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Private Wealth Management

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Private Wealth Management [#permalink] New post 03 Nov 2008, 18:12
Does anyone here work in Private Wealth Management/Private Banking (HNW, UHNW clients)? I'm not very familiar with the industry or how things work and would appreciate some insights. I think it may serve as a good back up plan if I can't break into banking.

It seems that a few MBAs from schools like Anderson/Cornell/etc go into PWM each year, and perhaps a handful from the M7 schools. From what I understand, it's completely a relationship building business, and other people handle the analytics and asset allocation - is this correct? Also, what are the career paths in PWM like? Where do you start right out of B-School and how do you advance? I would assume that Top 15 MBAs are not cold-calling around to win over new clients?

It seems like there is a big market for PWM in Southern California, especially. The guys who run the $1B AUM+ groups seem to be making amounts similar to Senior Investment Bankers. Understandably, I think it would be very difficult to start from scratch and build a client base of $1B+.
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Re: Private Wealth Management [#permalink] New post 04 Nov 2008, 16:25
What part of PWM are you interested in? If you were previously interested in banking I assume it'd be the portfolio management portion? What about a company like PIMCO which deals more with pension funds, etc?

From my (very limited) perspective it seems like PWM isn't growing too much...companies like Schwab/ETrade bring portfolio management directly to the average American. It is also fairly difficult to get into I think, lots of pressure to perform and get new clients. I've heard that the best bet is to get a mentor who will give you their "book" when they retire...this is from a suburban branch though of Morgan Stanley where I heard that...not sure how it is in metropolitan areas.

I think a more stable area is probably UHNW where you are not only providing portfolio management but also legal advice, tax advice, etc...people who have enough money where it doesn't make fiscal sense to manage it yourself. That market will always be there..no matter how much discount brokerages try to chip away. Somewhere like US Trust, etc.
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Re: Private Wealth Management [#permalink] New post 04 Nov 2008, 16:36
Meowzilla wrote:
I think a more stable area is probably UHNW where you are not only providing portfolio management but also legal advice, tax advice, etc...people who have enough money where it doesn't make fiscal sense to manage it yourself. That market will always be there..no matter how much discount brokerages try to chip away. Somewhere like US Trust, etc.


This is the part that excites me the most, and the part that I feel that there is still a solid market for (UHNW individuals).

There is still a nice market for HNW people in Southern California, because many of them are in entertainment and cannot manage their own money. However, in the rest of the country, it seems that HNW category people know how to manage their own finances.

I don't know much about how PIMCO operates. It seems like the most prestigous and highly paid roles at a place like PIMCO would fall under the quant umbrella.
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Re: Private Wealth Management [#permalink] New post 04 Nov 2008, 19:55
There is a lot to like about PWM, once you've built your book of business, and I know people in it (I also interned at Merrill Lynch PWM when I was in college). However, your success in the business is not based on the quality of advice you give or your degrees on the wall, it's based on your ability to bring in business. PWM is a sales job. Even at a place like ML, which is the top PWM for HNW, you must build your entire book yourself. Having a top 10 MBA means nothing (unless it helps you convince people to invest with you, which I guess is possible). In PWM, including at ML, you are not given any clients (I assume you know this). You start entirely from scratch. You will build your book by working your existing network and cold calling. It's very tough and very few people make it. At ML you must bring in $50MM in AUM within 1-2 years (again entirely own your own, they do not provide clients or leads). If you don't bring in this much business, you are fired. PWM is a job for later in your career when you have a large rolodex of wealthy people to call on. If you have the contacts and can build your book, then it's pretty cool. You are an advisor and confidant. You assemble portfolios, do estate planning, retirment planning, etc. You do not pick stocks. You assign money to various managers. You work pretty short hours and you make decent money.

Last edited by IHateTheGMAT on 04 Nov 2008, 20:02, edited 1 time in total.
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Re: Private Wealth Management [#permalink] New post 04 Nov 2008, 20:00
IHateTheGMAT wrote:
There is a lot that I like about PWM, once you've built your book of business, and I know people in it (I also interned at Merrill Lynch PWM when I was in college). However, your success in the business is not based on the quality of advice you give or your degrees on the wall, it's based on your ability to bring in business. PWM is a sales job. Even at a place like ML, which is the top PWM for HNW, you must build your entire book yourself. Having a top 10 MBA means nothing (unless it helps you convince people to invest with you, which I guess is possible). In PWM, including at ML, you are not given any clients (I assume you know this). You start entirely from scratch. You will build your book buy working your existing network and cold calling. It's very tough and very few people make it. At ML you must bring in $50MM in AUM within 1-2 years (again entirely own your own, they do not provide clients or leads). If you don't bring in this much business, you are fired. PWM is a job for later in your career when you have a large rolodex of wealthy people to call on. If you have the contacts and can build your book, then it's pretty cool. You are an advisor and confidant. You assemble portfolios, do estate planning, retirment planning, etc. You work pretty short hours and you make decent money. You do not pick stocks. You assign money to various managers.


I was told a very similar explanation. So do most join PWM after they are successful in a different industry? If so, which industry leads to great contacts? IB?
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Re: Private Wealth Management [#permalink] New post 04 Nov 2008, 20:05
Any industry can lead to great contacts. You could be a doctor and make lots of rich doctor friends and there is the start of your book. You could be a lawyer with rich clients, rich lawyer friends, etc and there is the start of your book. The 2 guys I know best at ML were in commercial banking and consulting before switching to PWM.
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Re: Private Wealth Management [#permalink] New post 04 Nov 2008, 20:46
I have a friend in Private Banking at a BB (not ML/BOA) and he has never made a cold/sales call. He works on a fairly small desk, but the MBAs that have joined the group are not second tier types. He basically acts as client liaison and decides how to allocate assets, determines the risk profile, helps construct portfolio, answers any and all questions/concerns of the client, etc. It's possible that they have a different group within the bank that solely focuses on asset gathering, but his group does none of it. It seems like a good mix of interpersonal skills as well as investment knowledge which pays good money and doesn't take 70 hour weeks.
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Re: Private Wealth Management [#permalink] New post 04 Nov 2008, 21:01
cougarblue wrote:
I have a friend in Private Banking at a BB (not ML/BOA) and he has never made a cold/sales call. He works on a fairly small desk, but the MBAs that have joined the group are not second tier types. He basically acts as client liaison and decides how to allocate assets, determines the risk profile, helps construct portfolio, answers any and all questions/concerns of the client, etc. It's possible that they have a different group within the bank that solely focuses on asset gathering, but his group does none of it. It seems like a good mix of interpersonal skills as well as investment knowledge which pays good money and doesn't take 70 hour weeks.


I have heard that some banks divide the private banking and private wealth management groups. For example, private banking may only deal with individuals with AUM >$25M, $50M, or $100M and private wealth may deal with individuals between $5M-25M, with retail financial advisor types taking anything below $5M.

I would assume that you would like to have a different kinds of people working with a $10M guy and a $100M guy. The $100M guy is going to demand top-notch legal, trust and estate advice and he is probably going to have a very different investment strategy as well.
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Re: Private Wealth Management [#permalink] New post 04 Nov 2008, 22:06
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Last edited by egy on 09 Jan 2009, 21:44, edited 1 time in total.
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Re: Private Wealth Management [#permalink] New post 05 Nov 2008, 09:06
As IHateTheGMAT said, PWM is a highly glorified term for a sales position (aka broker).
Re: Private Wealth Management   [#permalink] 05 Nov 2008, 09:06
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