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Wealth Management/ Private Banking Career Guide

In Career Guides, Retail Banking by Gaurav SharmaUpdated On:

It is said known that making your first million is the hardest. That statement is partly true thanks to banking professionals known as Wealth Managers whose job it is to make sure that their rich clients keep getting richer every day. Before we take a deep dive into this rapidly growing and well-paid profession, let’s just clarify a few key terms used in this article.

What is Private Banking/ Wealth Management?

Private Banking – This is the terminology used by some banks for their Wealth Management division and related product offerings. The idea was that private banking clients would have special access to the bankers and not have to go through public channels like the local bank branch. These days, it has more to do with bespoke and specialised products rather than anything else.

Investable Assets – The assets that an individual is willing to invest or has already invested somewhere. The assets have to be liquid which essentially means that it should be easy to buy or sell the asset – like stocks, bonds, index funds, gold etc. Even real estate is generally included but not the primary residence.

HNIs – High Net-Worth Individuals are people with significant investable assets. There is no industry accepted threshold but USD 1 million of investable assets is what many banks consider a bare minimum for this category. It can be much lower or much higher as well depending on the country and the bank.

UHNIs – Ultra High Net-Worth Individuals are people with even more investable assets! The minimum threshold could be anywhere from USD 10 million to USD 50 million or even beyond that. These are not really industry-standard definition, but rather internal classifications made by each bank for each geography that they operate in.

There could also be more sub-categories like affluent or VHNI (Very High Net Worth) – it all depends on the bank. The reason for these distinctions is because the ideal product mix changes based on the amount of investable assets. Bigger clients also require a bigger time commitment and there is almost always more competition to on-board such clients so that is a consideration as well. Anyway, this takes care of the basic wealth management terminology, so let’s dive right in!

Job Description

You would initially start in something like an assistant RM (Relationship Manager) role. This means that you won’t immediately start with advising clients but would rather assist the actual RM with his tasks to service his clients.

As an Assistant RM

Some activities you can expect to do as an assistant RM:

  • Assisting with compliance and regulatory approvals. This involves collecting and vetting client KYC documents like ID proof, net worth statements and whatever else is required as per local law.
  • Preparing presentations or other materials for the RM.
  • Attending conference calls where the RM would most likely take the lead.
  • Assisting the WM team with analysis, risk management, monitoring, compliance and other support tasks.

To sum it up, the assistant RM has essentially two main responsibilities – assist the RM with whatever he needs to service his clients and learning as much as possible to eventually start handling his own clients.

As a Wealth Manager

Once you are a full-fledged RM, you would have a client base of your own to manage. The number of clients you service will depend on how much revenue can be expected out of them. For example, if you are managing clients with USD 1-5 million in assets, you can expect to have quite a few of them. But if you are looking at folks with >50 million in investable assets, you would likely have fewer clients but spend more time in serving each of them.

The role of a wealth management RM is quite different form that of a corporate/ investment banking RM. Although all RMs are eventually just servicing clients, the products they are selling and their clients needs are totally different. However, there are a lot of opportunities for cross-sell. For example, banks are increasingly targeting the CEOs or other top executives of their client companies with wealth management products. It’s easier to gain trust when you already have a working relationship with the client.

Anyway, getting back on topic, here is what would be expected of you as a wealth management RM:

  • Advising existing clients on how to maximise their wealth by recommending relevant products and services. The first step is always the creation of a financial plan for the client based on her goals and targets and a detailed analysis of her current portfolio. This means a lot of meetings or calls with the client or her staff and a bit of number crunching.
  • Business development efforts – trying to gain wallet share from existing clients or on-boarding new clients.
  • Internal meetings with investment professionals or product specialists to understand new products and also advising them on what new products they should focus on.
  • Ensuring full compliance with internal and governmental regulations and laws. The RM is the one ultimately responsible for his clients even if someone else (like the assistant RM or a back-end team) has helped him with the on-boarding.
  • Meeting revenue, asset build-up, cross sales and other targets for the bank.
  • Continuous monitoring of risks to ensure optimal performance for both the bank and the client.

As a Portfolio Manager

While the RM’s do the front-end client facing work, someone has to actually manage the assets and risk. That’s where the Portfolio Managers come in.

  • Implement the client’s investment strategy and construct the portfolio based on internal research.
  • Review and adjust the portfolio based on the market situation and client needs as communicated by the front end team
  • Implement long-term strategic shifts or short-term tactical shifts in the portfolio as and when necessary.
  • Be fully aware of all relevant products offered by the Private banking division and use them optimally.
  • Maintain an active understanding of all asset classes used in portfolio construction like mutual funds, ETFs, hedge funds, equities, structured products and so on.
  • Perform Risk Management at the portfolio level.
  • Coordinate with Relationship teams to help them service their clients better and increase wallet share.

Qualifications & Skills

Being personable and respected – As a wealth manager, your clients are your bread and butter. And these clients are not corporations or governments but individuals who have to like and trust YOU before they would be willing to initiate a relationship with your bank. This means that you need to build a personal reputation in addition to your professional skills.

Putting the client first – It is legally required in most countries to place your client’s interests before yours or even your employer’s. For example, if you plan to sell a stock because you expect it to go down and the client also wants to sell it, then you would have to execute the client’s trades before you execute your own. This is just a simple example, but I hope it gets the point across. When in doubt, assume you are a super hero who always does the right thing. Yes, some people break that rule, but they don’t last long.

Building Chinese walls – This is the term used to describe an insurmountable information barrier. Essentially, the idea is that confidential information from one division of the bank should NOT flow elsewhere. For example, let’s say the M&A division is working on a deal and has information that can affect the stock price. The other divisions of the bank should not even have that information, let alone act on it. While this is true for most banking divisions, it is especially important in wealth management as you are dealing with some big players who either have such information or want it.

Investment savvy – There is usually a research and an investment team that assists the RM with what he should be pitching to the client and why, but the RM still has to be able to answer each and every concern that the client has. This means having a very broad knowledge about the investment world in general as well as deep insights into what the client really wants. For example, if you are pitching a life insurance product to the client, you would be expected to answer him if he suddenly asks you why he just shouldn’t buy Alibaba stock instead.

Regulatory knowledge – The investment industry is very tightly regulated and all breaches are severely punished with massive penalties. RM’s should thus be on top of all internal and regulatory guidelines. Your bank will likely assist you with this by providing you with periodic training and updates, but it is still your responsibility at the end of the day.

Leadership – The wealth manager is ultimately responsible for executing the strategies agreed with the client. This means working with the KYC teams, the back and middle office, other product teams if you are cross selling something and so on. You would be the one responsible for busting bottlenecks and kicking everything into high gear!

Having rich-people hobbies and interests – It’s highly unlikely that you would be invited to partake in such activities by a client as a brand-new wealth manager, but it is something that you would need to develop a taste for eventually. In corporate and investment banking, the conversation usually revolves around just shop talk or something related. But in wealth management, you do have to build a stronger personal rapport with the individual you are banking.

How to Get In

Academics

A finance, business or economics degree should be sufficient in most cases at the entry level, but an MBA is highly recommended. With an MBA, you can directly join at a higher level and would probably be assigned a more affluent client base than otherwise. In all honestly though, that advice holds true for any banking career, but it is what it is.

Having some sort of investment and front-end sales experience would also be beneficial and can really provide you with an early boost. It’s much easier to break into wealth management from other industries (if you have investment/ sales experience) than it is to break into corporate/ investment banking.

Certifications

There are certain regulatory certifications that you need. In the US for example, you would need  Series 7, 63 and 65 at the very least (more details here at FINRA). These requirements are unique to the country you decide to operate in, so you should check up on the local requirements. In my opinion, these certifications should be fairly easy if you have at least a basic college-level understanding of finance.

There are also a whole bunch of certifications offered by private companies which have little actual value to be honest. CFA is obviously the exception which can really add value. Its curriculum is very closely related to the sort of work you would be doing on a daily basis. However, more than the curriculum (which can be matched by other certifications providers as well), it’s CFA’s brand value that matters. It’s the most recognizable certification in the investment world some firms even make it a mandatory requirement for some of their roles.

Wealth Management/ Private Banking Career Resources

Here is a small list of resources to help you prepare for a career in wealth management or private banking.

Resource TypeResource ProviderLearn More
Best Course/ Certificate for WMProfessional Certificate in Wealth Management offered by the New York Institute of FinanceCheck Course Details
Best Course for Real Estate Investing (a major component of wealth management assets)Real Estate Suite (ed2go)Check Course Details
Best Book for understanding the industryBehavioral Finance for Private Banking: From the Art of Advice to the Science of AdviceCheck on Amazon
Recommended CV/ Cover Letter Writing ServiceResume PlanetLearn More

This recommended NYIF course covers everything from money markets, FX, bonds, equities, derivatives (options, futures, swaps etc.) and credit instruments. That’s almost the entirety of the financial market.

Salary and Bonus

As a full-fledged wealth manager, you can easily make USD 100K to USD 200K plus a variable component which averages around 30%-60% of your fixed component. Your salary depends on location, the bank you are working for and the type of clients you are handling. As an assistant RM/ assistant WM you would probably start with less than 100K but that should grow rapidly.

Swiss banks are generally known for paying better than most banks in wealth management since they usually have a decent market share in most locations. Something like a UBS or J.P. Morgan would definitely pay a lot higher than a regional bank, but the criteria to get in are higher as well.

The pay rise in WM is impressive compared to most other industries and even most banking divisions other than corporate/ investment banking.  Managing Directors easily earn USD 500K and this can even reach several millions if you play your cards right. The key here is to build such a strong relationship with your clients, that you become the reason that they stick with the bank. This is a lot easier to do in WM than it is in any other banking division.

The number of HNI’s is also rising rapidly and this has made wealth management a very rapidly growing industry, especially in Asia. If you are willing to relocate, you can expect significant pay hikes with each move. And the best part is, you will most likely stay in the main financial hubs so the change in lifestyle would not be that drastic.

A Normal Day in WM

Wealth mangers should expect to interact with their client’s staff on a pretty frequent basis. This would mostly be for operational things though like completing paperwork or following up on some transactions. In addition to this, there are likely going to be detailed monthly or quarterly meetings where the client’s portfolio is reviewed with her and major tweaks are agreed upon. The frequency does depend on the size of the client.

Expect to spend a lot of time with internal teams as well. Your assistant RMs would likely need your help with things that they are stuck with. Investment analysts would likely need to speak with you regarding their models and whether a client’s portfolio needs tweaking. Risk managers might hit you up in case there is some over-allocation or other issue with one of your clients. It becomes more about problem solving when you look at it on a day-to-day basis.

Locations

Most HNI’s are located in financial hubs and major urban centres around the world. The US leads the pack followed by the EU, Japan, China and India. So if you decide to get into wealth management, you would most likely be based out of the US East/ West Coast, major European cities or financial centres like Singapore, Dubai and Hong Kong.

This can be an important consideration for some as the cost of living etc. is generally significantly higher in such urban centres. However, that is where the clients are and thus that is where you must be!

Career Path

Most careers in wealth management and private banking go something like this:

Option 1: Starting as an assistant RM/ assistant WM

You will spend a few years helping the RM with their duties and doing the paper work, coordinating with internal teams and other operational tasks. Over time, you would be trusted to deal with the client on operational matters as well. Eventually, you can expect to become a full-fledged wealth manager and have clients of your own.

Once you are in wealth management, the field is broad enough for you to spend your entire career there. As mentioned earlier, this is a very rapidly growing segment for banks especially since the corporate and investment banking space has become increasingly over-crowded. Almost every bank has a wealth management or private banking division and there are some companies which focus only on this business and don’t even have retail or corporate banking operations.

More senior roles in WM involve leading teams of other wealth managers and making sure they hit their revenue and other targets. Eventually, you can also end up managing an entire country or more.

Option 2: Moving up the value chain

If you decide to start with a smaller regional bank, you can expect to reach the front-end client engagement role a lot sooner than with a large global bank. This would also be the case if you are handling clients at the lower end of the HNI brackets.

The advantage of this is that you get a head start in taking the lead and can prove yourself in the field sooner rather than later. Eventually, you can shift to banks which offer more compensation or start handling bigger clients which means that you will generate more revenue and thus get paid a lot better.

Option 3: Shifting from related roles

It’s possible to move into wealth management from roles such as investment analyst or even a sales role in an industry where you are dealing with HNIs already. You obviously need to have the relevant skills and investment product knowledge, but it is indeed possible to make the switch.

Exit Options

If you decide to move outside of wealth management after spending some time there, you still have some rather nice options.

Option 1: Investment Management roles

This can be a bit tricky, but if you are really good with some asset classes, you can move into asset management, hedge funds, sales and trading etc. If you want to pursue this, you need to build some expertise and network with the right people.

Option 2: Start your own firm

If you have built enough of a reputation and can convince clients to trust you, then this is good long-term exit option. This is impossible in corporate/ investment banking but doable for wealth managers (although it’s far from easy).

Option 3: Other Luxury Sales Roles

You can just decide to quit financial services and service your HNI clientele in some other industry. What matters most are your relationships.

Don’t discount this option as such roles have very generous commission structures. You would be ideally placed to be a top salesperson to HNIs given your prior position as their banker.

Why become a Wealth Manager?

  1. Great networking opportunities
  2. Performance linked compensation
  3. Rapidly growing industry
  4. Faster Career growth compared to other options
  5. A rather interesting lifestyle (wining and dining the ultra rich)
  6. One of the easier ways to get hired by Bulge Bracket banks
  7. Decent Exit Ops
  8. Not too stressful, but still challenging
About the Author

Gaurav Sharma

Gaurav started his career as a Corporate and Investment Banking intern at Citi in 2009 and eventually ended up as an Associate Director at Standard Chartered Bank’s Wholesale Banking division a few years later. By 2016, Gaurav was consulting FinTech start-ups in London with product development in the institutional banking space. He also advises mid-market Private Equity/ Asset Management firms and Banks in North America and Europe with investments in the financial services and FinTech sector. Gaurav writes on topics ranging from European Union banking regulations and FinTech to Blockchain startups and the inevitable rise of our AI overlords! He has an Engineering degree in Computer Science and a Masters in Business Administration. He is also a Certified Financial Risk Manager.