Are you wondering whether private banking in Canada is worth it? This post will go over what private banking in Canada is, what it can offer you, which banks offer private banking services, and what the minimum number of investable assets you should have to be eligible for private banking.
Imagine someone that you can trust who you can just email or call to get things done if you don’t have time to go to the bank? Imagine that you want to secure a new mortgage but don’t have the time to go during the work week or during banking hours to meet someone and sign papers. Imagine that you are wealthy (and busy) enough that the bank would want to have someone be your main contact so you don’t have to deal with impersonal banking call centre personnel.
That’s private banking.
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More and more Canadians are becoming rich and becoming millionaires. According to this Globe article, the number of high-net-worth Canadians grew by 11.3% in 2016. These rich Canadians’ financial assets, increased by 11.7% to $1.1-trillion.
These wealthy people have money to spare and hence would benefit from paying a bit of their monthly income towards having their day-to-day banking managed.
They don’t worry about how much they should have saved by 40.
I would think that affluent families who are into private banking probably do not bank account churn to get a free iPad or free cash bonus for new bank accounts in Canada.
They might want to capitalize on some online brokerage promotions in Canada such as getting $2000 cash back on $1,000,000 invested with these financial institution investment platforms.
They have passive income in Canada working for them because they have limited time.
What is Private Banking?
Private banking is usually a specialized division within a big bank that caters to high net worth (HNW) individuals. There is a certain liquid asset criteria level in order for you to qualify for private banking services.
These private banking services are typically day-to-day banking, like securing loans, or deposits, etc.
Private banking includes personalized financial services and products catered for those with HNW. Unique to this is that there is ONE person at the bank who the HNW person deals with instead of a difference face each time when you head into the branch.
Personally, I think in this day and age with the ease of online banking, online personal cheque deposits, private banking isn’t completely necessary, but there are some perks that come with private banking packages that are worthwhile… other than what I like to call the ‘feeling fancy factor’ (FFF).
The big banks in Canada have recently upped their focus on cultivating these relationships with HNW individuals and focusing on their wealth management divisions and private banking divisions.
People who use private banking value their time.
People who use private banking are usually entrepreneurs, wealthy families, business owners, or professionals and time rather than money is more of the essence (because they already have lots of money but they have limited time).
Wealth Management vs Private Banking
What’s the difference between wealth management vs private banking?
Private banking is mainly just banking, the day to day transactions. However, wealth management encompasses more than just the banking.
Wealth management considers things like philanthropy, investments, borrowing services, preferred foreign exchange rates, succession planning, and trust and estate planning.
Private Banking Services
What’s included in Canada’s private banking services?
Broad day-to-day banking services are included in addition to more complicated things such as trust and estate planning, tax planning, philanthropy, and investment services.
- Day to day banking (there are no fees for certain credit cards, Interac e-transfers)- For example, you could just email your private banker and ask to apply for a certain credit card. They will prepare everything for you and you just have to e-sign.
- Borrowing services, for example application for a mortgage or line of credit
- Preferred rates for foreign exchange, e.g. CAD to USD- you won’t have to use Norbert’s Gambit.
- Preferred rates for loans
- Tax planning
- Succession planning (free)- not to be mistaken with end of life planning
- Trust and estate planning (free) – this will save money on your lawyer fees as the ‘grunt work’ is done with the estate planning that is offered by private banking
- A fancy private banking access card so you can silently declare your HNW status
- For some banks, a private banking floor- step off the elevator and get instant attention
- Safety deposit box fee waiver
- “Feeling of importance” appeal, like being invited to fancy meals or entertainment at exclusive events and enjoying them for free
Private Banking Minimum Requirements
So how much do you need to be eligible to joint this exclusive club and have a private banker?
In general the private banking minimum requirements is that you have $1 million in investable assets or $3 million in total net worth.
So if you are a house rich (and fluid asset poor) Vancouverite with a big mortgage and under $3 million net worth, you won’t qualify.
Also keep in mind, with $1 million investable assets there is still a monthly charge for private banking services.
According to RBC Wealth management, a high net worth individual in Canada means having $1 million USD in investable assets and a minimum income of $100,000 USD annually.
What is the monthly fee for private banking in Canada? It is usually around $100+ a month.
Some banks will waive the $100 monthly private banking fees if your household has over $3 to 5 million in investable assets.
If you want to keep track of your investable assets (like if you have accounts in different banking institutions or investment institutions), to make sure you are at over $1 million in investable assets, Wealthica is an amazing free tool that is like a free net worth tracker or investment portfolio tracker in Canada.
Here’s my Wealthica review. Wealthica aggregates almost $10 billion in assets from over 25,000 Canadians.
It is like a Personal Capital for Canada.
Best Private Banking in Canada?
What is the best private banking in Canada?
What are the best private banks for high net worth individuals?
According to Wikipedia, the two private banks in Canada with the most assets under management are RBC Wealth Management and BMO Wealth Management.
So since BMO and RBC are so popular for private banking, you could say they are the best private bank in Canada.
Here are some of the private banks in Canada:
Scotiabank Private Banking
Scotia Private Banking is called Scotia Wealth Management.
What are the Scotiabank private banking minimum requirements?
The monthly fee is $150 and it is available to Scotiabank clients with lending needs.
If there are over $750,000 in investable assets with Scotiabank Wealth Management, the monthly fee can be reduced to $75.
With Scotiabank Private Banking you can get access to their Total Wealth Credit Solution™, which is a strategic financing service.
You also get an annual fee waiver for their premium credit cards.
They even have something called Pursuits, a concierge and travel management service, where you can ask them to get a booking at a Michelin star table with just 24 hours notice, or a private tour with a chef.
In addition, Scotiabank had recently acquired MD Financial Management, which has similar features to private banking, and provides private banking-like services to almost 50% of physicians in Canada.
BMO Private Banking
BMO Private banking is under an umbrella called BMO Private Wealth.
BMO Private Wealth encompasses BMO Private Banking, BMO Private Investment Counsel, and BMO Nesbitt Burns.
BMO Private wealth combines banking with investment needs.
The BMO private banking minimum requirements are similar to the others private banking minimum requirements, which is $1 million in investable assets.
They ask that if you have less than $500,000 in investable assets you get in touch with their investment advisors instead.
RBC Private Banking
RBC Private Banking is similar to TD’s private banking in that they focus on a holistic approach.
For example, with RBC Private Banking they help guide you, a HNW individual, through things like:
- Philantropy
- Credit strategies
- Estate and trust planning
- Tax planning
- Business owner planning
The RBC Private banking minimum requirements are as follows:
You have to have a minimum of $1 million in investable assets or an overall net worth of $3 million (which includes real estate for example, your primary residence).
TD PRivate Banking
TD Private Banking is called TD Private Wealth.
What is the TD Private banking minimum requirement?
The TD Private banking minimum is $1,000,000 in investable assets, and to waive the monthly TD private banking fee (which is around $100 a month) you have to have at least $3,000,000 to $5,000,000 in investable assets.
CIBC Private Banking
Finally, CIBC also offers private banking, it is called CIBC Private Wealth Management.
CIBC Private wealth encompasses:
- CIBC Private Banking
- CIBC Wealth Planning
- CIBC Estate and Trust
- CIBC Investment Management
Is Private Banking Worth It?
The people with massive wealth and affluence are usually insanely busy and they may believe that any services that will buy them some more time and convenience is worth it. According to Red Flag Deals forum on private banking, the $100+ a month fee can be shared by multiple families.
Usually if your household hits the $1 million investable assets and you qualify for private banking, you can also add on your parents and your spouses parents to private banking and even siblings families households. Also, incorporation fees are usually covered under this private banking plan too, which can be anywhere from $20+ a month.
Therefore, some people may find this a steal of a deal, even if it is $100 a month because it covers not just your household.
Personally, I feel that some features of private banking are included already in top tier banking accounts, like the TD All-Inclusive Account for example, which is $29.95 but waived if you have a $5000 minimum balance.
The top tier banking accounts also include free personal cheques.
You get a free premium credit card like the TD Aeroplan Infinite Visa that is normally $120+ a year. You also get a free TD US Dollar Visa which is normally $39 a year.
You can get the free TD US dollar Visa from the free US dollar accounts, too.
Additionally, Scotiabank has something similar with their Ultimate account.
You get an annual $150 waiver on a premium Scotiabank credit card. They also have a promotion right now where you can get $350 cash for free if you open up an account.
The $30.95 a month fee for the Scotiabank Ultimate Package is waived with a $5000 minimum balance or a $30,000 combined balance between your MomentumPLUS accounts and Ultimate account. Both banks give you a free safety deposit box too.
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Also, a lot of private banking services can be completed with online banking.
Pros of Private Banking in Canada
However, maybe affluent business people who use private banking are too busy to remember their banking login, so in this case, being able to email or phone your private banker instructions is probably invaluable.
For example with some big banks (which are a great buy and hold for their dividends by the way), you can use the app to call in to the call centre. Your private banking status will be displayed if you log in, and your call will be placed in priority (answered within seconds instead of 129 minutes).
For some, not having to deal with calling a call centre to hear muzak for 129 minutes and a looped recording of “your call is important to us, one of our agents will reach you as soon as possible” and having to repeat your story is PRICELESS.
You will have one expert banking person (that you trust) to handle your money who is a phone call or email away.
However, if you can get multiple households on board with one fee (kind of like the Netflix account but for banking, haha) I suppose the $100+ a month monthly fee for private banking can be worth it, especially if you take advantage of the estate planning services which can normally cost hundreds to thousands of dollars.
I’m not at $1 million in investable assets yet, though that is a goal of mine in a few years, but it would be sure fun to carry around a black private banking card in your Louis Vuitton wallet.
I’m kidding.
I’m more of an inner scorecard kind of gal myself.
You may also be interested in:
- Frugal habits of the super rich
- Ultra High Net Worth vs High Net Worth Individuals in Canada
- What is a LIRA?
- RBC iPad Offer
- BMO New Account Offer
- Top one percent net worth in Canada
Have you ever used private banking?
Would you pay $100+ a month for high net worth banking in Canada?
Do you keep a minimum balance to access chequing account waivers?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.
I have private banking through my spouse for the past year now. We haven’t e-mailed/called our private banker at all. As you said, everything can be done online these days. The main reason why my spouse has private banking is because it was offered for free with access to wealth management, which manages investments for her business. The investment advisor has access to investment options that are not available to retail investors. The investment advisor will also e-mail/call if there are new investment ideas. However, if you ask me, my personal portfolio has performed better than the one setup by the investment advisor. Though, having someone invest for you is better than procrastinating on a pile of cash. Wealth management isn’t free and is a percentage of assets under management.
As you said, a lot of the private banking features are available with top-tier bank accounts. So far, we have a cash back credit card with annual fees waived and a safety deposit box. We plan to use private banking for estate planning. We don’t “pay” for private banking, since the cost is probably covered by wealth management. We’re frugal and if we were given the option, we would not pay $10/month for private banking.
@DreamingofDividends- It’s not $10 a month, more like add another 0! Even top-tier bank accounts are like $30 a month (waived with minimum $5K usually). That’s great that you are able to get Private Banking for free. And yes, good point about a pile of cash. Would be interesting to see the returns between your DIY investing and wealth management and how they compare!
Ha! Love the FFF. I think achieving private banking status would be a total ego thing. Although when we do achieve the threshold I hope that we are transitioning to being less busy and can manage our own finances.
@Maria- That day will probably come soon for you guys! You’re doing great.
My wife and I have been with TD Private Banking for the past 3-4 years. I would highly NOT recommend them. They “automatically” give you their “best” rates and free accounts, but even basic rates were not the best we could have had shopping around. Furthermore despite the arguments I hear here, they didn’t simplify any steps of the process applying for mortgages or business loans. We still had to submit all the same paperwork we did even when we were dealing with our local branch.
This year we were charged a penalty for selling one of our condos (without having the penalty disclosed). It is unique to TD and was a substantial penalty without our knowledge (despite trusting our Private banker). We never shopped around for rates and put trust in the Private Banking experience. The differences in structures and penalties are not explained and despite having 4 other mortgages and myriad number of products, you are still treated as a number with Private Banking. There is no special communication or accommodation.
Our local branch had an amazing manager who went out of her way to help us and simplified our process. When she left of province, she recommended the Private Banking team due to our assets. Despite our move, I would say there were no additional perks obtained and in fact slower communication. We have decided to leave TD due to our experience with their Private Banking division. This is no small endeavor as we have over 20 accounts with them.
If you have a strong established relationship with an advisor or local branch manager then I would recommend against starting a new relationship in Private Banking (at least at TD).
I hear positive things of BMO private banking and they have marketed themselves heavily; having won “best in class” annual awards. We may look into that option but once you put yourself all in on a bank it is hard to extricate yourself.
@Dan- Thanks for sharing your experience, Dan. That’s unfortunate about the penalty- even complaining did they provide any compensation of sorts? Yes, that’s how they get you. Hard to extricate and move banks when you have everything with them. I agree that bank managers/ advisors you have a relationship with are also pretty amazing and give customer service that can rival a private banking experience.
I’ve been a Jade client of HSBC and it is worth it. Since I self invest my retirement funds, I was able to qualify, but it is on invitation only. I was “high maintenance” for them and made their list probably because my regular banker wanted to get rid of me but could not afford to loose my accounts. In short, I have my personal bank associate available 24/7. I would never abuse of it, but he helped us resolve a few major problems that would have been a nightmare to work around without him. Ironically, these kind of nightmare are cause by the banks bureaucratie (All banks will give you a hard time from time to time), so with a good bank manager, you will get the equivalent resolution anyway. Beside that’s, the perks are good, a “metal” premium credit card with it’s perks including unlimited Lounge access in every airport around the world (via Lounge Key) and a valet service that offers things way out of my league. The paybacks I got from the card alone are worth over 1000$ annually for me (in addition to what I get from a regular free credit card), since I got this premium one for free, it’s a no brainer decision to joint. As a side note on the card, nothing screams kidnap/abuse/gouge me like a metal card. Use with caution.
@Stephane- Lol, thanks for sharing your perspective as a high maintenance customer. Those are awesome perks of HSBC! Unlimited lounge access sounds amazing.
If you go to private banking with $1mn in investable assets, be prepared to be the least profitable and therefore least important client. Their relationship managers are handling people with 10x or 100x of what you have. Don’t expect much in the way of special treatment.
@Bill G- indeed! Thanks for sharing.
I’ve been with BMO Private Banking for 3.5 years. I signed up solely for the investments but they have barely beaten inflation. I asked my accountant his thoughts and he advised “…[Private Banking] all use an indecipherable mix of in-house funds that never seem to generate alpha”. Everyone I have dealt with has been very smart and well spoken, but none have delivered the results I expected.
@cb- Thanks for sharing your experience. Whoever is beating inflation right now this year would be an investing machine since the market is down.
i know I Am late to the party but great article. And great contributions from all. Very informative! If I may, can you add a like button or up-vote? Wanted to up-vote a few comments ..and the post itself
@GraceTwice- Thanks! Feel free to share on social media/ tweet, thanks!