Private Banking vs Independent Wealth Management – which is cheaper?
Most investors think about performance and reputation when choosing a wealth manager. But the real difference is often hidden in the fees and costs you actually pay. Custody fees, mandate fees, hidden product margins, ticket fees – they all reduce your returns. The problem: private banks are not always transparent, whereas independent wealth managers often disclose all fees.
In this article, we compare Private Banking fees with Independent Wealth Management costs. And because numbers speak louder than words, you can also use our free Wealth Management Fee Comparator Tool to calculate your own costs. Simply enter your Assets under Management (AUM) and your annual portfolio turnover, and see the results in seconds.
Why Costs Matter in Wealth Management
- Custody Fees: Higher for private banks, lower for independent managers.
- Mandate Fees: Similar ranges, but independents are often more flexible.
- Transaction Costs: Private banks hide them in spreads, independents show ticket fees.
- In-house Products: Private banks often add hidden costs of 0.25%–0.75% p.a.
Even slight differences add up. On a CHF 20 million portfolio, just 0.25% in hidden costs means CHF 50,000 lost every year.
Calculate Your Own Costs
Use our interactive fee calculator to compare Private Banking and Independent Wealth Management. Enter your portfolio size and turnover, and see the difference in black and white.
Private Banking vs Independent Wealth Management — Simple Cost Comparator
Your inputs
Private Banking (Direct client)
| Total (yearly) | — |
|---|---|
| Total (% of AUM) | — |
Independent Wealth Management
| Total (yearly) | — |
|---|---|
| Total (% of AUM) | — |
Method (fixed)
- Turnover applies to full AUM: traded value = AUM × turnover% (buy + sell combined).
- Asset mix fixed at 50% equities / 50% bonds.
- PB trading cost = 0.40% on equity trades + 0.20% on bond trades (on traded value).
- IWM trading cost = ticket CHF 125 per trade side. Number of sides = traded value ÷ (5% × AUM).
- Custody floors: PB CHF 1’500; IWM no minimum.
- Mandate fee (discretionary) = 1.00% p.a. on AUM (both columns).
- PB in-house (hidden cost) adds +0.25% p.a. on AUM (toggle above).
- Taxes, FX, stamp duty, extra TERs beyond in-house uplift are omitted for simplicity.
Understanding the Results
Private Banking: Higher custody, plus hidden in-house product costs if used. Transaction costs are bundled into spreads and not always visible.
Independent Wealth Management: Lower custody (no minimums), transparent ticket fees, and usually access to cheaper ETFs and institutional funds. The result: more of your money stays invested, less goes to fees.
A worked example: CHF 5 million, 50% turnover
Take a CHF 5 million portfolio with an annual turnover of 50%, using the method of the calculator above. The traded value is CHF 2.5 million per year.
| Cost component (per year) | Private Banking | Independent Wealth Management |
|---|---|---|
| Mandate fee (1.00%) | CHF 50,000 | CHF 50,000 |
| Trading costs | CHF 7,500 (0.40% equities, 0.20% bonds) | CHF 1,250 (10 tickets à CHF 125) |
| In-house products (+0.25%) | CHF 12,500 | – |
| Total before custody | CHF 70,000 | CHF 51,250 |
The difference is CHF 18,750 per year before custody fees, or about CHF 187,500 over ten years without compounding. The mandate fee is the same in both columns. The gap comes from the costs clients rarely see on a statement.
What the simulation leaves out
The calculator keeps things simple on purpose. In practice, several further costs apply to both models:
- Swiss stamp duty on securities trades, typically 0.075% on Swiss and 0.15% on foreign securities for the client.
- VAT of 8.1% on asset management fees.
- FX margins when trading in foreign currencies, often hidden in the exchange rate.
- Fund costs (TER) of ETFs and funds beyond the in-house uplift.
These costs do not change the conclusion, but they show why an all-in view matters.
Five fee questions to ask before you sign
- What is my total annual cost in CHF and in % of assets, including custody and trading?
- Are transaction costs charged as tickets or hidden in spreads?
- Which share classes are used, and are retrocessions passed on to me?
- What FX margin does the bank apply?
- Is there a minimum fee, and how does it change if my assets grow?
Frequently asked questions
Is independent wealth management always cheaper than a private bank?
Not always, but often. The main savings come from lower custody fees, transparent ticket fees and the absence of in-house product margins.
Why is the mandate fee the same in both columns?
To compare like with like. In practice, mandate fees vary by firm and can often be negotiated.
Can I negotiate private banking fees?
Yes, especially for larger portfolios. Ask for an all-in fee proposal in writing and compare it with the totals from the calculator.
Conclusion: Transparency Wins
The right wealth manager is not only about performance or brand. It is about how much of your wealth you keep after all fees and hidden costs. Our calculator shows that in most cases, Independent Wealth Management is cheaper and more transparent.
👉 Try the tool with your own numbers, compare the totals, and see how much you could save. Over ten years, the difference can reach hundreds of thousands of francs.
Disclaimer: This article is for informational purposes only. It does not represent financial advice. Please consult a licensed professional before making investment decisions.
Source: https://vapa.ch/fee-simulation-between-private-bank-and-independent-wealth-manager/ · vapa.ch
