Private Banking Offers Expertise and Service-Amenities Valued by Professionals

By Shari S. Cohen
October 1, 2007

Private banking advertisements often portray an affluent-looking couple on a sail boat or at a ski resort with a caption about preserving wealth for the next generation.

However, private banking also offers valuable expertise and time-saving service for successful business owners and professionals who may not have a million dollar trust fund. Private banking originated in Switzerland where bankers stressed confidential personal relationships with customers, rather than treating them as commodities, according to Patrick M. McQueen, president and chief operating officer of The Private Bank.

Anticipating the needs of clients is one of the hallmarks of the private banking industry.

Headquartered in Bloomfield Hills, The Private Bank focuses on personalized service for its customers, about half of whom are business owners, real estate investors and professionals.

To McQueen, formerly Michigan’s banking commissioner, private banking is all about the relationship between the customer and the bank.

“The client knows you and you know the client. Relationships grow over time. The handshake is important. We anticipate clients’ needs and we can solve their problems,” he says.

The Private Bank strives to reduce banking hassles. “We have fewer rules. We’ll pay your bills. We always have foreign currency on hand. We have a courier service,” McQueen explains.

Customers typically seek out The Private Bank, he says, when they experience a major business or life change, such as the sale or relocation of a business, the death of a family member or retirement.

At JPMorgan, the Chase division which provides private banking, customers are “closely-held businesses with unique needs and challenges,” according to Jack Csernits, managing director of their Private Client Service in southeast Michigan. Clients have high net worth usually derived from middle-market business, he says.

JPMorgan’s wealth management and advisory team provides them with overall financial strategy, as well as plans for retirement, taxes, asset management, business succession, estates, insurance and risk management.

Ypsilanti residents Peter Langer and his wife turned to JPMorgan Private Client Service for professional assistance in handling their substantial portfolio. (Langer is a Ford retiree and the couple owns apartment buildings.) They chose JPMorgan because Langer was “so impressed with how well they handled my father’s estate and how little they charged to do it.” The JPMorgan Private Client team “looked at the whole picture, including wills and insurance, which was really great, and laid out a plan with a balanced portfolio,” he said. They obtained a home mortgage from JPMorgan and later refinanced their rental properties with the bank because they were so pleased with the service.

The Private Bank provides similar services through four divisions: deposits; trusts and investments; private banking (providing loans) and residential mortgages. A managing director oversees outside experts, such as investment managers or estate planning lawyers required for a client. “We don’t sell a product; we sell a process,” McQueen emphasizes. Although The Private Bank was acquired by Chicago-based Bancorp, Inc. in 2005, decision-making remains local, states McQueen.

Customers are not charged special fees for private banking at JPMorgan or The Private Bank. Instead, the bank’s compensation comes from customers’ regular account fees, such as interest on loans and a percentage fee for asset management, based on the individual services used.

While some of these services are available at other banks or branches, private banking groups coordinate them and provide an experienced account manager or team to oversee the customer relationship. For affluent business people and professionals, private banking may be a good fit.