Where Do Millionaires Bank and What Services Do They Get?

For individuals with substantial financial resources, banking and financial services differ significantly from the general population. These high-net-worth individuals (HNWIs) typically have over $1 million in investable assets, excluding their primary residence. Their financial needs extend beyond basic transactional banking, encompassing wealth preservation, growth, and intergenerational transfer. Millionaires’ banking choices are driven by a need for sophisticated solutions and specialized expertise.

Institutions Serving High Net Worth Clients

Financial institutions catering to millionaires offer structures to manage complex financial affairs.

Private Banks

Private banks are a primary choice, providing personalized services to HNWIs and ultra-high-net-worth individuals (UHNWIs), who typically have over $30 million in investable assets. They prioritize a bespoke, confidential approach, assigning dedicated relationship managers. This model focuses on building long-term partnerships, offering tailored advice that aligns with client goals.

Wealth Management Firms

Wealth management firms offer a comprehensive approach to managing assets, often operating independently. They provide integrated services including financial planning, investment management, and tax planning. Many financial institutions, such as Goldman Sachs and JP Morgan, have dedicated wealth management divisions. These firms often cater to clients with minimum account requirements in the millions.

Multi-Family Offices

Multi-family offices represent another specialized option, providing a centralized hub for managing the financial affairs of multiple affluent families. Unlike single-family offices, which serve only one family, multi-family offices share resources. This shared model allows for cost efficiencies while providing access to broad expertise. Multi-family offices offer sophisticated wealth management services to families who might not meet the substantial financial commitment required for a dedicated single-family office, often serving those with assets starting from $25 million.

Specialized Financial Services

Millionaires seek a distinct array of financial services beyond conventional banking products, focusing on comprehensive wealth management.

Investment Management

Investment management is a core service, involving portfolio management, asset allocation, and access to unique opportunities. This includes strategies like investing in private equity and hedge funds, often unavailable to average investors. Wealth managers continuously monitor portfolios, adjusting strategies to align with market conditions and client objectives.

Estate Planning and Philanthropic Advisory Services

Estate planning and philanthropic advisory services preserve wealth across generations and fulfill charitable goals. Institutions assist with establishing trusts to manage assets, minimize estate taxes, and avoid probate. These services also encompass drafting wills, facilitating business succession planning, and advising on charitable giving strategies like donor-advised funds, which offer tax advantages. Planning helps ensure wealth transfer according to wishes while potentially reducing tax liabilities.

Tax Planning and Compliance

Tax planning and compliance are important, given the complex tax situations HNWIs often face, including income, capital gains, and estate taxes. Financial advisors provide guidance on tax-efficient investment strategies, such as utilizing municipal bonds or tax-advantaged accounts, to minimize overall tax burdens. This involves staying informed about changes in tax laws and integrating tax considerations into all financial decisions. The goal is to optimize after-tax returns and ensure adherence to federal and state tax regulations.

Specialized Lending Solutions

Specialized lending solutions provide millionaires with liquidity without liquidating assets. These include securities-backed lines of credit and high-value mortgages for luxury real estate. Institutions also offer options like art-backed loans or financing against other illiquid assets, such as hedge fund positions or commercial real estate. These customized loans often feature favorable terms, including lower interest rates and flexible repayment options.

Risk Management

Risk management protects accumulated wealth from various threats, from market volatility to unforeseen personal events. This involves identifying and assessing potential risks, then implementing strategies such as diversification across asset classes and geographical regions. Comprehensive insurance planning, including specialized policies like private placement life insurance, serves as a safety net against potential losses. Financial institutions also advise on legal structures, such as trusts, to protect assets from creditors and legal claims.

Factors Guiding Financial Choices

Expertise and Specialization

When selecting financial partners, millionaires prioritize expertise and specialization in complex financial areas. They seek advisors with deep knowledge in sophisticated investment strategies, tax implications, and estate planning. The ability of a financial institution to offer specialized guidance across diverse financial instruments is a primary consideration.

Relationship Management and Personalized Service

Relationship management and personalized service are valued, with millionaires seeking a dedicated advisor who understands their unique financial situation and personal goals. This personalized approach involves regular communication and tailored advice, fostering trust and ensuring strategies adapt as circumstances evolve. Clients expect a high-touch advisory experience that integrates human expertise with efficient digital tools.

Security and Trust

Security and trust are important, given the substantial assets involved. Millionaires seek institutions with a strong track record of stability, robust regulatory compliance, and strict confidentiality protocols. Private banks employ advanced security measures, including encryption technologies and physical safeguards, to protect sensitive financial information. This commitment to safeguarding assets and personal data is fundamental in building client relationships.

Global Capabilities

Global capabilities are important for millionaires with diversified portfolios or cross-border interests. Many wealthy individuals have family members, homes, businesses, or investments in multiple countries. Institutions with an extensive international network and local access in various regions are preferred, as they provide integrated services and advice across different jurisdictions. This global reach allows for seamless management of assets and financial affairs worldwide.

Fee Structures and Transparency

Fee structures and transparency are scrutinized when evaluating financial partners. An average wealth management fee might be around 1% of assets under management (AUM) for comprehensive services, but fees vary significantly. Some institutions may charge lower percentages for larger portfolios. Millionaires evaluate whether fees align with the value and scope of services provided, sometimes negotiating alternative structures like flat fees.

Referrals and Reputation

Referrals and reputation play a role in guiding choices. The established track record of a financial institution and recommendations from trusted sources influence a millionaire’s decision. Institutions with a history of successful wealth management and strong client testimonials are favored, as they demonstrate reliability. This reliance on reputation highlights a firm’s consistent performance and client satisfaction.