For decades, many investors have naturally gravitated towards banks and private banks when seeking investment advice. The perceived convenience of having lending, banking, foreign exchange and investment management under one roof can be appealing.
However, when it comes to managing long-term wealth, trustees, fiduciaries and private clients may benefit from asking a simple question: should banking and investment management really be provided by the same institution?
Increasingly, investors are discovering that independence can bring significant advantages.
Independence Matters
Perhaps the most important distinction between an independent investment manager and a bank-owned investment proposition is the ability to remain truly objective.
Many banks operate vertically integrated investment models. Their portfolios often contain in-house funds, structured products or proprietary solutions manufactured within the wider banking group. While these solutions may be entirely appropriate, they can create an inherent preference towards internal products.
An independent investment manager is typically free to select from the widest available investment universe. The focus is not on promoting a particular fund range, but on identifying the most suitable opportunities available across the market.
For trustees and fiduciaries, this independence can provide confidence that investment decisions are being driven solely by client objectives rather than product distribution considerations.
Avoiding the "Layer Cake" of Charges
Transparency around fees has become increasingly important.
When investors access investment solutions through a bank, there can sometimes be multiple layers of charges. These may include portfolio management fees, underlying fund costs and, in some cases, additional product-related expenses.
Independent investment managers often favour direct investments, carefully selected third-party funds or bespoke portfolios, enabling clients to better understand exactly what they are paying for and where value is being added.
The question should never be whether fees exist, but whether clients are receiving genuine value and transparency in return.
Local Decision-Making Remains Valuable
Investment decisions are often made during periods of market uncertainty, when speed and pragmatism matter most.
Within larger banking organisations, investment decisions may be determined by centralised committees operating in different jurisdictions and serving global client bases. While this can provide consistency, it can also create distance between the decision-makers and the clients they serve.
Independent firms often benefit from flatter structures and more direct access to investment professionals. Trustees and advisers can engage directly with those making portfolio decisions, resulting in greater transparency, accountability and responsiveness.
In a rapidly changing market environment, that accessibility can prove invaluable.
A Broader View of Risk
Consolidating banking and investment relationships with a single provider may feel convenient, but it can also create concentration risk.
If banking facilities, lending arrangements, custody relationships and investment portfolios all reside within the same institution, any disruption affecting one part of the relationship may have wider implications across the entire wealth structure.
Maintaining separate specialist providers can create greater resilience and encourage stronger oversight, ensuring each provider remains focused on delivering excellence within its area of expertise.
Service Over Scale
Large organisations inevitably serve large client bases.
Independent investment managers often differentiate themselves through a more personalised approach, building long-term relationships with trustees, professional intermediaries and families. Continuity of service can be particularly important for trusts, foundations and fiduciary structures where investment decisions need to reflect unique circumstances and evolving objectives.
Clients may also find they have direct access to senior decision-makers, rather than operating through multiple layers of relationship management.
The Best of Both Worlds
Banks play a critical role in providing lending, custody, transactional services and wider financial infrastructure. For many clients, they remain an essential partner.
However, banking and investment management require different skills, different expertise and often different mindsets.
Just as few would choose a single adviser to act simultaneously as lawyer, accountant and trustee, investors may wish to consider whether their banking provider should also be their sole investment manager.
The most effective arrangements are often those that combine best-in-class banking services with independent investment expertise.
- Tim Shallcross, Head of Marketing, Sales and Business Delivery
The information in this article is provided for general informational purposes only and does not constitute tax, legal, or financial advice. It should not be relied upon as a substitute for professional advice tailored to your individual circumstances. Tax rules and regulations may vary by jurisdiction and are subject to change. You should always seek advice from a qualified professional before making any decisions based on the information contained in this article.