A private bank, an external asset manager and a family office can all look after the same fortune. They do it from different sides of the table, and that difference decides more than most families expect.
Here is how I explain the three, without the sales layer.
The Private Bank
A private bank does everything under one roof. It holds the assets, runs the mandate, lends against the portfolio, executes the trades and produces the statement.
That integration therefore buys real convenience. One relationship, one statement, one number to call, and a balance sheet behind it when you want Lombard credit at short notice.
The trade-off sits in the same sentence. The institution that advises you also manufactures products, sets the custody fee and owns the platform. Good banks manage that tension openly. It does not disappear because they manage it well.
The External Asset Manager
An external asset manager, also called an independent wealth manager or EAM, separates advice from custody. Your assets stay at a custodian bank in your name. The manager holds a limited power of attorney to invest, and nothing else.
That structure changes the incentives. The external asset manager does not manufacture the products, does not own the platform and does not earn the custody fee. When the custodian disappoints, the relationship moves and you stay.
Naturally, it also means two invoices instead of one, and a client who must understand a tri-party arrangement. Most families grasp it in a single meeting. Some never warm to it.
Since 2020 every Swiss external asset manager needs a FINMA licence and supervision by an approved supervisory organisation. The old picture of a lightly regulated boutique belongs to another decade.
The Family Office
A family office, by contrast, manages a family rather than a portfolio.
A single family office employs its own people for one family: investments, tax, legal, property, governance, sometimes the aircraft and the art. A multi family office does the same for several families and shares the cost.
The threshold is higher than the brochures suggest. Running a credible single family office means salaries, premises, systems and succession for the office itself, which usually needs several hundred million to make sense. Our list of Swiss single family offices gives a feel for who actually clears that bar.
Comparing a Private Bank, an External Asset Manager and a Family Office
| Private bank | External asset manager | Family office | |
|---|---|---|---|
| Who holds the assets | The bank itself | A separate custodian bank | Several custodians, usually |
| Product shelf | Own products plus selected third parties | Open, across providers | Open, plus private markets and direct deals |
| Typical entry size | From roughly CHF 1 to 5 million | From roughly CHF 1 to 3 million | From roughly CHF 100 million upwards |
| Lending | On its own balance sheet | Arranged at the custodian | Negotiated across banks |
| Scope | Banking and investments | Investments and coordination | The family’s whole affairs |
| Cost shape | One all-in relationship | Management fee plus custody | A fixed cost base you carry |
| Continuity risk | Institution outlives the banker | Depends on the firm’s succession | Depends on the family |
Ranges are indicative. Every provider draws its own line, and the numbers move.
What Actually Decides Between a Bank and an External Asset Manager
Size, however, matters less than people assume. Three other things matter more.
The first is complexity. One country, one currency and a straightforward balance sheet rarely need three institutions. Four passports, an operating company and property in two jurisdictions change that answer quickly, and so do the cross-border rules that come with it.
The second is what you want to control. Families who want to choose their own custodians, compare their own managers and see every fee line gravitate towards an external asset manager or their own office. Families who want one number to call stay with a bank.
The third is time horizon. A family office is an institution you are founding, with hiring, governance and its own succession problem. An external asset manager relationship you can end with a letter.
The External Asset Manager Hybrid Most Families End Up With
In practice, few families pick one and stop.
In practice, the common pattern is a core mandate with an external asset manager, custody split across two banks, a lending relationship with the bank that prices it best, and a small internal team once the family grows. The open platform makes that combination workable, and consolidated reporting makes it legible.
As a result, that hybrid is usually cheaper than a family office and more independent than a single bank. It also demands somebody who coordinates it, which is precisely the job a good independent wealth manager does.
What to Ask Before You Choose
Ask who earns what, on every layer, in writing. Find out what happens when the person you like leaves. Then ask which products the shelf excludes and why. Above all, check how the onboarding runs, because the anti-money laundering side is where timelines really go, and ask how a client of your profile is actually served rather than how the firm describes its typical client.
Then ask the same questions of the other two. The answers diverge far more than the marketing does.
Choosing between a private bank, an external asset manager and a family office is not really a question about returns. It is a question about who sits on your side of the table, and how many people that costs you.
