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About Private Banking
by Angela Atkinson
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Overview
About Private Banking
Considering the unpredictability of the economy, Americans need to be especially financially savvy. It's important to financially plan for the important parts of your life, including the end of it. Private banking is one option that can make the managing of your money and assets simpler, from daily spending to investments to estate planning.
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History
The first record of private banking goes back to about 2000 BC, when IGIBI Bank in Babylon introduced it. This was originally taken over by the temples, but two hundred years later, private banking was the standard in Greece. Ancient Romans used a highly regulated private banking system before Augustus took over the system. Following the fall of the Roman Empire, private banking returned, only to be lost and reinstituted again several times over the next several centuries.
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Function
Private banking, as opposed to retail banking, is a service offered to individuals or families who traditionally have a large asset pool. While retail banking is appropriate for most average families, some use private banking to receive more direct and personally driven assistance from a banker who is familiar with their specific financial situation. They hire or are assigned a private banker who acts as an accountant of sorts, but who also advises the client on investments opportunities and other financial issues.
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Misconceptions
Many people believe that private banking is not for the average income person. While private banking in the past was primarily marketed to the wealthy, more middle class people are taking advantage of its benefits. Small business owners, retirees, and even divorcing couples can benefit from a private banking relationship as well. Private bankers often serve as financial planners, so even young professionals and families will do well to use the services offered.
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Significance
In addition to personalized banking services and investment advice, private banking offers customers the opportunity to receive assistance in estate planning and tax planning. Estate planning can be very complicated, and a private banker will take you step by step through the process, offering suggestions and advice to help ensure that all of your wishes are met. Tax planning means to set aside a certain amount each month to prepare for tax time.
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Benefits
Private bankers help with mundane daily banking activities as well. Their clients request everything from making simple account transfers to handling mortgage questions or problems. For business owners, this saves a significant amount of time, plus saves money, as they won't need to hire an accountant. Private bankers also have an enhanced understanding of their clients' financial needs, so they're better able to recommend banking products and ideas to help the client maximize his money potential.
