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Wealth Manager or Private Banker—Which Should You Use?

With increasing wealth comes increasing responsibility, whether you want that responsibility or not. You may have accumulated wealth over many years of hard work or inherited much of your wealth. Either way, it is crucial to set a strategy in place to not only preserve that wealth for tomorrow, but to be able to enjoy it today, while leaving some for financial succession if desired.

Private Bankers and Wealth Management firms are both eager to help you with this responsibility, providing a one-stop shop for all your financial needs. However, the choices and execution are substantially different. Which is best for you and which should you use?

Financial Institutions have Developed and Evolved to Meet Clients’ Needs

We only have to look as far back as the 1950s to see that depository banks used to be the primary source of financial assistance, and professional investment management was just in its infancy. But fast forward 70 years, and we find that your financial welfare requires much more than bank accounts, savings bonds and passively monitored trusts.

Personal financial planning now entails a fluid mixture of expertise that may include investment portfolios, tax accounting, estate planning, insurance strategies, mortgage brokerage, asset/property management, legal services, retirement planning, succession planning and philanthropic guidance.

Likewise, numerous financial institutions and independent firms offering a multitude of financial solutions have developed and evolved over the years to meet clients’ needs. Wealth Management Firms and Private Bankers both seek to alleviate the increased complexity of your financial welfare.

On paper, the descriptive offerings of the financial services presented by Private Bankers and Wealth Managers may sound similar; however, “buyer beware”—they can actually be quite different. Products and services provided by the former may be more “Bank Centric,” while those provided by the latter may be much more “Client Centric”—a reflection of their underlying business models.

Private Banker: The Express Shopper in Your One Stop Financial Supermarket

One of the primary perks offered by Private Bankers is that you will never have to line up for banking services and in fact you can have as little contact with the bank as you wish, having been assigned a personal Private Banker as your intermediary.

Much like supermarkets providing the service of an in-store “Express Shopper” who will help you fulfill your order and bring your purchases to your car, private banks provide you a personal “Private Banker” who presents you with a menu of off-the-shelf products and services. Like the Express Shopper who may substitute your choices for what the supermarket has on its shelves, the Private Banker can only provide you with the bank’s proprietary products and services.

There is a caveat—the Private Banker is largely paid by the Bank through commissions earned on the products and services presented to you. The more the Private Banker sells you, the more the Private Banker earns, which should always prompt their clients to question whether the products are indeed in their best interest.

Wealth Manager: Your Fiduciary Planner and Interface

Now, imagine that your express shopper isn’t confined to one supermarket. What if the express shopper could shop for your favorite food products, best cuts of meat and freshest produce anywhere in the city or even anywhere in the world. This is what a Wealth Management Firm is able to do in contrast to the constraints of a Private Banker: the Wealth Manager has the ability to search for the best-in-class providers of the exact services you need.

Furthermore, none of us like being sold to. The Wealth Manager will build a long-term relationship with you and will not look at each meeting as a sales opportunity to sell you products. The Wealth Manager is not paid by commissions but by a fully transparent fee schedule for the planning services they provide you. They will then act as your fiduciary interface with any and all service providers you may use.

The greatest skillset of the Wealth Manager is to establish, with your input, a financial management plan that fulfills all your needs and desires, while at the same time educating you on the choices to be made so you gain greater confidence through understanding the process and finally have the financial peace of mind you want.

The Bottom Line

For many, the first exposure to financial planning is through an introduction to the Private Banking services of your current savings and chequing account institution. The asset threshold for these services is often lower at larger institutions than at independent Wealth Management Firms.

However, as your assets continue to grow and your financial circumstances become more complex, the services and expertise of an independent Wealth Management Firm will more likely be able to fulfill your needs.

Preserve and Build Your Wealth with Bloom

As an independent investment management firm, Bloom Investment Counsel, Inc. may be one of the experts recommended by your Wealth Manager to manage your investment portfolio. Through our clients we work with a variety of Wealth Managers as well as many other types of financial service providers that may contribute to your overall financial management program.

At Bloom Investment Counsel, our personalized investment portfolios are constructed to meet each client’s unique goals. You and your family’s financial situation is private, personal and unique—and so is your investment portfolio. We are happy to work with you and your Wealth Manager to protect and build your family wealth.

Visit Bloom’s website to learn more about our investment approach or get in touch with Bloom to find out what we can do to help you and your family protect and build wealth.

This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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