Financial Watchdog Post From Forbes.com
Wealthy Clients Should Beware Of Private Banks Edward Siedle,
Conflicts of interest, murky disclosure render wealth management suspect.
It's a little-known secret that many wealthy investors are profoundly dissatisfied with the private banks that oversee their assets. They should be. Private banking is an investment backwater where appearances and reputations often far exceed capabilities.
To make matters worse, as private banks become more embedded in their clients' overall financial lives, firing even poorly performing ones becomes challenging. The bank may, for example, become your lender or serve as a corporate trustee in your family trust.
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Separating lending, asset management, corporate trustee duties and other services among best-of-class firms is almost always the wiser course.
For those who are unfamiliar with private banking, it seeks to cater to high-net-worth clients--often those with $10 million or more to manage--by blending menus of bank, investment management and other financial services.
"Private" refers to the notion that customer service is provided on a highly personalized basis and delivered by employees who are supposed to be highly trained financial advisors.
Harris Private Bank offers advice on managing wealth, investments, trusts and estates, as well as other family office services. If you feel overwhelmed by "the various facets of wealth," you can "partner with experienced advisors" who will "advocate on your behalf," according to Harris.
Specialized knowledge of income and estate tax planning, retirement planning, philanthropy, risk management, wealth transfer and business succession are all readily available, its promotional literature says.
Before signing on, investors should ask whether private banks can offer all these services on competitive terms. After all, private banking services are supposed to be the top of class--reserved for those who can afford the very best.
PLEASE READ MORE: http://www.forbes.com/2010/05/24/private-bank-trust-personal-finance-conflict-of-interest.html