The difference between a family office and a private bank is who they work for. A private bank is a division of a bank that serves many wealthy clients with banking, lending, custody and investment products. A family office is the family's own organisation. It makes the investment decisions and often uses several private banks to carry them out.
What is a private bank?
A private bank serves wealthy individuals and families inside a larger bank. Its services usually include:
- deposits, payments and foreign exchange
- lending, including loans secured against a portfolio or property
- custody of securities
- investment products, managed portfolios and advice
- estate and trust services through specialist teams
Each client works with a relationship manager, who serves many clients and connects them with specialists across the bank.
What is a family office?
A family office is a private organisation that manages one family's wealth and affairs, or several families' in the case of a multi family office. It sets the investment strategy, runs reporting across every bank and manager, and handles administration and family services.
For the basics, see our guide to what a family office is and our comparison of single family office vs multi family office setups.
Family office vs private bank: side by side
| Private bank | Family office | |
|---|---|---|
| Serves | Many clients | One family (or a few) |
| Earns | Fees, spreads, product margins | Funded by the family; MFOs charge fees |
| Core services | Banking, lending, custody, products | Investment decisions, administration, family services |
| Independence | Sells its own and third-party products | Buys from whichever provider fits |
| Direct deals | Rare | Common |
Family office vs private wealth management
"Private wealth management" is a broad term. It covers private banks, the wealth divisions of brokerages, and independent advisors that manage money for wealthy clients. All of them serve many clients.
A family office is dedicated to one family (or a few, for a multi family office). It coordinates these providers on the family's behalf.
When each one fits
- A private bank fits when a family wants banking, lending and investment management in one relationship, and its affairs are simple enough for one relationship manager to coordinate.
- A family office fits when the family's affairs have outgrown a relationship manager: several banks, private investments, operating businesses, trusts, and family members who need consolidated reporting. Our guide to family office minimum net worth looks at when that point arrives.
- Both fit for most large families. Many start with a private bank and add an office as complexity grows.
How a family office and a private bank work together
Most large family offices keep private banking relationships for execution. In practice:
- Custody. The office holds assets at one or more banks.
- Lending. Banks provide credit lines and mortgages, often secured against the portfolio.
- Execution. Trades, foreign exchange and payments run through the banks.
- Oversight. The office compares banks and managers, negotiates fees, and consolidates reporting into one view for the family.
Working with several banks gives the office choice and a basis for comparison. This is general information, not legal or tax advice.
What it means if you are raising capital or selling
A private bank's product committee and a family office's CIO are very different doors. The family office can say yes to a direct deal; the bank usually cannot.
If you are a vendor, the bank is a corporate buyer and the office is a small, discreet one.
FAQ
Is a family office better than a private bank?
They serve different needs. A private bank gives many wealthy clients banking, lending, custody and investment products. A family office works for one family, makes its investment decisions and coordinates every provider. Most large families use both: the office decides, and the banks hold assets, lend and execute.
Do family offices use private banks?
Yes. Most large family offices keep relationships with one or more private banks for custody, lending, foreign exchange and trade execution. The office compares the banks, negotiates terms and consolidates their reporting, so the family sees one picture of its wealth across every institution.
Can a private bank act as a family office?
Some private banks have dedicated teams that offer family office style services to their largest clients, such as consolidated reporting and coordination with advisors. These teams remain part of the bank. A family office is owned by the family and works only for it, which gives it full independence in choosing providers.
Will a private bank invest in my startup or fund?
Private banks usually add funds to their platforms through a product committee with its own criteria, and direct deals are rare. A family office can invest directly, which makes its CIO or principal the more natural first contact for a startup founder or an emerging fund manager.
Related comparisons
- Family office vs trust
- Family office vs RIA
- Family office vs family foundation
- Family office vs investment holding company
The bottom line for a capital raiser
If you are raising capital and need the family offices in your market (each verified as active, with a live website) with their investment domains and decision-makers, see the Full USA Database and Full Worldwide Database.