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What is Private Investment Banking?

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  • Written By: Kristie Lorette
  • Edited By: O. Wallace
  • Last Modified Date: 06 September 2019
  • Copyright Protected:
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    Conjecture Corporation
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Private investment banking is a form of money management that consumers or institutions can use to save and grow assets. When a consumer or a company works with a private investment banker, the banker works as a financial advisor to help establish checking, savings and investment accounts to help the individual or institution reach their financial goals.

Typically, private investment banking services are for high net worth individuals or organizations. Because high net worth individuals have more cash and other assets, the wealth that they have amassed allows the investors to choose from a more diverse range of investment accounts, products and services. Since the investment needs of high net worth clients are different from the average investment, private investment banking offers specialty services that match the needs of the high net worth clients.

One of the services that private investment bankers offer is investment advice. While a standard financial advisor provides advice on which investments clients should invest to meet and exceed their personal financial goals, private investment bankers take the process one step further. First, private investment bankers have an interest in wealth protection.

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Second, private investment banking services provide products and services that allow the high net worth clients it serves to grow their wealth even more. Private investment banking also covers topics such as financial planning for the investor and passing this wealth on to the heirs after they are gone—estate planning, saving on taxes and protecting heirs from huge inheritance tax payments or capital gains tax.

Private investment banking may allow account holders to invest as little as $50,000 US Dollars (USD) to take advantage of the specialty financial wealth management services. Other private investment banks have minimum requirements that start at $500,000 USD in investable assets. Individual investors that have amassed this amount of wealth then have the opportunity to invest their money in alternative forms of investments, such as hedge funds and real estate.

In addition, the rationale behind private investment banking is that high net worth investors do not have liquidity problems. In other words, these are not the types of investors that are investing the cash that they need to live on or pay their daily living expenses. These types of investors are investing money that is above and beyond the cash they have on hand to cover their normal expenses and costs, including emergency funds. The money invested in a private investment bank account is the money they have devoted to protecting and growing for the future.

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