For those who have a lot of money, the doors open more easily. This is also the case with the banks. They like to pamper their wealthy customers a little more, with an extra service tailored to their needs. But of course that doesn’t just happen. You also have to pay for those extra cares.
Private banking is the name of the service with which banks fish for wealthy customers. What it comes down to is that they get a permanent contact person to whom they can go with all their financial questions. This ranges from the management of their investment portfolio, over advice for real estate and insurance to succession plans.
Large banks such as BNP Paribas Fortis, ING, KBC and Belfius have a special private banking branch. They even have a separate network of offices, which are specially equipped for this purpose.
In addition, there are a number of specialized financial institutions that focus exclusively on wealthy consumers, such as Delen Private Bank, Degroof Petercam, Van Lanschot, Leo Stevens & Co, Dierickx Leys, Quintet (Puilaetco) and Econopolis.
Three-stage rocket
The financial capacity you need to be able to go to a private bank or specialized house differs from bank to bank. And often again from formula to formula. Most institutions offer a step-by-step approach,
From a certain capital – usually from 250,000 euros, but it can also be less – your capital is invested according to a selected type of portfolio that corresponds to your profile and your wishes. Your investments are then mainly put in funds. That also makes sense. Such an investment allows a rapid diversification of your portfolio and therefore of your risks. Sometimes the bank even uses a kind of robot investment system for this, in which an algorithm ensures automatic monitoring and, if necessary, rebalancing of your portfolio if necessary.
In a second level – often 500,000 euros or 1 million euros – you get to real private banking, where you have two options. You can opt for advisory management or discretionary management. With advisory management, you take the final investment decisions yourself after consulting your banker. With discretionary asset management you give your banker a mandate to make the decisions for you, albeit within the framework that you have agreed. He will then contact you at regular intervals to see if adjustments are needed.
The third level, usually from around 5 million euros, is for the very largest assets. We then speak of wealth management, which offers a lot more specialized services such as tax and legal advice in addition to asset management. You will also gain access to, for example, investments in unlisted companies.
Or take Econopolis, the asset manager around economist Geert Noels. From 200,000 euros you can join the Twain formula, with an automated system helping you along. If necessary, you can nevertheless also get information by phone, via chat, video and physical information. Discretionary management is possible from 1 million euros.
How much is it?
Let’s take ING as an example. From a financial capital of EUR 250,000, the bank offers the option of entering into four profiles, each of which corresponds to a risk level that you choose yourself. In addition, you have the opportunity to make regular additional investments or generate regular income. The bank charges a 2% entry fee for this. Discretionary management is possible from a capital of 1 million euros. Advisory management from assets of 2.5 million euros. The rates depend on the size and special characteristics of the file.
The limits and costs may therefore be different at other banks. For example, at Dierickx-Leys, for discretionary management up to EUR 1 million, a rate of 1.20% + VAT on the assets under management applies, and above that limit a rate of 1.00% + VAT. For advisory management there is a rate of 0.70% + VAT up to 500,000, up to 1 million euros that is 0.60, and up to 2 million euros 0.50%. Each plus VAT. The minimum compensation is 1,750 euros.
With Delen you have no costs for discretionary management if you have your assets invested in funds of the bank itself. Your costs then correspond to the entry and management costs of the funds. The fee is 1.10% per annum on the part not invested in these funds.
Don’t fall asleep
The great advantage of private banking is that the banker relieves you of your worries and ensures professional follow-up of your investment. Nevertheless, it must not become flight behavior on the part of the investor whereby he hands over the management of his assets “to get rid of it.”
Also bear in mind that you will have to regularly re-evaluate your investments. Is the spread of your assets still in line with your plans? Because they can change. Maybe you are thinking about investing in real estate? Then you must be able to release a certain amount and therefore build more security into your investments. Or you get the prospect of an inheritance, which means that you have more capital in prospect and you can invest more.
Tip: Here you will find an overview of the private banking services offered by the banks in our country.
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