In this paper, we are going to be looking at the role of a private banker. This will be accomplished by examining their responsibilities, licensing requirements, the know your client rule and assessing risk. Together, these elements will highlight how these individuals are assisting the affluent. This is when they can create strategies that will help them to achieve a variety of critical objectives.
¶ … Private Banker
Role of Private Banker
What is the typical role of a Private Banker?
A private banker is someone who will help affluent clients to invest their money effectively. This involves focusing on a number of areas to include: financial planning, probate, asset protection, reducing taxes and transferring wealth from one generation to the next. At the same time, the private banker has a fiduciary responsibility to reduce risks for their customers and offer sound advice. This means that they must provide objective analysis and recommendations. That will help the client achieve a variety of goals over the long-term. ("Private Banker," 2012)
Moreover, private bankers assist their customers to connect with other services they require (i.e. accountants and lawyers). This ensures that the strategy is effectively coordinated. When this happens, there is less risk and greater amounts of stability associated with the client's net worth. In the future, this helps them to plan how they will protect, grow and transfer their assets. ("Private Banker," 2012)
If you were a high net worth individual, what qualities would you look for in a Private Banker?
A private banker must possess a number of attributes to include: organization and they will always place the customer first. Organization is when the individual can remain focused on a number of tasks and quickly access different sources of information. This helps to improve their ability to analyze new investments and other opportunities. It is at this point when they can provide objective advice about the current situation. This will assist the customer in making prudent financial decisions. ("Private Banker,"2012)
Always placing the customer first, is when the banker will take into account the client's interests at all times. This means recommending investments that will benefit the customer. While the banker; may not be as generously compensated for the recommendation. In these kinds of situations, this will assist clients in protecting and growing their net worth. Those who possess these qualities will be able to make recommendations that will reduce their taxes, risk and increase the growth. ("Private Banker," 2012)
What are the licensing requirements for a Private Banker in the U.S., UK, Dubai International Financial Centre and the Qatar Financial Centre?
In the U.S. A private banker must hold the Series 7 / 63 licenses and they will have to register with the state if they are selling insurance products or are offering tax advice. ("How to become a Private Banker," 2012) As far as the UK is concerned, the individual must pass the Financial Planning Certificate exam. This is offered through the Financial Services Authority and it allows someone to give advice on products ranging from insurance to equity securities. ("Investment Advisor," 2012)
In Dubai and Qatar, anyone who is working in the financial services sector must possess a license in areas of insurance, equity securities, futures or bonds. The licenses are issued through the Insurance Authority and the Securities & Commodities Authority. Recently Qatar has introduced Law 13. This is designed to regulate those individuals who are offering investment advice to foreigners living in the country. The responsibilities for this license will be handled by the same government agencies. ("Investment Advisor," 2012)
What is Know Your Customer and generally what type of documentation must be provided by a private banking client to prior to opening the account?
Knowing the customer is when the advisor must demonstrate that they completely understand the client's financial situation. This means asking them a series of questions that are focused on: their net worth, life goals, tax situation, estate issues and degrees of risk. These areas will help a private banker to create a customizable strategy. That is taking into account these objectives. (Tarantino, 2010)
The kinds of documentation that must be presented include: the new account form, disclosures stating the risks involved with investing in certain areas and identification. The information that is collected will allow the advisor to determine the type of customer they are working with. It will also offer them with insights about their personal situation, goals and lifestyle choices. This is the point that a specialized strategy can be created (which is taking these different factors into account. (Tarantino, 2010)
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