Private banking is a bundled financial service for wealthy individuals and families that pairs you with a dedicated relationship manager who coordinates investment management, lending, trust and estate work, and tax planning under one roof. Most institutions set the entry point at around $1 million in investable assets, with deeper service tiers opening at $5 million to $10 million. The model is built for people whose finances are complicated enough that standard retail products leave gaps.
What You Actually Get
The defining feature is the relationship manager. This person is your single point of contact and pulls in the bank’s internal specialists as your situation calls for them. Need a custom loan structure? The credit team gets looped in. Rethinking your estate plan after selling a business? Trust and tax advisors join the conversation. You aren’t calling a general service line and explaining your situation from scratch each time.
The scope stretches well beyond checking accounts and CDs. A private bank is set up to handle the whole picture: personal investments, business holdings, real estate, philanthropy, and the connections among them. If you sell a business and want the proceeds to fund a charitable trust that also reduces estate tax exposure, the bank coordinates that across departments instead of leaving you to stitch together advice from three separate firms.
Investment Management
Portfolios look different from what a standard brokerage offers. Alongside publicly traded stocks and bonds, private banks provide access to alternatives: private equity, hedge funds, venture capital, and direct real estate deals. These are legally restricted to investors who meet wealth thresholds set by federal securities law. Most private funds require accredited investor status, which means a net worth above $1 million excluding your primary residence, or individual income above $200,000 in each of the prior two years (or $300,000 jointly with a spouse) with the same expected going forward.1U.S. Securities and Exchange Commission. Accredited Investors The most exclusive funds require qualified purchaser status, which demands at least $5 million in net investments for individuals.2U.S. Securities and Exchange Commission. Defining the Term Qualified Purchaser Under the Securities Act of 1933 The bank handles the verification and the access pipeline.
Strategy is built around your specific risk profile rather than dropped into a model portfolio. The tradeoff with alternatives is illiquidity. Money can be locked up for years, so portfolio construction has to account for when you’ll actually need cash.
Trust and Estate Work
This is where private banking earns its keep for multi-generational families. The 2026 federal estate tax exemption is $15 million per person, so a married couple can shield up to $30 million from estate tax.3Internal Revenue Service. What’s New – Estate and Gift Tax For families above that threshold, or those worried about future legislative changes, the trust and estate team becomes central.
Irrevocable trusts are the workhorse. Once you transfer assets into one, those assets generally leave your taxable estate and step out from under the 40% federal estate tax rate. The bank often serves as corporate trustee, providing professional administration and continuity that doesn’t depend on any single person’s availability. Corporate trustee fees typically run between 0.25% and 1% of trust assets annually, with the rate declining as the trust grows.
Philanthropic planning sits inside the same advisory framework. The bank can help you establish a private foundation for maximum control over grantmaking or a donor-advised fund for a lower-overhead approach. Both offer immediate tax deductions but differ significantly in administrative burden, minimum funding, and public disclosure.
Specialized Credit
One of the most-used private banking products is the securities-based line of credit (SBLOC). It lets you borrow against your investment portfolio without selling anything, which avoids triggering capital gains on appreciated positions. Interest rates are typically lower than personal loans or standard credit lines.4FINRA. Securities-Backed Lines of Credit Explained
The risk is real. If your portfolio drops, the bank can issue a maintenance call requiring you to post additional collateral or repay part of the loan within two or three days. If you can’t meet the call, the bank can liquidate your securities to cover the shortfall, often without giving you advance notice.4FINRA. Securities-Backed Lines of Credit Explained A forced sale during a market downturn locks in losses at the worst possible time.
Beyond SBLOCs, private banks structure lending against less conventional collateral: fine art, private aircraft, or commercial real estate development. Repayment terms and covenants are tailored to each asset’s cash flow profile. That willingness to underwrite bespoke deals is a major draw for clients whose wealth is tied up in hard-to-finance assets.
Who Qualifies and How You Get In
Minimums vary by institution but generally start around $1 million in investable assets for basic private banking. The most exclusive ultra-high-net-worth groups often require $5 million to $10 million. “Investable assets” typically means liquid holdings: stocks, bonds, cash equivalents. Home equity and the value of a closely held business are generally excluded from the calculation, even though they add exactly the kind of complexity the bank is built to manage.
Banks tier services by asset commitment, so higher balances unlock more specialized access, sometimes including direct conversations with the chief investment officer or invitations to co-invest alongside the bank’s own capital. Dollars aren’t the whole story, though. A client with $3 million spread across international trusts, a business interest, and multiple currencies is exactly the profile private banking is designed for. Someone with $5 million sitting in a single domestic savings account may not need the full service suite at all.
Onboarding is more involved than opening a regular account. Federal anti-money laundering rules require the bank to verify your identity through a Customer Identification Program, collecting your name, address, date of birth, and tax identification number at a minimum. Business accounts also require corporate registration documents and information on ultimate beneficial owners. High-value clients often face enhanced due diligence, including screening against global sanctions lists and databases of politically exposed persons. Expect several weeks, not days.
What It Costs
The dominant fee model is an annual charge calculated as a percentage of assets under management. Industry averages hover around 1% for portfolios in the low millions, with rates falling as the asset base grows. A client with $50 million or more can often negotiate below 0.50%. The sliding scale is designed to encourage consolidation: the more you park with one institution, the lower your blended rate.
Services outside routine portfolio management often carry separate charges. Trust administration, complex estate work, and family office services may be billed hourly or under a flat annual retainer. Some banks aim for an “all-in” arrangement where the AUM fee covers investment advice, performance reporting, and basic planning, but transaction-based charges can still appear for specific brokerage trades or foreign exchange. Ask for the complete fee schedule before signing on, and pay attention to which services are bundled and which trigger additional charges.
One point catches people off guard. Investment advisory fees are no longer deductible on your federal return. The Tax Cuts and Jobs Act eliminated the deduction for miscellaneous itemized expenses in 2018, and subsequent legislation made that elimination permanent. So a 1% AUM fee on a $5 million portfolio costs $50,000 a year with no tax offset. That makes fee negotiation and service comparison more consequential than they used to be.
What to Watch For Before You Sign
Which Standard of Care Actually Applies
Not every piece of private banking advice carries the same legal duty, and the distinction matters more than most clients realize. When the bank’s advisory arm operates as a registered investment adviser, it owes you a fiduciary duty and must act in your best interest on an ongoing basis, including a duty to monitor your portfolio over time. When the bank’s brokerage arm makes a recommendation, it operates under SEC Regulation Best Interest, which requires acting in your best interest at the time of the recommendation but does not impose the same ongoing monitoring obligation.5U.S. Securities and Exchange Commission. Regulation Best Interest – The Broker-Dealer Standard of Conduct
Many private banking relationships blend the two. A managed investment account may fall under the fiduciary standard while a one-off bond purchase through the brokerage desk falls under Regulation Best Interest. Ask your relationship manager directly which standard applies to each service. The answer should be specific, not a vague assurance about always putting clients first.
Proprietary Product Conflicts
Private banks sometimes steer client portfolios toward the bank’s own in-house funds or pooled vehicles. The bank earns additional fee income from managing those products on top of the advisory fee you’re already paying. Federal bank examiners have flagged situations where fiduciaries continued investing in poorly performing proprietary funds to maintain assets under management, generating fees at the beneficiary’s expense.6FDIC. Compliance/Conflicts of Interest, Self-Dealing and Contingent Liabilities
Not every proprietary product is bad. Some are genuinely competitive. Ask what percentage of your portfolio sits in the bank’s own products, whether third-party alternatives were considered, and how the bank’s compensation changes depending on which products end up in the account.
Where FDIC and SIPC Coverage Stops
FDIC insurance covers bank deposits up to $250,000 per depositor, per insured bank, for each account ownership category. For someone with $5 million in cash, that standard limit covers a fraction of the total. Private banks help maximize coverage by structuring deposits across different ownership categories (individual, joint, revocable trust) and sometimes using deposit networks that spread cash across multiple FDIC-insured banks behind the scenes. A trust account with five or more beneficiaries can be insured up to $1,250,000 at a single bank.7FDIC. Your Insured Deposits
Investment accounts are treated differently. FDIC insurance does not cover stocks, bonds, mutual funds, or other securities.7FDIC. Your Insured Deposits If the brokerage fails, the Securities Investor Protection Corporation (SIPC) covers up to $500,000 in securities per customer, including a $250,000 limit for cash held in the brokerage account.8SIPC. What SIPC Protects For a client with tens of millions at one brokerage, the SIPC ceiling is a rounding error. Those gaps matter when you’re deciding how to distribute assets across institutions.
Portability
Some private bank investment products, particularly proprietary funds and structured notes, cannot easily transfer to another institution. If you decide to leave, you may face liquidation and the tax consequences that come with it. Account transfer fees are relatively modest, but the real cost is the friction of unwinding positions that were designed to live inside that bank’s ecosystem. Before committing to any proprietary vehicle, ask what happens if you want to move those holdings somewhere else in three years.
When Private Banking Isn’t Worth It
Private banking is not a universally better version of regular banking. If your financial life is relatively straightforward, the cost-to-benefit ratio can be poor. Paying 0.75% to 1% a year on a portfolio that could be handled with low-cost index funds and a good estate attorney is expensive convenience, not sophisticated strategy. The value shows up when your situation genuinely requires coordination across investment, tax, credit, and estate planning, and when trying to do it yourself or across multiple firms would cost more in missed opportunities than the fees.