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NBFC is a company registered under the Companies Act, 2013. NBFC is regulated by the Reserve Ba...
The term private banking refers to a customized line of banking & financial services offered to private individual banking clients that earn high levels of income &/ or owning sizable investment assets, such as ‘High Net worth Individuals’ (HNWIs). Such private services are distinctive from retail banking services offered or standard wealth management in that clients are assigned relationship managers or private banker that specifically deal with them personally. In general, it is a valued-added banking service in comparison to traditional banking that offers more sophisticated products & more personalized customer service.
The term Wealth Management refers to a professional investment & advisory service that offers financial planning, investment management & other types of specialized financial advice. Wealth management services are usually provided to clients such as high net-worth individuals & business owners, who seek professional financial advice from a financial specialist, generally incorporating all financial assets of the client, with the ultimate goal of growing his or her wealth.
Private banking facility is accessible in most developed economies with private banking services accessible from local, regional & global banking institutions. Private banking clients can include high -net-worths such as executives, business owners, entrepreneurs & sophisticated investors. Distinguishing it from standard wealth management accessible by retail customers, services provided can include product specialist investment advice, wealth protection advice, succession planning, philanthropy, family governance, wealth structuring as well as access to alternative investment opportunities that are not normally available to retail investors.
Wealth management facilities can be provided by an expert financial services firm or even a unit or subsidiary within a bank. Clients have access to a wide range of financial services from investment decisions & tax planning to real estate management. A customer may require having a minimum financial net-worth to be eligible for these services. The type of clientele & minimum criterion required for qualifying for these services may vary in different institutions & in different countries. Wealth management facilities are especially beneficial when an individual has a large number of assets & needs professional assistance to manage them. In some cases, wealth management services may also be customized to meet the client’s specific requests.
The very concept of Private Banking is quite broad. In all its appearances, it implies the service of wealthy clients, but the range of services provided & the principles of building work in different banks can vary significantly. Many banks operating in this segment of the market declare their readiness not only to provide preferential banking services but also to solve issues of managing the entire welfare of the client & his family. In foreign practice, this kind of services is called Wealth Management. The concepts of Private Banking & Wealth Management are not shared by many. They really overlap, but there are small differences in terms of the volume & nature of the services provided.
In the classical sense, Wealth Management is a broader concept, it includes work on optimizing the client portfolio as a whole, taking into account the client’s propensity for certain tools, & also considering his long-term tasks & plans. Private Banking implies the work of a banking organization with wealthy clients, aimed at managing the client’s assets within the bank, providing individual banking solutions on the best banking terms.
Private Banking is directly related to banking, these services cannot exist outside of the banking organization. Private Banking is primarily beneficial deposits, soft loans, top card products, additional non-financial consultations, which are provided for reference, according to the principle of concierge service. In addition, Private Banking means servicing customers on privileged terms compared to other clients, allotted by an employee who is always available & ready to approach the client’s tasks individually. Within Private Banking, investment solutions can also be offered, but they are only an additional part of the product content &, as a rule, are fairly standardized.
Service Wealth Management, on the contrary, can be rendered within the framework of consulting services outside the banking organization. On this principle, for example, multi-family offices are successfully operating. The main focus is to manage the entire wealth of the client. The work is aimed at developing an individual investment strategy that takes into account personal circumstances, long-term & short-term interests, & a comfortable level of risk. At the same time, a full range of available investment instruments is considered, ranging from securities to real estate & investments directly into a running business. Given the scale & variety of investment decisions, Wealth Management services also imply the ability to provide the client with expertise in tax litigation, legal matters, real estate, financial modeling & valuation of the business.
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