Do you have what it takes to work in private banking? Maybe you do. Or maybe you just think you do. We asked some questions of the anonymous senior private banker behind the private banking blog and Twitter account The Banker's Umbrella. He said private banking isn't quite as sparkly as you may think. That doesn't mean it's a bad career - unless you're of an envious disposition.
It’s just another job and a way of putting foie-gras on the table. On a scale of 1-5 for how glamorous is it? I hate to disappoint, but probably around 2.7. It’s a job that pays you enough to keep you turning up, but not as well as outsiders think. My daily routine doesn’t differ from most other working types, so no glamour there.
If glamour is a material thing, then we do all right. You get to drive a decent car or two, not be in debt to your tailor and check the time on Switzerland’s finest. So if that’s your thing and motivates you then private banking might be for you. But if that is how you measure your life, then…
A very normal week (like I said, not very glamorous). Tried to help a colleague get rid of a rather large position in an illiquid stock in a small country where I have some good broker contacts.
Everyone was also waiting for the Fed decision. After all these years in the business the whole drama of the Fed makes me chuckle. The fact that the financial world sits about waiting for a talking shop to talk so that they can scrutinize and try to read their minds and billions of dollars exchange hands based on that only.
I did try to get a big client to sell a stock at the open the day after the Fed meeting and pick it up again in the evening for a cheaper price. It was such a no brainer, you should always take the opposite position on a gap up day in the first few minutes of trading. I couldn’t convince the client and as my suggestion proved to be right, I bit my lip and held back the natural urge to call and say “I told you so”, you can be sure they noticed and will listen to me next time.
No regrets at all. Until the time I can buy a time machine on eBay, I’ll never have a regret. I just don’t think like that. If I can’t go back and change it, I leave it there.
Some do and some don’t. If you are the envious type, this business will eat you up and suck your skull. Needless to say envy is not a good trait for personal harmony in private banking. The one great thing about this business for me is that I fall into the latter camp. If I ever did have money envy issues then that all disappeared years ago. You meet all types of people in this business and if you can’t work out that money doesn’t make you smart and doesn’t make you better than other then you really don’t know your clients.
I’m going go out on a limb here and recommend something in a market I am bearish on, in an industry I hate. The airline SAS is coming out with a 4y bond with a coupon just below 10%. As we go enter 2014 we are going to see further increases in bond sales, pushing yields up. So I think you could pick this up with a +10% yield in 2014. It pays out quarterly and the company is owned jointly by the Swedish, Danish and Norwegian governments. What ever happens (and trust me things will happen, thanks to the unions) these are Triple A rated countries with Norway being so rich that it can be classed as the Chuck Norris on the investment world. If you ask them what stocks are they buying they will answer “all of them”. My point is this, they aren’t going to let SAS go bust, they’ll let it go to the brink for sure, because politics demands drama. But bust, nope.
I have serious concerns for private traditional banking in Europe. We face huge cost increases due to legislation which have resulted in a growth in non-revenue-generating areas, particularly the middle office. Then we are facing increased competition from independent advisors who are savvy and quick to adapt. Add to this the fact that our industry tends to be run by dinosaurs we are in serious trouble.
If you do get involved it can be a great industry. We private bankers get to dabble in everything. We aren’t just equity, bond or commodities people - we get to do it all. But it’s also a very risky business from a job security perspective. Much more so than before. If you do get in, just be sure not to define yourself via your job title. You are a person, father, brother, sister, son, daughter, friend etc. before you are a banker. If you do as so many private bankers do, that you define yourself as a banker first then when its gone you end up in a very bad place that’s tough to get out of.