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 Canadian banks offer private banking services, and what the minimum number of investable assets you should have to be eligible for private banking.
Imagine contacting a banker directly 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 for high net worth individuals.
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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.
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What is Private Banker?
Private banking is usually a specialized division within a big bank that caters to high net worth individuals (HNWI). There are certain liquid assets 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 for high net worth clients.
Private banking focuses on personalized financial services and products catered for high net worth individuals. 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.
You get a dedicated private banker or an advisor, a dedicated relationship manager.
Personally, I think in this day and age with the ease of online banking and fee waivers, 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 Canadian banks have recently upped their focus on cultivating these relationships with HNW individuals and focusing on their wealth management divisions and private banking divisions.
Clients who typically use private banking value their time rather than their banking financial life.
Private banking clients are typically 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 offered to high net worth clients?
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 exclusive access to fancy meals or entertainment at unique events and enjoying them for free
- You could access financial planning, investment advice, portfolio management, review your complex financial picture as well
Minimum Requirements For Private Banking
So how much do you need to be eligible to joint this exclusive club and have access to private bankers?
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 to manage your day to day financial affairs.
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 net worth tracker or investment portfolio tracker in Canada and gives you a look at your financial picture.
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 Canada
What is the best private banking in Canada?
What are the best private banks for high-net-worth-individuals?
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’s private banking has won awards as the best private bank in Canada for the World Finance Banking Awards.
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’s 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:
- 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 (not necessarily investable assets with TD), 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 for Wealth Planning?
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 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.
Benefits 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, banking directly and 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 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
- Generational Wealth: What’s the Hype About?
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 fee 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.