Choosing a private bank (part 1 of 2): Benefits of bulge bracket firms

March 1, 2008 | Comments Off on Choosing a private bank (part 1 of 2): Benefits of bulge bracket firms

At first glance, all private banks look alike. But in fact, they differ on fees, product offerings, advice quality and strengths. Roughly private banks belong to either one of the two categories: Bulge Bracket or Boutique.

Bulge bracket private banks are the wealth management arms of investment banks or multinational banks. UBS Wealth Management and Morgan Stanley Private Wealth Management, for example, are bulge bracket private banks. There are also many smaller boutique firms that offer specialized services. Bulge bracket private banks and boutique firms each have their own strengths, I‘ll talk about both of them in this two-part series. Let’s first look at the benefits of using a bulge bracket firm:

Safety and Stability
For bulge bracket firms, a solid balance sheet may be their biggest appeal to clients. No one is interested in putting their hard earned money at places where a bankruptcy is around the corner. Even after the financial turmoil in 2008, many bulge bracket private banks still have a relatively stable balance sheet.

Strong Product Offering
Product offering is another key benefit bulge bracket banks offer: Many top investment banks can provide investors with a wide range of services including stock lending, customized investment vehicles and general prime brokerage services. Investors who are interested in diversification across multiple asset classes often find global bulge bracket banks offer a wider range of products.

Operational Excellence
On top of 24-hour online banking capabilities, bulge bracket firms’ global resources make them attractive to many clients. Large banks tend to have operation teams in different time zones, making it extremely easy for clients to place orders or make inquiries anytime, anywhere.

It is not uncommon that individuals see owning an offshore Swiss bank account as a status symbol. I have personally met some local businessmen who routinely make reference to their UBS or Credit Suisse accounts to impress their potential business partners. Since most private banks have a minimum account requirement of US$1 million, being known as someone who has a private bank account with a reputable firm commands respect and admiration in many countries.


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