Selma vs. private banker – Episode #3

In the first episode you read about all the differences between Selma and the average bank. The second episode taught you everything important about DIY investment solutions. Today, it’s time for Selma to enter the ring with private bankers. 

Before we head into this comparison, let’s define the term private banker. A private banker is a personal financial advisor who works one-on-one with high-net-worth clients, offers personalised investment advice and manages their customers’ portfolio. A private banker can either be working for a bank or can be a self-employed consultant. 

Round #01 - Costs 

Costs are always an important aspect we want to keep in mind when starting investing. Round 1 takes a look at the cost difference between private bankers and a digital financial advisor (aka Selma). 

If we keep it very general – the more human touch is required, the higher the cost is for financial advice. Many private bankers charge a percentage of your assets which can be up to 1% per year. There is also a possibility that it ranges higher, especially for smaller accounts (or on the other hand, lower for bigger ones). A “good to know” fact is, private bankers may require a fairly high minimum amount of assets to manage before they are even accessible. When reaching out to a private banker, you should definitely also talk about fee structure and professional qualifications before trusting them with all your assets. 💰

Most digital solutions will come with a set fee. If we take Selma as an example, you have a yearly fee that will get lower the more you invest. The fee includes custody, covers all trading costs and you don’t need to pay for adding or taking money out of your account. What makes Selma outstanding are the facts about a low minimum investment and that the human touch isn’t lost at all. You have the chance to reach out to a competent and knowledgeable team via mail, chat or call whenever you feel the need for it.

Round #02 - Investment options and personalisation

Access to investment options
Private bankers have access to a wide range of investment options and can offer exclusive investments, such as private equity, hedge funds and real estate investments. They might even be able to provide you access to initial public offerings (IPOs) and other exclusive investment opportunities.

Most digital solutions, such as Selma, on the other hand, offer a wide range of ETFs which are designed to provide a stable, diversified portfolio at a lower cost – with access to socially responsible investments to make sure your money does good. 🌳

Personalisation
A private banker is a human being and you can talk to them one on one. They will take a holistic view at your finances, include estate planning, tax strategies as well as charitable giving and offer you customised investment options which align with your personal values and goals. 

While a digital financial advisor might lack the human touch of a private banker, it still looks at your financial goals and risk tolerance. Selma asks you all these important questions during your onboarding and provides you with a personalised investment plan that fits your life and adapts accordingly.

Round #03 - Ease of use

Private bankers take over the care of your investments, so building and establishing a relationship with them is crucial and can be time consuming. You need to meet with them in person, provide detailed financial information, and establish a level of trust. However, once you have established a relationship, a private banker can provide you with hands-on guidance and support.

Digital financial advisors are easy to use and require little to no financial expertise. With Selma for example you can open an online account with a few clicks. After answering a few questions about your financial goals and risk tolerance, you will receive your personalised investment plan and you can start investing. Additionally, you have 24/7 access to your account. 📱

As usual, it is your decision whether the private banker or Selma has won this virtual fight. The choice of your ideal partner for your investments is totally up to you. If you prefer a personalised approach with a wider range of investment options and are willing to pay higher fees, a private banker may be a better fit. If you prefer a reliable, digital platform with a stable, diverse portfolio that helps your wealth grow long-term, Selma might be a good choice. Ultimately, both options can help you achieve your financial goals and secure your financial future.