Private Banking vs. An Independent Financial Advisor: Finding the Best Fit for Your Financial Goals

Thomas Sleep
11 hours ago
11 min read

If you're an expat, who’s really in the best place to manage your financial future? A private bank or an independent advisor?

Starting a life as an expat in the Middle East continues to grow in popularity, and those who initially came for just a year or two are now here for the foreseeable. Expats will typically relocate for professional and financial rewards. The region's strong economic growth creates attractive career opportunities with tax-free income, lower living expenses, and fewer deductions; many expats find themselves saving more than they ever did back home. Over time, this can lead to the accumulation of serious wealth.

But with that opportunity comes complexity. Chances are, you won’t stay in the region forever. Your future might include moving to another country, retiring abroad, or navigating cross-border tax and pension rules. That’s why your financial decisions today need to account for tomorrow and beyond.

So, let’s compare private banks and independent financial advisors to help you decide which is the better fit for your long-term goals.

What is a Private Bank?

A private bank offers specialised financial services to high-net-worth individuals. These banks often have exclusive tiers, like HSBC Jade, Barclays Private Client, Credit Suisse

Private or Julius Baer Core, designed to provide:

Investment portfolio management
Preferential banking services
Personal relationship managers
Concierge-style perks (airport lounges, priority support, etc.)

Private banks are sleek and convenient, but behind the premium branding lies a key issue: they’re often tied to in-house products. Your relationship manager may be incentivised to sell you their own bank’s investment funds, insurance products, or structured notes to hit their internal targets. That can create conflicts of interest.

What is an Independent Financial Advisor?

A financial advisor helps you plan, protect, and grow your wealth and your family, focusing on holistic advice rather than just investment management. However, independent financial advisers (IFAs) are different; they are not tied to a single institution. Instead, they will start with an open conversation, learning and listening, focusing on your goals and then providing a researched financial recommendation advising on solutions aligned to your needs from the entire expat marketplace.

The more international licenses the advisory has, the greater the advisor's reach, and the greater the advisor's ability to access different solutions in the territories within global international or domestic markets suited to your needs.

For expats, especially in Dubai and the Middle East, an internationally licensed and regulated financial advisor can be invaluable. This is particularly important as an expat has completely different financial planning needs and entitlements. With domestic doors shutting and international doors opening, an independent advisor will help you to understand what has changed since moving overseas, typically helping with:

Retirement planning
Children’s education planning
UK Pension Analysis
Global Tax Planning
Family and asset protection
Currency and FX risk management
Succession and legacy planning
Repatriation strategies
Wealth coaching

How Each Builds a Financial Recommendation

Private Banks: A Restricted Product Pathway

Most private banks begin with a basic risk profiling quiz. Based on your answers, they’ll slot you into a pre-made investment portfolio, usually made up of their own funds. While this offers simplicity, it often lacks customisation. Your personal goals, family situation, and tax residency are often overlooked in favour of quick portfolio allocation. If your financial planning needs stretch wider than investment management, such as UK pension advice, a private bank will not be licensed to provide such advice, so the topic may not come up in conversation.

Independent Financial Advisors: A Flexible, Goal-Based Process

Independent advisors take time to understand your complete financial picture. They might ask you:

Where are you planning on retiring?
What currencies are your assets in?
What benefits are your UK pensions currently providing?
What are your short, mid, and long-term goals?

Once they have a full understanding of your financial needs, current assets, and future financial planning shortfalls and an idea of your preferences for how to bridge any shortfall gaps, they are ready to get to work for you. They will research and build a bespoke plan that matches your needs with the right strategy and solutions.

As an independent advisory does not own any investment funds or ETFs, many provide a Model Portfolio Service (MPS) to ensure that your investment strategy meets your needs and provides diversification and cost-efficiency. This type of strategy means that over the long term, their annualised performance often outperforms private bank funds due to their ability to switch elements in or out of the portfolio based on economic outlook, cost and peer performance to ensure the strategy is fully optimised. This also takes away any underlying bias in a recommendation.

With the Model Portfolio Service built and managed by a separate team (typically qualified up to Chartered Financial Analyst status), without the direct involvement of the advisor, this means your advisor time is not spent on responsibilities outside of their qualifications or experience. Their time can then be spent more efficiently, looking after their clients and providing them with ongoing advice.

Measuring Success – Using Independent Benchmarks

Leading independent advisors subscribe to institutional data, such as Asset Risk Consultants, which provides the performance of over 350,000 funds provided by 150 of the leading asset managers and private banks in the world. This can be further broken down into currencies, timeframes, and risk categories (Defensive, Cautious, Balanced, Growth, Adventurous) to measure your portfolio’s performance against industry benchmarks. This means you’re not just “doing well” based on a bank’s internal targets; you’re genuinely keeping pace with the broader market.

In simple terms:

With a private bank, you can choose from their set menu of products and investment strategies.

With an independent advisor, they tailor the whole meal just for you. Selecting the ingredients for the meal based on your needs.

Why This Decision Matters More for Expats

Living abroad complicates financial planning. Here’s why…

You may not be in the Middle East forever, so what would be best for you right now will certainly need to be reviewed should you decide to leave the region. Should you leave the Middle East and begin paying tax again, this would create a massive tax headache if your portfolio is not structured in the right way.

We have to remember that it is the person that is taxed based on their residency, not where assets are based in the world. So, just because a private bank may be based in Dubai (DIFC) or Switzerland doesn't mean that it is tax-free forever. You may have contributed to a portfolio free from the burden of tax, but it does not mean that future income in retirement or withdrawals to fund your children’s university will be tax-free once we leave the Middle East.

This is where an independent advisor has the edge. They can tailor your financial planning to span jurisdictions to mitigate tax on future withdrawals when you leave the region. Navigating these tax liabilities in advance will only enhance your portfolio, as every dollar or pound saved in tax is then free to compound year on year. Capital gains taxes and income can vary from country to country, but if we take the average of higher rate of CGT across the western world being between 25%-30%, and income tax between 40%-50%, that is one expensive headache to avoid!

One more stealthy cost that tends to remain hidden until too late is the risk of currency exposure. Holding and growing assets in one currency when we will need income in another is a mistake many have made in the past to great expense. Think about expats who dreamt of retiring to the likes of Spain or Portugal, only to realise in September 2022 that their UK pension income would be 17% less per year compared to pre-Brexit exchange rates. But we can learn from this. An independent financial advisor can select the right wealth platform or International SIPP to provide currency protection and diversification.

Private banks typically focus on present-day investing, with less concern for where you’re heading. Independent advisor, especially those regulated globally, are better equipped for long-term planning across multiple borders.

Understanding the True Cost of Advice

Let’s talk money. How much do you charge? One of the most common questions that I am asked, and yes, I agree, it is one of the most important to ask. However, the question is commonly sent in the right direction and without full understanding of what someone may already be paying in their existing planning.

Banking & Private Bank Costs

You’re often charged indirectly via high product fees, internal fund costs, and layered platform charges, making them hard to navigate as pricing is rarely transparently displayed, with fees bundled together.

The banks and private banks buy at an institutional share class, taking advantage of their own economy of scale, and then increase the price (called spread) for distribution to customers at a retail share class. This spread for distribution is what typically makes banks so profitable.

Last year, HSBC publicly recorded a record pre-tax profit in 2024 of $32.3 billion, with the most significant increase in profits coming from their Wealth and Private Banking division, up 37% from the previous year to $12.2 billion, which was mainly from a 21% increase in profits collected from fees applied to their customers.

Now, let's talk about the structuring of wealth. As the bank will hold your portfolio on its own platform, it controls the entry and exit costs and the funds available on the platform (typically their own). As the costs of popular private banking platforms vary between 0.4% to 0.5% per year on total portfolio value, these costs only increase in real terms as the portfolio grows. On top of this, advisory fees go up to 1.5% per year, and discretionary fund fees up to 1.2% per year.

With a private bank, you own the underlying portfolio assets directly, which means that, unfortunately, there is very little ability to mitigate any tax on income, withdrawals, or death, further increasing the net price. Some expats I have spoken to over the years were also surprised to learn that even if your private bank is based in Switzerland, Europe or Dubai, and your investment portfolio has US-listed assets within,you will be liable for 40% estate tax on anything over $60,000. This is usually very easy to identify as the ISIN code (International Securities Identification Number) will start with US.

If you would like to understand your existing portfolio in greater detail, feel free to book a time with me today.

Independent Financial Advisor (IFA) Costs:

As I described earlier, the right independent advisor will research the market and come back to you with their advice recommendations. Within this report, all fees for their services, ongoing advice, and product and portfolio costs are clearly and transparently broken down upfront.

Unlike private banks, the leading independent financial advisories build their model portfolios by buying the funds at an institutional share class (using their own economy of scale) and then building them into your bespoke portfolio without increasing the cost.

As an independent financial advisor provides a holistic service, their fees go much further than just investment management, so it could be said a typical 1% ongoing advice fee to be better value for money, but it depends on the level and extent of service provided.

The expat international marketplace that an independent advisor has to choose from is extensive, with similar institutional platforms to private banking available from 0.30% with unlimited investment options within. Additionally, it is possible to access tax wrappers, which provide high levels of cross-border tax efficiency whose pricing is based on the value of the contributions. As a result, the effective cost of pricing becomes significantly more cost-efficient as the portfolio builds over several years.

When it comes to tailoring the investment strategy to your needs, a Model Portfolio Service provides access to diverse and low-cost portfolios for between 0.09% and 0.56%.

For example: a 1% fee difference on a $500,000 portfolio in reality is $60,000 lost in 10 years due to hidden costs. That’s money you could use for education, a home, or early retirement.

Who’s Legally Obliged to Act in Your Best Interest?

This is critical. A fiduciary must act in your best interest. Most private banks are not fiduciaries. Their relationship managers represent the bank first. In contrast, independent advisors, especially those regulated by the FCA (UK), CYSEC (Cyprus), or SCA (UAE), are legally required to put your interests first.

A simple question asking, “Are you legally required to act in my best interest?” If the answer is “no” or vague, it’s time to look elsewhere.

What Does Ongoing Advice Actually Look Like?

Private Banks:

Clients of Private Banks will get sent regular reports on their investment performance, typically on a quarterly and annual basis. However, on the whole, limited in-person reviews are available unless you request one with a relationship manager, who have a tendency to change regularly.

Independent Financial Advisors:

The personalised approach to financial advice continues from the initial recommendation into active servicing, with the better advisors proactively scheduling face-to-face reviews on a quarterly basis. These meetings are more than just a update on the performance of your investments, they are a holistic review of your financial life. From updates on your budgeting to making adjustments for any significant life events to checking that you are still on track to achieve the goals that you originally set for yourself.

In reality, financial advice and financial planning is only truly accurate in the moment it is provided, so regular reviews that also account for global tax law changes, residency updates, or market shifts help you to feel confident about the strategy and service. After all, you have a personal advisor, not a rotating call centre.

This type of proactive advice can save you from massive tax bills or missed opportunities.

Performance and Long-Term Value

It’s not just about performance. It’s about net performance after fees and taxes. An independent financial advisor can tailor an investment strategy to your needs, typically using low-cost index funds or ETFs, with options to blend in discretionary managed funds if needed. and structure your portfolio tax-efficiently.

Private banks, on the other hand, will recommend in-house and/or fully discretionary managed funds, which naturally have higher costs. These may underperform against global benchmarks due to their higher-than-average fees.

When you’re planning for the next 20–30 years, even a 0.5% difference in fees can lead to a significant gap in final wealth.

Common Myths Debunked

Within all industries, there are always beliefs and myths that have somehow established themselves as truth but need some light shed on them. Below, you will find the most common myths that I hear from expats.

Myth #1: Private banks are safer.

Reality: The safety of your savings depends on product structure and regulatory protection, not the brand name. In the UK, deposit protection is up to £85,000 per account; in Europe, it’s up to €100,000, and in Switzerland, it’s up to CHF 100,000. An independent advisor can help you access wealth structures that have up to 90% capital protection. So, as your portfolio grows, so does your protection barrier. A Model Portfolio will also invest your funds through the most prominent financial institutions in the world, such as BlackRock, Vanguard, or LGT Vestra.

Myth #2: Financial advisors just sell products.

Reality: An independent financial advisor and the advisory they work for do not own any kind of financial product or instrument, so their advice is not subject to any underlying bias. If they are going to sell anything, it will be their expertise and service. If that experience means that their client will receive a better financial outcome as a result, then that is where the value of their ongoing advice fee is.

Myth #3: Private banks are only for ultra-wealthy people.

Reality: Some accept clients from $500,000+, but the majority have tiered access from $1M+, $5M+, $10M+ which doesn’t mean their advice is better.

What’s Right for You?

Choosing between a private bank and an independent financial advisor isn’t just about investments, it’s about your entire financial life. Independent financial advisors often provide greater value, flexibility, and peace of mind for expats, especially those with cross-border plans and long-term goals.

Ready to Take Control of Your Financial Future?

If you’re an expat looking for clarity, structure, and independence in your financial life, book a free discovery call with an internationally - licensed financial advisor in Dubai. We’ll help you build a plan that grows with you, no matter where life takes you.