Private Banking in New Zealand
Our exclusive guide explains everything you need to know about private banking. We look at ANZ, ASB, BNZ, HSBC and Westpac and reveal how much money you need, what is offered, pros, cons and must-know facts
Updated 24 March 2022
The Australian-owned banks and a handful of smaller New Zealand players offer private banking, but the services are largely unknown. This guide is the first to explain what the banks offer, the costs, benefits, disadvantages and must-know facts. Our research team talked to private banking clients about their experiences to complete the guide. We also shared and discussed our findings with banks, given the lack of general information about private banking.
Our definitive guide to private banking covers:
Disclaimer: Our guide to private banking is journalistic in nature and we do not recommend any services discussed below. We believe that individual experiences of private banking will vary based on how much money you need to borrow, invest, put into a term deposit and/or similar.
The Australian-owned banks and a handful of smaller New Zealand players offer private banking, but the services are largely unknown. This guide is the first to explain what the banks offer, the costs, benefits, disadvantages and must-know facts. Our research team talked to private banking clients about their experiences to complete the guide. We also shared and discussed our findings with banks, given the lack of general information about private banking.
Our definitive guide to private banking covers:
- What is Private Banking?
- Private Banking Pros and Cons
- Private Banking Services Available
- Private Banking Client Experiences
- Frequently Asked Questions
- MoneyHub User Insights
Disclaimer: Our guide to private banking is journalistic in nature and we do not recommend any services discussed below. We believe that individual experiences of private banking will vary based on how much money you need to borrow, invest, put into a term deposit and/or similar.
MoneyHub Founder Christopher Walsh shares his views about private banking:
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“Private banking is not widespread in New Zealand, perhaps because a lot of people’s wealth is tied up in home equity and not in investible assets. However, private banking relationships offer clients convenience, time-saving, and many personal benefits. If you like the idea of never visiting a branch, filling out a bank form or calling your bank’s 0800 number again, private banking will be valuable”.
“Banks make far more revenue from selling investments than they do by managing your term deposit. For this reason, the private banking division is intertwined with a financial advisory and investment management service. However, just because your private banker invites you to events and always answers the phone doesn’t mean he or she will offer the most suitable (or best performing) investment products”. “Many private banking clients enjoy having a private banker but invest their money elsewhere. I understand their rationale in doing so – banks are not known for their investing prowess, and the historical performances of funds managed by Milford, Fisher Funds and Pie Funds far outperform anything from ANZ, ASB, BNZ and Westpac”. “Private banking is perfect for anyone who qualifies – it doesn’t cost anything extra and makes everyday banking a little more ‘special’. If you have money to invest, don’t follow what your personal banker says without properly considering all of your options”. |
Christopher Walsh
MoneyHub Founder |
What is Private Banking?
Private banking is a bank division that specifically looks after its wealthiest clients. All the main banks offer private banking, including ANZ, ASB, BNZ and Westpac. Private banks usually require a minimum household income (e.g. above $250,000), cash assets to invest (e.g. above $1m or $2m) and other thresholds.
Private banking experiences are generally similar between the banks and include:
Private banking is most valuable to a bank when a client invests with them - all banks offer investment services, but the limitation is that you won't be offered funds outside the bank. This means, for example, you won't be able to invest in Milford or Harbour Asset Management via your bank's investment advisor.
Private banking experiences are generally similar between the banks and include:
- Use of personal banker, which avoids the need to call the bank's helpdesk or set up a meeting in a branch (or fill out long forms for new products)
- Tailored financial advice from the bank's investment team
- Specialised offers, such as discounted mortgage rates and higher term deposit rates, and more competitive foreign exchange rates.
- Invites to events and seminars
- Access to experts on different financial and banking matters
Private banking is most valuable to a bank when a client invests with them - all banks offer investment services, but the limitation is that you won't be offered funds outside the bank. This means, for example, you won't be able to invest in Milford or Harbour Asset Management via your bank's investment advisor.
Know The Difference: Private Banking vs Financial Advisory
Private banking typically covers banking and investing needs. For example, you'll have a bank account, savings account and other core banking needs. In addition, you may receive better interest rates, higher overdraft limits and/or foreign exchange benefits. You will also have the opportunity to invest in the bank's investment funds (which are offered to non-private banking customers).
Financial advice doesn't usually cover everyday banking. Instead, a financial advisor will look at investments, wealth protection, estate and trust planning and other specialist areas. A financial advisor may also provide guidance around insurance.
Overall, there is some overlap, but, on closer inspection, the best financial advisors work with many fund managers, whereas banks usually use their investments team. When it comes to fees, what you pay will depend on what you're investing in - always check the total fees charged before making any decision.
Financial advice doesn't usually cover everyday banking. Instead, a financial advisor will look at investments, wealth protection, estate and trust planning and other specialist areas. A financial advisor may also provide guidance around insurance.
Overall, there is some overlap, but, on closer inspection, the best financial advisors work with many fund managers, whereas banks usually use their investments team. When it comes to fees, what you pay will depend on what you're investing in - always check the total fees charged before making any decision.
Eligibility requirements for private banking
- How much money you need continues to change and has moved on since these historic Stuff and NZ Herald articles.
- A bank looks at a customer's deposits with the bank, investments, KiwiSaver, and/or mortgage balance to determine eligibility. Term deposits/investments of over $500,000 and/or a mortgage balance of over $2m will usually meet the threshold to trigger a private bank invite.
- You may still qualify even if you don't meet the requirements. For example, we are aware of the children of private banking clients being extended the same benefits as their parents. Banks presumably do this knowing that wealth transfers, and they want to ensure they are retained as the family's bank from generation to generation.
I believe I am eligible – do I wait for my bank to contact me, or should I contact them first?
If you want to take advantage of your bank's private banking features (or switch to another bank that offers what you want), the best approach is to contact the bank directly. Unfortunately, banks don't always know their customers' true value, so if you can demonstrate your financial means to qualify, you'll need to make yourself known to the bank you want to do business with.
Private Banking - Pros and Cons
Private banking sounds exclusive, but we argue there's not too much to get excited about, especially if you're looking for a place to invest considerable funds. We outline the pros and cons to ensure you're fully informed:
Pros
Cons:
Pros
- A dedicated banker - every client is assigned a 'personal banker' who is fully briefed of your circumstances. You'll avoid form-filling, visits to the bank and call centres with this relationship designed to save you time.
- Access to the right specialists for your needs - You'll also speak to the right person without navigating the bank in the way that regular retail customers have to.
- Personal attention - the bank will invite you to events, seminars and keep you informed of relevant news. If your wealth is significant, the bank may be able to assist with event planning, philanthropic planning and a variety of other custom needs.
- Potentially better pricing - banks will often extend discounts for mortgages and better rates for saving and foreign exchange. What you'll receive will be quoted on a case by case basis.
- Business benefits - business owners enjoy many perks, including free bookable boardrooms/workspaces in branches around New Zealand, funding advice, and business assistance services. Business owners will likely represent a reasonably significant percentage of private banking clients, hence the benefits will often extend to what we have listed here.
Cons:
- The interest rates on offer may not be the most competitive - this applies to mortgages, term deposits and savings accounts. Big banks don't always offer the best deals, which applies even if you're a private banking client. It is more convenient to go with the bank but comparing the market is the only way to ensure you are getting the best deal.
- A limited selection of investments - unlike financial advisors or platforms like InvestNow, which offer dozens of funds to invest in, banks usually only offer their investment team's funds. And, per ongoing Morningstar reporting, banks do not have a track record of outperforming experienced managers such as Milford, Fisher Funds, and Pie Funds. Furthermore, investment specialists at a bank are not independent - their ultimate goal is to get your money into their funds.
- Small fees may still be charged - Some banks don't waive the fees for minor services, such as annual debit card fees and cheque deposits.
- Private bankers come and go - you may form a relationship with your banker only to receive a 'this is my last day' email later down the road. On the other hand, financial advisors tend to stay with their clients for the long term.
Private Banking Services Available
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ANZ Private Banking
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ASB Private Banking
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BNZ Private Banking
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HSBC Private Banking
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Westpac Private Banking
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Private Banking Client Experiences
The number of private banking clients is, as expected, limited, so our research team reached out within investing communities to ask for anyone to share their experience. A selection of responses, which have not been verified and are published on face value, appear below:
A MoneyHub user outlines a personal experience with the BNZ's private banking service:
"I was invited a while back and can confirm the service is free. I don't believe there are a lot of soft benefits - there's a quarterly magazine, and I get invited to online investor videos once in a while. I believe my parents get invited to more things, but, to be honest, I think Lexus sends out more (and better) invitations than the bank does".
"If I was no longer a private banking client, I'd most likely miss the cheaper currency exchange rates. Also, if I need to make important financial decisions, a personal banker on call is helpful. However, I often get the banker's secretary - I guess I am not important enough to get the actual banker".
"There are benefits I don't use that have value. These include the BNZ partners centres (free bookable boardrooms/workspaces) in most cities, investment advice and business assistance services. I invest outside of the BNZ and am happy to do so".
Another MoneyHub user outlines a personal experience with the ANZ's private banking service:
"I find ANZ private bank useful, but I rarely invest with their wealth team due to the limited options. I value the benefits, such as having the bank come to me when I need them and always getting someone who knows what they're doing. I fear it would take longer to get in front of the right person without private banking. I'm also invited to events, receive regular investment updates and get a 'special' service".
A wealthy MoneyHub user shares his experience with HSBC (and ANZ and ASB):
"We had a private banking relationship with HSBC for as long as I could remember, although recently we've been demoted from Private Banking to their new Jade offerings as we shifted assets away".
"HSBC maintains a presence throughout the globe, and I've found this particularly useful. That said, their meagre presence in New Zealand is somewhat laughable. They don't offer as much as a personal credit card. I don't think HSBC's Private Banking has much of an operation in New Zealand; most of the services we've received are from their retail banking division (i.e. HSBC Premier). My experience is that HSBC's foreign exchange rates are usually the worst among banks, so Private Banking didn't help us there".
"My view is that HSBC's Private Banking strongpoint is a banker to speak to about your banking needs, and they can open a bank account in any country they operate as part of their service. I've received invites from various conferences they'd hold in various places from time to time. However, I don't care for their prepackaged investment products, and their brokerage rates have not been competitive when I've compared the market. However, HSBC Private Banking does focus on family wealth and have relationships with accountants and lawyers to set up trusts and structures".
"Beyond HSBC, I also have ANZ and ASB Private Banking. I believe that we'd be better served by retail banking; as enigmatic as it sounds, Private Banking is quite useless once you take away the fuss and buzz, especially for individuals who prefer a more hands-on approach towards investments. At best, I've been offered a 0.05-0.10% discount under the published rates for mortgages, but other banks have been cheaper anyway. Some of the perks are certainly nice to have (and it's nice to get a Christmas card etc.), but those aren't necessarily exclusive to Personal Banking clients".
Other users have commented that their private banking offered value by offering:
However, having discussed private banking pros and cons with several customers from all four banks, the consensus was that few used the bank's investment products. The reasons for investing elsewhere were better options, cheaper fees and historically superior performance.
One MoneyHub user, a farmer in Otago, shared the following:
"I sold two farms at the start of 2020 before COVID. I was already a Westpac private banking client but didn't want to invest in their funds. So instead, I put the majority of the money in Milford Asset Management. 2020 was a very good year, although that's down to Milford, good timing and general market conditions coming together. I don't believe the Westpac funds performed nearly as well as Milford - the difference is probably around a million dollars in additional gains".
A MoneyHub user outlines a personal experience with the BNZ's private banking service:
"I was invited a while back and can confirm the service is free. I don't believe there are a lot of soft benefits - there's a quarterly magazine, and I get invited to online investor videos once in a while. I believe my parents get invited to more things, but, to be honest, I think Lexus sends out more (and better) invitations than the bank does".
"If I was no longer a private banking client, I'd most likely miss the cheaper currency exchange rates. Also, if I need to make important financial decisions, a personal banker on call is helpful. However, I often get the banker's secretary - I guess I am not important enough to get the actual banker".
"There are benefits I don't use that have value. These include the BNZ partners centres (free bookable boardrooms/workspaces) in most cities, investment advice and business assistance services. I invest outside of the BNZ and am happy to do so".
Another MoneyHub user outlines a personal experience with the ANZ's private banking service:
"I find ANZ private bank useful, but I rarely invest with their wealth team due to the limited options. I value the benefits, such as having the bank come to me when I need them and always getting someone who knows what they're doing. I fear it would take longer to get in front of the right person without private banking. I'm also invited to events, receive regular investment updates and get a 'special' service".
A wealthy MoneyHub user shares his experience with HSBC (and ANZ and ASB):
"We had a private banking relationship with HSBC for as long as I could remember, although recently we've been demoted from Private Banking to their new Jade offerings as we shifted assets away".
"HSBC maintains a presence throughout the globe, and I've found this particularly useful. That said, their meagre presence in New Zealand is somewhat laughable. They don't offer as much as a personal credit card. I don't think HSBC's Private Banking has much of an operation in New Zealand; most of the services we've received are from their retail banking division (i.e. HSBC Premier). My experience is that HSBC's foreign exchange rates are usually the worst among banks, so Private Banking didn't help us there".
"My view is that HSBC's Private Banking strongpoint is a banker to speak to about your banking needs, and they can open a bank account in any country they operate as part of their service. I've received invites from various conferences they'd hold in various places from time to time. However, I don't care for their prepackaged investment products, and their brokerage rates have not been competitive when I've compared the market. However, HSBC Private Banking does focus on family wealth and have relationships with accountants and lawyers to set up trusts and structures".
"Beyond HSBC, I also have ANZ and ASB Private Banking. I believe that we'd be better served by retail banking; as enigmatic as it sounds, Private Banking is quite useless once you take away the fuss and buzz, especially for individuals who prefer a more hands-on approach towards investments. At best, I've been offered a 0.05-0.10% discount under the published rates for mortgages, but other banks have been cheaper anyway. Some of the perks are certainly nice to have (and it's nice to get a Christmas card etc.), but those aren't necessarily exclusive to Personal Banking clients".
Other users have commented that their private banking offered value by offering:
- Small mortgage interest rate discounts (although this isn't consistently applied)
- Tickets for events
- The ability to bypass filling out forms
- A call-back service (i.e. email the private banker and have him/her call you back)
However, having discussed private banking pros and cons with several customers from all four banks, the consensus was that few used the bank's investment products. The reasons for investing elsewhere were better options, cheaper fees and historically superior performance.
One MoneyHub user, a farmer in Otago, shared the following:
"I sold two farms at the start of 2020 before COVID. I was already a Westpac private banking client but didn't want to invest in their funds. So instead, I put the majority of the money in Milford Asset Management. 2020 was a very good year, although that's down to Milford, good timing and general market conditions coming together. I don't believe the Westpac funds performed nearly as well as Milford - the difference is probably around a million dollars in additional gains".
Frequently Asked Questions
Who is eligible for private banking?
It varies between banks, but usually, it will be someone with funds to invest over $2m, large borrowings, and/or a $250,000+ annual salary. Our guide to each bank's eligibility is outlined here.
What questions should I ask a private banker?
The answer depends on what you need – some people, primarily business owners, may want to know about borrowing and financing. In contrast, a retired private bank client may want to know about investing and term deposits.
What are the perks of private banking?
The biggest benefit is avoiding a bank's main customer support centre and going directly to the dedicated private banker and associate you're assigned. This means the bank can 'come to you', and you'll avoid the need to fill out forms and visit the bank for an appointment. Other benefits include more favourable interest rates (for lending and deposits) and invite-only events and seminars.
What is the difference between a private bank account and a normal bank account?
In most cases, nothing. Private banking clients have a bank account similar (or the same) as the bank's other customers. It may have a different interest rate for savings and overdraft, but the day-to-day functionality is the same. While there aren't any special private banking credit cards or debit cards, the bank will prioritise your needs with a dedicated banker who is on call to help.
MoneyHub User Insights
If you have an experience about private banking you would like to share, please email us. We're interest in comments around the following questions:
We appreciate your time to help us improve our guide.
- What bank are you with?
- Did you apply for private banking, or were you invited?
- Do you pay anything by way of a monthly fee to be a private bank client? (and if so, how much?)
- Does your private banking discount the interest rate on your mortgage? (if so, how much)
- Are you invited to events, and/or do you receive special offers by being a private banking client? If so, can you outline your experience?
- If you were no longer a private banking client, what benefit(s) would you miss most?
- What service do you receive that you believe is unique to private banking?
- Do you invest with your bank, and does private banking give you more choices, or is there no difference to what your bank offers all retail clients? (please explain your experience)
We appreciate your time to help us improve our guide.
