InvestorQ : How do banks earn from wealth management services?
seema Upadhyaya made post

How do banks earn from wealth management services?

Answer
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Gauravi Patel answered.
8 months ago


Wealth management services are generally provided by the investment banks and are not really attractive to the bankers. However, they are also a good source of revenue for the banks. Banks generally receive a commission on the assets they manage, which could be around 1-2.5%. But when the assets that are under management are in billions, this could derive good profits to the banks.

Banks also charge fees for managing the assets, for the purpose of wealth management. The fee structure is often very attractive and fetches banks good money. These banks also charge fees from the investors for advising them on the right portfolio or to especially design a portfolio that fulfills the customer's needs.

Wealth management is not the only source of income that investment banks have. These banks also charge a good amount from companies that seek advice on merger & acquisition. It also, make money by purchasing securities at lower rates and then selling them in the secondary market for higher prices.

Banks charges this fee from the investors and this fee/commission is already fixed or a fixed percentage of assets under management.