Wealth Management
Sectors explained – Wealth Management
Private wealth managers help very rich people manage their money, far away from the prying eyes of the gossip columnists and paparazzi. They fall into two categories.
Private bankers
Help clients invest their money wisely and avoid any risks that might reduce the value of their assets. They also offer tax and pensions advice, help develop a strategy for charitable giving, and advise on bequeathing their wealth.
Private client brokers
Help clients buy and sell financial products, particularly equities or stocks (hence the term ‘stockbroker’). They also advise on products to invest in. The clients of private wealth managers range from company chief executives to property tycoons, investment bankers, sports stars, celebrities or members of privately run family businesses.
Private banks typically look for clients with at least $1m to invest but many deal only with clients whose financial assets (not their houses or yachts) alone are worth more than $30m.
Roles and career paths
If you work as a private banker, you can expect to perform one of three broad categories of job: investing money for existing clients; building relationships; or managing back-office functions such as human resources or accounting.
People working in investing either invest their clients’ money or offer them detailed advice to help them invest their own money. They are typically product specialists expert in a particular asset class, such as fixed income, equities, structured products, or investments in the private equity and hedge fund sectors.
Those on the relationship side are effectively salespeople who cultivate links with clients and sell the bank’s services. This can involve a lot of travelling and close contact with demanding people. After a relationship private banker has established aclient’s needs, specialists produce a detailed solution. “A good wealth manager is someone who enjoys both art and science. He or she may have a degree in business but they also have an affinity for right brain activity like art, music and language,” says Edythe De Marco, financial advisor with Merrill Lynch Wealth Management in the US.
There are two types of private client brokers. The first works on discretionary mandates, in which wealthy clients communicate their investment strategy and the broker buys and sells the financial products they think appropriate. The second works on advisory mandates, where the broker advises the client what to invest in, but needs their permission before making a move. Junior brokers are most likely to work on advisory mandates. However, making the first move can be challenging, as generally only the larger firms offer graduate training courses.
Pay and bonuses
In Switzerland, traditionally a hub for wealth management, a private client relationship manager can expect to earn CHF100k-160k ($118k-190k) base pay after five to seven years’ experience, rising to CHF170k-280k ($200k-333k) at the senior end, according to the Robert Walters 2011 salary survey.
In Singapore, which is actively recruiting wealth managers, a junior relationship manager can expect a base of S$85k-120k ($69k-97k), while an investment advisor can bring in S$80k-110k ($65k-89k), according to Robert Walters. At the senior end, base pay comes in at S$320k+ ($260k+).
In the US, the mean wage for a financial advisor is $91.2k, according to figures from the Bureau of Labor Statistics.
Skills sought
It is no good going into private banking if you have a taste for gossip. Discretion and an ability to manage, retain and build relationships with incredibly wealthy individuals are absolutely vital attributes.
“You need a broad set of skills, from sound commercial judgement and having an international outlook, to being able to build a rapport and understanding of what makes your clients tick,” says Kate Turner, head of private banking at Coutts & Co. “Every client is different, with changing attitudes to risk and return, and it’s essential to understand their needs fully in order to provide the best advice, win their trust and
win the business.”
Merrill Lynch’s De Marco says that having emotional intelligence is one of the keys to success. “One needs to have the skill set to be able to do financial planning, but must also be able to connect emotionally with clients in order to understand their needs and aspirations,” she says. “As wealth managers, we form deep, meaningful and lasting relationships with our clients. These are qualities that are also important in being a good friend.”
But it is not just about being personable. In the fiercely competitive market of wealth management, private bankers need technical expertise to get ahead of the herd. “Technical skills include a good grasp of financial products, terminology, riskmeasurements, portfolio construction, and various other wealth management tools like trust and estate planning,” says Tan Su Shan, group head of wealth management at DBS.
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