As the name suggests, 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 clients on bequeathing their wealth to the next generation.
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: experts 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 a client’s needs, specialists produce a detailed solution.
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
Switzerland is a hub for wealth management, and relationship managers earn CHF100k-160k ($106k-170k) after five to seven years, according to Robert Walters, rising to CHF170k-280k ($180k-298k) in the senior ranks.
In Hong Kong, a junior relationship manager earns HK$360k-460k
($46k-60k), rising to HK$540k-680k+ ($70k-90k) after eight years’ experience. In the UK, a senior private client investment advisor should expect £100k ($160k), while junior positions typically pay £40k-60k ($65k-96k).
In the US, the mean wage for a financial advisor is $91k, according to figures from the Bureau of Labor Statistics.
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.
“The biggest skill in any type of advice field is your ability to build relationships and credibility,” says Janine Craane, managing director of investments and global institutional consultant, Merrill Lynch Wealth Management in the US.
“That means listening to understand, under-promising and over-delivering, paying attention to the small things and bringing them back into the conversations and following up to build lasting relationships where someone understands just how much you care and look out for them.”
Knowledge of financial products within your specialism is important, but a good private banker must always present advice to clients in a way they can easily understand.
“Integrity, striving to put clients first and the ability to tailor and deliver advice in a way that is free of jargon are crucial,” says Mark Kary, head of UK wealth management at Rothschild.
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. In an ideal world, a private banker needs to be well-rounded – demonstrating excellent knowledge of the financial sector with softer skills, according to Tan Su Shan, managing director and group head of wealth management at DBS.
“They should have a strong understanding of global capital markets, a keen grasp of risk management and volatility, and the ability to advise on the structure and asset allocation that are most relevant to the clients’ needs,” she says. “In terms of soft skills, he or she should have good communication skills and the ability to listen to, relate to, and empathise with the client, and should always be relevant and respond in a timely manner.”