Any Idea What $5 Million Looks Like?

When you think of "private banking," do you immediately get an image of wood-paneled rooms tended over by elderly men in long black coats?

Actually, this used to apply to handling the very, very wealthy, with such bankers doing rather dismal and mundane jobs to keep the client happy. "Used to" are the key words for today a private banker has to be quite flexible and do almost anything the client wishes such as buying a yacht or Lear jet. This usually happens when a client comes into a great deal of money rather suddenly and they want to see exactly what the sum looks like. I kid you not. I know one banker in Philadelphia who was asked to spread $5 million out on a table in the conference room--surrounded by legions of security guards, of course.

Actually, private banking is one of the fastest growing sectors in financial services today and this has been generally enhanced by all this new wealth stemming from inheritance or just hitting the lottery. As a result, private banking has been reshaped. How so?

Well, one banker says that she now has to offer a wider range of investment services for particular clients. For example, she will even lend money against loan notes for entrepreneurs who have sold their businesses to enable them to invest.

Clearly, the fundamental needs of clients have remained pretty much the same for centuries with convenience, smart asset management, and a good return being the primary components. But some have even created a number of specialist roles to develop services in wide-ranging areas, including global strategy, financial planning, and global trust and fiduciary services.

As a result, there has been a constant flow of new and innovative products designed to meet real needs and which now form part of most client portfolios.

The type of products now being offered include absolute return strategies and hedge funds, capital-protected structured products which guarantee a 100 percent repayment of capital, and short-term returns well in excess of the norm. Also, there are private equity funds, property funds, exchange-traded funds, and covered warrants, to name a few.

Consequently, what we are seeing today is a private client advisory side that firms are developing by adding a financial planning operation. And, you know what that means: continuous tactical reviews, the lifeblood of any good financial planner.