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Once you've reached a certain level with your finances, real questions emerge over "How do I hold onto this?" For the many who've found wealth outside the world of finance, figuring out the smart and responsible actions to take with what you've earned can pose an intimidating challenge. One popular option made for this very issue is private banking.

What Is Private Banking?

Private banking is the exclusive financial services a bank provides to any client it deems a High-Net-Worth Individual (HNWI). Each bank sets its own bar for what constitutes a HNWI, but generally, it equates to those with at least $1 million in liquid financial assets. This doesn't always hold. A good number of financial institutions allow private banking services for those with only six figures in investible assets. Chase Private Client (JPM - Get Report) , for example, only requires an average balance of $250,000 or more to access its private banking services. Some banks even allow a limited number of private services for those with only $50,000 in assets.

These services come from a "private banker" or "relationship manager" that the bank assigns to each HNWI in question. This private banker will take a comprehensive examination of a client's total financial situation and then tailor a series of services to the individual's specific financial need. These can include:

Investment planning: Private bankers draw up investment and portfolio options for you to consider.

Tax advice: Private bankers will review the best way you can manage your finances under current tax law as well as weather potential changes to tax in law in the future.

Cash flow management: Private bankers help you understand and plan out your everyday cash flow. They can also advise you and how best to handle your bills.

Risk-management solutions: Private bankers offer plans designed to insulate you from damage due to liquidity risks, interest rate fluctuations, and foreign exchange rates.

Estate planning: Private bankers give advice on how to ensure your wealth passes down to future generations.

Custom credit strategies: Private bankers can recommend creative tactics such as "strategic borrowing" to optimize your cash flow and tax expenses.

Aside from these services, private banking also opens you up to a host of perks at your chosen bank. You can qualify for preferential pricing, such as higher interest rates or freedom from overdraft charges and fees. You can also access prime interest rates on mortgages, specialized loans, or lines of credit (LOC). If you deal significantly in overseas trading, the foreign exchange rates you deal in may be better than normal. In addition, a host of exclusive financial offers may open up for you. These can include hedge funds, private equity partnerships, or alternative investments.

What Are the Pros of Private Banking?

Privacy: A major pro of private banking is that it's just that, it's private. A private bank's clients, their financial evaluations, and the services offered to them will typically remain completely anonymous. If a private bank's financial evaluations and advice became public, its competitors would have a chance to lure clients away with its own set of solutions. This in mind, it's a safe bet that the dealings between you and your private bank will remain under tight wraps.

Access: In addition to the services private bankers provide, all the aforementioned special pricing and exclusive offers become available to you once you become part of the program. These specialized interest rates or investment opportunities can be a huge benefit when you're in a long-term relationship with the same financial institution.

What Are the Cons of Private Banking?

Instability: Private bankers tend to see a high turnover rate. This could mean that the private banker you work with will change a few times, forcing you to repeat the process of building a relationship and understanding in this personalized service.

Conflicts of Interest: Unlike an independent money manager, private bankers are paid by the financial institution that employs them rather than directly by their client. This could create instances where they have to choose whether to place your interest first or their bank's in the advice they give you.

Limited Access and Services: While private banking gives you access to exclusive investment deals, these will generally be limited to the proprietary products of the banks. In addition, the services private bankers provide, be they investment, tax, or legal advice, will certainly be competent and professional. But they'll also be more standardized and, with that, perhaps less creative than what you could find in outside services. The passage of the Dodd-Frank act following the 2008 financial crisis may also factor into these services. With an increased pressure for transparency and accountability, the banks may offer you a more limited, but safer service than what others might.

Private Banking vs. Wealth Management

Wealth management refers to a broader range of services than private banking, all aimed toward optimizing a client's portfolio. Unlike private banking, it's theoretically available to anyone, not just HNWIs. As the name suggests though, it's typically the wealthy that seek out and can afford these services.

Wealth management services are the primary means individuals use when seeking to invest in a variety of funds and stocks. They come in all sizes, ranging from massive corporations like Goldman Sachs (GS - Get Report) to licensed, independent financial advisers and portfolio managers.

A key difference between these two services comes down to investing assets. Wealth management services will directly invest the assets of their clients. But private banks, while they can and do offer investing advice to their clients, very rarely give themselves license to go ahead and invest those assets for their client.

In private banking's defense though, wealth management can't offer any of the facility services such as lower interest rates or optimal foreign exchange fees that private banks can.

So while wealth management refers to a broader and more directly-involved range of financial services, private banking can occasionally encompass the majority of these, and in addition, offer the perks that come from having a special relationship with your bank rather than just a wealth management corporation or financial adviser.

Examples of Private Banking

Chase (JPM - Get Report) , Credit Suisse (CS - Get Report) , Citibank (C - Get Report) , Merrill Lynch, Morgan Stanley (MS - Get Report) , UBS (UBS - Get Report) , and Wells Fargo (WFC - Get Report) offer some of the most popular private banking services today. The most popular of these, UBS, requires the standard $1 million in assets to access its private banking services. But others, like Chase, as mentioned before, only require $250,000 for access to some of its private banking services.

Included in this are perks like discounted mortgage interest rates, a $750 discount on closing costs for loans, access to Sapphire Reserve or Sapphire Preferred cards for travel perks, and wealth management services like financial advisory services, mutual funds, securities-based lending, annuities, and college planning, including 529 plans that come with a few tax advantages.

It's never too late - or too early - to plan and invest for the retirement you deserve. Get more information and a free trial subscription to TheStreet's Retirement Daily to learn more about saving for and living in retirement. Got questions about money, retirement and/or investments? We've got answers.