There comes a point in most investment banking careers when the hours get to you. When you've been doing 12 or 14 hour days six days a week for seven or more years, you start to wonder what else is out there. Increasingly, the answer is private banking.
Investment banking to private banking is nothing new. I've seen investment bankers move into private banking time and time again during my career, but it's a move that seems to have been picking up pace of late as banks look to cut costs in their markets and corporate finance divisions. At Credit Suisse, for example, shifting investment banking talent into the private bank has been a deliberate strategy.
For bankers who are burning out, a move into private banking can seem a good bet. The hours are shorter and the pay cut isn't that high. For private banks, hiring experienced bankers or markets professionals makes good sense. - They bring in tons of expertise and prestige to service clients who are mostly interested in seeing their savings increase without taking too much risk. It’s a bit like hiring a SWAT team to hunt Bambi.
This, however, can be a problem. Transitioning from a job where you're dealing with multi-million dollar transations to one where your transactions are more likely to be in hundreds of thousands or even tens of thousands of dollars isn't easy. Suddenly you realize you're playing in the small league. I've known ex-bankers try to compensate for this by looking for ways of bumping up their fees, but this isn't how things work when you're a private banker.
Nor is private banking the easy life it used to be. It can still be a very profitable business, but the perks have gone. Ten years ago, private bankers I knew were taking their clients to play golf or treating them to Michelin-starred restaurants. Today, this still happens with the very top clients who have a lot of assets under management (AUM), but the emphasis - as elsewhere in banking - is on cutting costs.
At the same time, the skillset required to transition into private banking has changed. It used to be all about schmoozing and knowing how to make rich people like you. Now, it's much more about understanding complex investments and structured products. Markets professionals who thought they'd be hanging out and rewarded for their social skills are ending up disappointed.
And then there's the ruthless competition. Private banking is all about chasing AUM and if you're a relationship focused private banker who finds a new source of AUM, you'd better get onto it quickly before all your colleagues are there too. There's also a question over what constitutes a private banking client. - Is a family office one? What about a listed multi-family office? Who gets to service these kinds of clients and is the relationship owned by the individual private banker or the bank? People who've moved into private banking tell me it can be incredibly political.
So, yes - if you're fed up with the hours in an investment bank, private banking is waiting as an alternative. But your new career may not be as easy as you expect.
Amit Itelmon is a pseudonym
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