Kleinwort Benson Private Bank will take clients with between pounds 50,000 and pounds 250,000 into its Select Service. More typically, Lloyds Private Banking seeks customers with investable assets of at least pounds 75,000. Mr Newbury says the ideal private banking client is looking for “a good professional service all from one place – wills, mortgages, the core products of investment management, financial planning, pensions advice and, more and more importantly, tax. Everybody’s working much harder than they used to, they just have not got the time to shop around.”Asset management, not fancy chequebooks, is the most important element of private banking.

This is particularly true for the private banking arms of the clearing banks like Barclays and Lloyds.Mr Maguire says Lloyds Private Banking has discretionary management (where it makes all investment decisions for you) over about pounds 6bn of client funds. Hence its Mortgage Management Account offers clients a chequebook that allows them to draw down the equity in their property, as and when they need it. Subject to the normal income limits, the bank will allow clients to extend their loans to 80 per cent of the value of the property.Most private banks promise personal service and generally seek to offer a comprehensive package through a single point of contact. Warwick Newbury, the head of private banking at Coutts, estimates there are more than 2 million people who either earn more than pounds 100,000 a year or who have liquid assets of more than pounds 150,000.

Only 100,000 of that 2 million use private banks, and about 30,000 of them are Coutts customers.Kleinwort Benson Private Bank believes the financial needs of the “new money” higher-earners are very different from those of established clients, who have traditionally looked to generate an income from existing assets. Steve Reynolds, the marketing director, says: “The high-income earner is looking for a service that helps him or her to manage day-to-day income – to manage and pay down debts, and to generate assets for the future.”Kleinwort Benson’s approach recognises that the first requirement of its customers may be a need to borrow. Much of this “old money” tradition survives today, perhaps best exemplified by such organisations as the small Fleet Street bank C Hoare & Co and, half a mile west, by Coutts & Co. However, private banks are increasingly turning their attention towards the newly wealthy: businessmen who have sold their companies; high-earning professionals; and beneficiaries of the explosion in City salaries.
David Maguire, head of marketing and sales at Lloyds Private Banking, says the number of wealthy Britons is growing much faster than the population at large. I felt this was too computerised, and they needed to loosen up.”. Private banking conjures up an image of discretion and refinement.

Attentive staff in frock coats, finely furnished wood-panelled meeting rooms, portraits of the bank’s founders on the walls, and, in the background, the sound of a grandfather clock. They give you no pensions advice, because they have not got a pension to sell. In the case of our caller, Ms Davidson was quickly able to find six life offices offering cheaper rates than Virgin’s life insurance.The company says callers with a firm idea of which Virgin financial product they want and exactly how much cover they need can be dealt with in about 10 minutes. The Virgin adviser also failed to suggest buying the life insurance through a pension, which would have given our caller 40 per cent tax relief on his contributions.Ms Davidson’s verdict: “They’ve got a limited product range, so they are geared towards that for a sale. But this emphasis on risk differentiation can work against you if you have any health problems or have an unhealthy lifestyle. Virgin says this degree of detail is needed to produce a personalised quote, and argues that this means healthy customers can save money by not subsidising others.