Private banks softening stance on AUM


With new pension freedoms being introduced next month, many of our clients will be considering what is the best home for their investments. The new rules mean anyone over the age of 55 can take what they want, when they want, from their pension fund and won’t have to buy an annuity.

With increased flexibility as to what you do with your money, being forced to hand over substantial assets to a private bank in order to secure a mortgage at a decent rate, can cause resentment. It’s not so much that clients are set against doing it but many prefer to do so in a considered way, once they’ve got to know the people who will be looking after their money.

Many clients would rather give themselves time to get to know the bank and let the relationship evolve, with assets passing across once they are comfortable with the set up. The emphasis is then on the bank to prove its worth and to develop a relationship with the client.

The good news is that attractive borrowing terms can still be secured even if there is a go-slow in transferring assets under management (AUM). Clients must be prepared to develop a relationship: this is not a way of avoiding that but there are other options. Custodianship of assets might be worth considering, for example – keeping your funds with the same manager and transferring the investment to the custodianship of the bank instead.

A professional client we introduced to a private bank recently has started to refer his clients across to the bank demonstrating his willingness to developing a relationship with them. Because of this, the bank was happy not to receive any AUM from the client.

It is certainly worth considering: we know of private banks who may lend from as little as 2.25 per cent over base rate with no assets under management required. Please get in touch for more information.

Jonathan Harris
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Jonathan Harris