The mahogany desk. The annual review over lunch at the right restaurant. The personalised Christmas gift. The tone of continuity and alignment — of an institution whose interests are entirely coincident with yours.
They are not.
A private bank is a commercial entity with shareholders, a quarterly earnings cycle, and a product shelf whose profitability is measured independently of whether those products are the best available options for you. The relationship manager is an employee of that entity, incentivised on metrics that are not always disclosed, whose loyalty — when tested — is to the institution that employs them, not the client they serve.
Understanding this is not cynicism. It is the precondition for managing the relationship correctly.
The Structural Conflict No One Names
Private banks manufacture products. They also distribute products. When the bank is both manufacturer and distributor of what it recommends to you, the question of whose interest the recommendation serves is not always answerable in your favour.
The structured product that earns the bank 3% in embedded margin. The fund managed by an affiliated asset manager. The currency overlay that generates a spread the client does not see but the institution captures. These are not hypothetical scenarios. They are standard mechanisms in private banking revenue models across every major institution.
None of this is disclosed in the relationship review meeting.
Why the Ultra-Wealthy Are Restructuring Their Banking Relationships
The most sophisticated family offices have long since separated their banking relationships from their advisory relationships.
They maintain private bank relationships for specific, functional purposes — custody, lending against illiquid assets, access to primary issuances where the bank’s distribution network provides genuine access. They do not ask private banks for investment advice.
The investment advice comes from independent advisers with transparent fee structures and no product to sell. The custody is at the bank. The relationship manager is used as a logistics function, not a strategic one.
This architecture is more expensive to maintain. It is also dramatically more aligned.
The Question Worth Asking
The next time your relationship manager presents a recommendation, ask a clean question:
What does your institution earn, in total and in all forms, from this recommendation?
The quality of the answer — its completeness, its specificity, its absence of deflection — tells you more about the relationship than any Annual Review lunch.
The institutions that answer cleanly are worth keeping. The ones that cannot answer cleanly are managing a relationship whose terms you have not been told.
What Genuinely Aligned Looks Like
It is not a private bank. It is a fee-only, conflict-disclosed advisory structure built around your family office’s specific needs — with the bank retained for the functions where it provides genuine, irreplaceable access, and independent advisers retained for everything else.
This is not radical. It is how the most sophisticated wealth in the world is managed.
The principals who have made the transition do not return to the old model.
Partnership is a word. Alignment is a structure. Know which one you have.
