How The Wealthy Folks’ Banking Habits Differ From Ours
Money management is an art and the key to wealth is successful money management. One key feature is that the rich and affluent people know when to save and also when to borrow. The key to affluence is thus mastering the science and art of funds management. The really rich lead very simple lives and do not flaunt their wealth at all. Then they tend to save and invest rather than spend on luxurious mansions, cars, yachts, airplanes, jewellery, etc. And if they invest in risky schemes, they cautiously do so in stages and preferably not with their own funds.
Individuals with a huge net worth are very conservative in money management and incline to take a contrarian method to handling their money. Research reveals that the ultra-rich and rich set themselves apart from the common men, especially when it comes to banking, saving, and investing. A golden Rule is that even small amounts should be saved and wasteful expenditure is curbed. A review of some banking habits of the affluent offer instructive results for us all, even if we may not be part of the ultra-rich; you could possibly apply some of these simple tactics when managing your personal finances;
Sticking to The Big Banks
Most community banks give a lot of services to their clients, the wealthier individuals habitually turn to market-tested, big branded and trusted banks to meet their basic banking needs. As per a recent survey, 32% of Americans worth anywhere from $5 million to $25 million, prefer doing business with either Wells Fargo or Bank of America. The question to ask is why do the wealthy prefer to ignore the local banks? Technology could be one important factor for differentiation as these banks invest a lot in technology to ensure data security and also ease of doing business.
Community banks and credit unions are no doubt becoming more technologically advanced but large banks are expected to offer the most innovative and latest products and services. Another key concern is that of accessibility. The number of branches of a big-named bank is likely to be more in multiple locations when compared to a local bank, which only operates in specific geographical areas.
Private Wealth Management is favored more than Traditional Banks
Someone with over $5 to $10 million in loose change for investment is not likely to queue up at a bank and request for a routine checking account. Should they do so, they may have to give up a few valuable benefits usually available with private financial services. Identifying a good private wealth manager or a reputed financial advisor, after a careful search, makes much more sense when there is a great deal of money involved.
Private banks like Northern Trust, BNY Mellon and Switzerland’s UBS, are known to control billions worth in assets on behalf of very wealthy clients. Much of their appeal is due to the reason that private financial institutions are offering tailored wealth management services and sound financial advice. Rather than deal with indifferent bank tellers or call a customer service help desk for account related queries, rich clients prefer to speak with a dedicated banker who is well-conversant with their accounts and investments.
Never Miss a Chance to Increase Their Wealth
Most rich investors understand that they must continue to make shrewd investments to preserve or grow their wealth and alsoimprove their net worth further. A recent report reveals that individuals with net worths between $100,000 and $25 million, maintain about 13% of their resources in liquid or cash investments while 60% of their resources are in equities. Thus while the affluent do park big money in their savings and checking accounts, they continue to invest much of their affluence in the equities market.
In sharp contrast, a survey revealed that typically, American investors keep 65% of assets in cash while only 18% is maintained in equities. So what did we learn here? When it concerns investing and banking, the affluent and ultra-rich do not let their assets waste away in accounts offering very paltry returns. They are more than willing to take a wager with their funds and position themselves accordingly to earn much more returns.
The Final Word
With millions of dollars at stake in their bank accounts, they need to take unique decisions for safety, security and prompt service when banking with their money. Apart from using major banks and private financial institutions, affluent people tend to put money into risky investment opportunities and hence focus on seeking various ways to preserve and grow their wealth.
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