’t understand why rich people bother about pb…

 

[wutawa]

rich ppl prob. i am contented with priority fees.

 

[reddevil0728]

rich ppl prob. i am contented with priority fees.

That’s for equity trading right

 

[celtosaxon]

My impression is that for private banks, it is not that they are attractive in a retail sense, rather - they solve some weighty problems for people that have way too much wealth than they know what to do with, because things just get unwieldy. If you are not in this situation, then it isn’t going to be of any value to you. I think minimum 8 figure net worth is when it might start to make sense.

 

[arctician]

guess it depends on which spectrum you are on, newly minted HNW, old school HNW, UHNW, family office etc. For those who are UHNW, their time is money, so they will need a butler-like service...Private RM who can do immediate execution on their instructions, these profile are the typical CXOs or partners

On the other end you have newly minted PB clients with starting AUM of maybe 1-2M+, typicale high income salaried employees who progress in career and maximize savings to achieve what they have today, so they will be be sensitive to transactions fees, costs and advocate DIY, because these are the values which made them successful in first place.

No right or wrong it all depends on needs, their rewards are quite generous though so make sense to take and go even if one is not keen on their services... Citigold PC, DBS TPC, HSBC Jade, all offer $5k and up just for onboarding

personally i like to keep things simple, so while they offered leverage bond financing, structured pdts etc, i dont see an improvement in risk reward ratio vs i.e. DCA in STI reits, The only reason why ROE may be higher is due to leveraging, but it cuts both ways..so just took reward and go

Those Uhnw may not attain their wealth from PB services though, it may be real estate investments, their equity stakes in own company, or even their annual income, partners and CEO generally earned a few mil per year, in US its around $10-20M for CXO in fortune 500.

 

[Shiny Things]

Let me know if I am missing something - What is the point of PB today when there is Interactive Broker?

I’m being very broad-brush here, but at a high level, there are two needs that high-touch financial services cater to:
1) Personalised planning; and,
2) Hand-holding.

Hand-holding is easy to dismiss, because on these forums we’re mostly pretty savvy, self-directed investors. But there’s a reason why the ”wirehouse” brokers in the USA—Merrills, Morgan Stanley, and UBS… especially UBS, which is a terrible bank but still an absolute monster of asset-gathering—still have trillions of dollars in assets under management: not everyone is a savvy, self-directed investor. And people who have money but don’t know what to do with it will sometimes put their trust in the person in a nice suit.

It’s easier to make a case for personalized planning. If you’re, say, a Singapore resident but a US taxpayer, you’re going to have a whole lot of restrictions on what you can do, but also a whole lot of tax-minimisation opportunities, and not all of these rights and responsibilities are obvious. It can be useful to have someone who can guide you through all that stuff.

Or, let’s say that you’re in the fortunate position of having a huge lump of your net worth tied up in illiquid company stock. You might be able to come up with a hedging strategy by yourself for that lump of stock, but if you want to do it right, you’re going to need a passing familiarity with options markets, structuring, tax planning, maybe even a little bit of quant stuff… and it’s easier to outsource that to someone else.

But in most cases, for most people—even the people with a couple of million dollars in liquid assets—they don’t need that kind of help.

[…]For instance if a PB customer wants to get some equity shares, they dont even go and buy to select fund/size. They do it via structured product (which charges a diff fee) and they get the execution of the shares at a lower strike price much lower than the market price (in the instance of an accumulator). They can do othe realms of products like FCNs to get coupon payment without even owning the shares (thus save on custody fees and exchange fees)

Yeah, there’s an important distinction here between “PB customers can do these trades” and “PB customers should do these trades”. My view of the alternative-investments and structured-products space is that none of these products are worth it, until you get up into the UHNW or family-office space, and you get access to genuinely good emerging managers or large established funds. (And by “worth it”, I mean “are you going to get risk-adjusted returns that are worth the fees you pay?”.)

 

[celtosaxon]

I believe Family Offices only make sense to those with a minimum 9 figures. They are not cheap. They can do a lot for you, but probably the most important function is wealth protection - to prevent someone in the family from doing something stupid and putting that wealth at risk. Rich does not equal smart.

For those who do have a few million or more in wealth, a simple umbrella policy is often the most efficient wealth protection vehicle - it’s actually not about the umbrella policy itself, but the team of high powered lawyers you’d have on retainer, should the need arise.

 

[limster]

I believe Family Offices only make sense to those with a minimum 9 figures. They are not cheap. They can do a lot for you, but probably the most important function is wealth protection - to prevent someone in the family from doing something stupid and putting that wealth at risk. Rich does not equal smart.

For those who do have a few million or more in wealth, a simple umbrella policy is often the most efficient wealth protection vehicle - it’s actually not about the umbrella policy itself, but the team of high powered lawyers you’d have on retainer, should the need arise.

Firms like ARA's private funds division are also an option. With introduction, I think can get you in even if you only have 7 digits to invest, but that might be just buying units in their fund rather than full service family office style cash and fund management.