To invest in private banking, you generally need at least $1 million in investable assets, documentation showing where that money came from, and a passed compliance review before signing a master service agreement and funding the account. In exchange, you get a dedicated relationship manager and access to funds and strategies that ordinary brokerage clients can’t buy. The onboarding is more demanding than opening a checking or brokerage account, and the fee stack is layered, so it helps to know what qualifies you, what you’ll sign, and what you’ll actually own before you start.
What It Takes to Qualify
There is no federal statute setting a universal minimum for private banking. Each institution draws its own line, and most major U.S. banks set the entry point at roughly $1 million in liquid, investable assets. The word that matters is “investable.” Your home equity, personal property, and illiquid business interests don’t count, because banks are measuring capital they can deploy into managed portfolios.
Meeting the bank’s minimum gets you in the door. Whether you can buy the products the bank sells inside that door depends on two SEC classifications.
You are an accredited investor if your net worth exceeds $1 million excluding your primary residence, or if you earned more than $200,000 individually ($300,000 with a spouse or partner) in each of the last two years and expect the same this year. You are a qualified purchaser at a higher bar: $5 million or more in investments. Qualified purchaser status opens funds that operate outside normal SEC registration under the Investment Company Act of 1940, including certain hedge funds and private equity vehicles that accredited-only funds cannot access. Your bank determines which classification you meet during onboarding and uses that determination to decide what it can legally offer you.
Documents to Have Ready
Federal law drives most of the paperwork. Under the Bank Secrecy Act and USA PATRIOT Act, banks must verify your identity, understand the nature of the relationship, and monitor for suspicious activity over time.1Office of the Comptroller of the Currency. Bank Secrecy Act (BSA) FinCEN’s Customer Due Diligence Rule adds specific requirements for identifying the beneficial owners behind any legal entities on the account.2Financial Crimes Enforcement Network. CDD Final Rule
At a minimum, expect to provide:
- Government-issued identification such as a passport or driver’s license, plus proof of address like a utility bill or lease.
- Source-of-wealth documentation. If your capital came from a business sale, the signed sale contract and bank statements showing the deposit. For inherited wealth, probate documents or a letter from the estate’s executor. For compensation-based wealth, employment contracts or corporate records.
- The last two to three years of filed tax returns.
- A financial goals questionnaire covering annual income, expected cash flow needs, and risk tolerance. The bank uses this to build the risk profile that shapes its recommendations.
Coordinating with your CPA and attorney before you contact the bank tends to compress the timeline. Having everything in a single organized digital file eliminates the back-and-forth that stretches approvals into months.
The Account Opening Process
Once your file is ready, the sequence is fairly predictable, though the timing varies by bank.
- Initial consultation request. You reach out through the bank’s wealth management channel or come in through a referral. Some banks require a referral; others accept direct inquiries if you meet the published minimums.
- Discovery meeting. A private banker interviews you about your situation, goals, and what you want from the relationship. This is also your window to evaluate their investment philosophy, fee structure, and how communication will work.
- Compliance review. The banker sends your file to an internal compliance committee. This typically takes one to three weeks, during which the bank verifies documents and screens your name against sanctions and watchlists.1Office of the Comptroller of the Currency. Bank Secrecy Act (BSA)
- Service agreement. After approval, the bank generates a master service agreement and account opening forms, usually signable electronically or in a private office.
- Funding. The bank provides wire instructions. Most institutions expect the initial capital transfer within 30 days of account activation.
- Confirmation. You receive account numbers and direct contact information for your assigned relationship manager.
Moving Existing Investments Over
If you already hold stocks, bonds, or other securities at another brokerage, you don’t have to liquidate and trigger a taxable event to move them. The Automated Customer Account Transfer Service (ACATS) lets your new bank pull holdings directly from the old account. As of late 2025, a standard ACATS transfer settles in three to four business days, down from the previous four-to-five-day window, and mutual funds and options now settle on the same timeline as other securities.3DTCC. ACATS Transformation is Underway The banker handles the paperwork, but confirm that every position moved correctly and that cost basis information carried over accurately.
What You Can Invest In
The main reason people move to private banking is access to investments that aren’t sold through standard brokerage accounts. Most are exempt from public registration under SEC rules governing private placements, which is why they’re restricted to accredited investors or qualified purchasers.4U.S. Securities and Exchange Commission. Private Placements – Rule 506(b)
Private Equity and Venture Capital
Private equity funds invest in companies that aren’t publicly traded, from leveraged buyouts of mature businesses to growth-stage deals and early-stage venture capital. The tradeoff for potentially higher returns is severe illiquidity. Lock-up periods routinely run seven to ten years, and some venture funds extend beyond that. Your capital is essentially inaccessible until the fund distributes proceeds or winds down. Minimum commitments per fund typically start at $250,000 and can reach well into the millions.
Hedge Funds
Hedge funds pursue returns that aren’t correlated with the broader stock market, using strategies like short selling, leverage, and derivatives. Lock-ups are shorter than private equity but still meaningful, often one to three years. Minimums generally range from $100,000 to several million. The strategic flexibility that creates the return opportunity also creates risks a traditional stock and bond portfolio doesn’t carry, including the possibility of large losses in a short window.
Structured Products and Pre-IPO
Structured products combine derivatives with traditional assets to create specific risk-reward profiles: some offer downside protection in exchange for capping upside, others amplify a particular market view. They’re custom instruments, and understanding exactly what you own means reading the term sheet carefully. Pre-IPO access lets you buy into late-stage funding rounds before a company goes public. The upside is buying at a lower valuation than the eventual IPO price; the risk is that not every company that plans to go public does, and those that do don’t always trade above their pre-IPO price.
What You’ll Pay
Private banking fees come in layers, and the total is usually higher than a self-directed brokerage. Understanding each layer prevents surprises.
The core charge is a percentage of assets under management, billed annually. At major institutions this typically runs from about 0.50% to 1.75% of portfolio value, with the rate declining as the account grows. On a $5 million portfolio at 1%, that’s $50,000 a year regardless of performance. The fee covers portfolio management, rebalancing, and access to the relationship team.
When your bank allocates capital into hedge funds or private equity, those funds charge their own fees on top of the bank’s fee. The traditional alternatives structure is “two and twenty”: a 2% annual management fee plus 20% of profits above a return threshold. Some funds have moved off that model, but performance fees remain standard. The all-in cost on the alternatives portion of your portfolio can be substantial.
Beyond percentage-based fees, watch for transaction charges on trades, wire fees, custody fees on certain assets, and early termination fees if you close the account before a minimum period. Ask for a full fee schedule before signing, and get the total estimated annual cost at your expected portfolio size in writing, not just the headline AUM rate.
How You’re Protected
The legal protections you receive depend on how your bank is structured and whether the professionals advising you are registered as investment advisers or as broker-dealers.
Fiduciary Duty or Best Interest Standard
If your banker operates as a registered investment adviser under the Investment Advisers Act of 1940, they owe you a fiduciary duty. That means acting in your best interest at all times, placing your goals ahead of their own. The SEC has described this as both a duty of care and a duty of loyalty, requiring elimination or full disclosure of conflicts of interest.5U.S. Securities and Exchange Commission. Commission Interpretation Regarding Standard of Conduct for Investment Advisers
If the professional making recommendations is a broker-dealer, the standard is different. SEC Regulation Best Interest requires brokers to act in your best interest at the time of a recommendation, but the obligation applies when a specific recommendation is made, not as an ongoing duty throughout the relationship.6U.S. Securities and Exchange Commission. Regulation Best Interest: The Broker-Dealer Standard of Conduct The distinction matters most where conflicts arise, such as when the bank earns higher revenue from one product than another. Ask directly which capacity your banker serves in, and get the answer in writing.
FDIC and SIPC Coverage
Cash deposits at a private bank are covered by FDIC insurance up to $250,000 per depositor, per insured bank, per ownership category.7FDIC. Deposit Insurance FAQs At private banking levels, your deposits will almost certainly exceed that cap, so you need a plan for the excess. Some banks run programs that sweep cash across multiple institutions to extend coverage; different ownership categories (individual, joint, trust) can also multiply the cap at a single bank.
Securities held in a brokerage account at your private bank are protected by SIPC up to $500,000, which includes a $250,000 limit for cash.8SIPC. What SIPC Protects SIPC protects you if the firm fails and your assets are missing. It does not cover investment losses. Many private banks carry excess SIPC insurance through private insurers for portfolios well above $500,000, but coverage terms vary. Ask for documentation of any excess coverage before you move large positions in.
Tax Filings to Plan For
The tax side is where new private banking clients most often get tripped up in their first year. Alternative investments produce documents that are more complex than the 1099s a standard brokerage sends, and some filings carry penalties if missed.
Schedule K-1s From Fund Investments
Most private equity and hedge funds are structured as partnerships, so you’ll receive a Schedule K-1 (Form 1065) rather than a 1099. The K-1 reports your share of the fund’s income, deductions, and credits, and you owe tax on that share whether or not the fund distributed any cash to you.9Internal Revenue Service. 2025 Partner’s Instructions for Schedule K-1 (Form 1065) K-1s frequently arrive late, sometimes not until September or October, so you may need to file a tax extension in April. You must report K-1 items consistently with how the partnership reported them; failing to do so without flagging the inconsistency on Form 8082 can trigger accuracy-related penalties.
One detail catches new alternatives holders off guard. If the fund manager’s compensation is structured as carried interest, gains attributable to that interest require a holding period of more than three years, rather than the standard one year, to qualify for long-term capital gains treatment. That doesn’t change how you file, but it affects the tax rate on certain distributions reported on your K-1.
Foreign Account Reporting
If your private banking relationship touches any account held outside the United States, an additional filing kicks in. Any U.S. person with foreign financial accounts whose aggregate value exceeds $10,000 at any point during the year must file a Report of Foreign Bank and Financial Accounts (FBAR) on FinCEN Form 114.10Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR) The FBAR is filed electronically through FinCEN’s BSA E-Filing System, not with your tax return. The deadline is April 15, with an automatic extension to October 15.
Penalties for skipping the FBAR are disproportionately severe. A non-willful violation carries a penalty of up to $10,000 per account per year, adjusted for inflation. A willful failure can result in a penalty of up to 50% of the highest account balance during the year or $100,000, whichever is greater. Even if your offshore account produces zero taxable income, the filing obligation still applies. If your private bank offers any cross-border services or foreign-domiciled funds, confirm with your CPA whether an FBAR is required before you fund anything abroad.