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Wealth Management

Overview

Wealthy people come from all walks of life and make their money all sorts of ways. Some are doctors or lawyers, and others are small business owners operating roofing businesses or a chain of dry cleaners. Some inherited their wealth, and others are corporate middle-level executives who've saved and invested, making millions in the process until they became rich. Others are young multi-millionaires who’ve become wealthy by founding and selling the latest hot tech startup. And yet others are high school dropouts who started their own companies, eventually selling them for handsome sums.

Regardless of their backgrounds, though, the wealthy have various asset management issues that are different than the average Joe's with a 401(k) and a few hundred stock options in his company. To address these more complex asset management issues, the financial services industry has created private wealth management departments that offer a host of products and services for the very wealthy.

Private wealth management, also called private banking, is a specialized branch of the investment community that provides one-stop shopping for a whole host of products and services needed by wealthy folks—typically defined as those who have liquid assets of more than $1 million (not including the value of one’s primary residence). But the most prestigious private banks and wealth management firms, such as those attached to major investment companies like Citigroup or Goldman Sachs, have much higher minimums, more than $5 million in some cases, and cater to the richest of the rich.

Private wealth managers, sometimes known as personal bankers, are the key players in this industry, but the wealth management industry also need legal, compliance, marketing (including social media), computer security, and office and tech support workers.

A bachelor’s degree is the minimum requirement to work in most wealth management positions. Wealth managers have bachelor’s degrees (and sometimes advanced degrees) in finance, mathematics, financial planning, economics, business, financial engineering, or quantitative finance. Other wealth management professionals have degrees in computer science and programming (tech support workers, database administrators, etc.), marketing (marketing professionals), or business administration (office managers).

Wealth managers with one to three years of experience receive salaries that range from $50,000 to $70,000 or more, plus bonuses. Those with three to five years of experience earn $62,000 to $85,000. Experienced wealth managers who generate strong profits for their employers can earn $500,000 to $2 million or more (including bonuses).

Wealth management firms are located throughout the United States. Most are headquartered in major cities. There are also opportunities throughout the world. Total assets under management (AUM) reached a record $84.9 trillion worldwide in 2016, according to PricewaterhouseCoopers, a professional services and consultancy firm. The top 25 global operators (led by UBS, Morgan Stanley, Bank of America Merrill Lynch, Wells Fargo, and Royal Bank of Canada) in terms of assets under management collectively managed $16.2 trillion, according to the Global Private Banking Benchmark 2018 report from Scorpio Partnership. 

Uppers
  • Clients. You’ll be helping people realize their hopes and dreams, manage the results of a lifetime of hard work, and plan for their futures. They’re generally interesting people with fascinating life experiences, and you may end up becoming very close to them.
  • Entrepreneurship. Once you’re an associate or higher, you’ll be ultimately responsible for your clients’ performance, and you’ll have the opportunity to build your own client base. You’ll have quite a bit of input into how much money you make, based on your drive and your investment savvy.
  • On-the-job knowledge. It’s not just stocks and bonds. While you’ll have backing from experts or consultants made available to you by your firm, you’ll end up learning quite a bit about a variety of investments and financial planning tools. From real estate to hedge funds, from prenups to estate planning, you’ll only get smarter as time goes on.
  • Philanthropy. Many private bankers find particular joy from helping their clients give their money away. While it’s not a high-commission activity by any stretch, it’s certainly good for the soul. And as one banker pointed out, it can lead to more business contacts and potential clients!
  • Lifestyle. For the most part, you can actually have a life outside of work if you manage your time and client accounts properly. You won’t have many eight-hour days, but you can reasonably expect to have weekends free, and you’ll be able to take vacations like the rest of humanity.
  • Money. While you’ll never receive multimillion-dollar checks for leading a merger deal, you’ll certainly be making plenty of money, enough to easily become a high-net-worth individual in your own right.
Downers
  • Clients. While the majority of your clients will fall into the “uppers” category, a few will most certainly drive you nuts. They’ll ignore your advice, do stupid things with their money, and then blame you for it. A few will call constantly with each tick of the market, and some will need hand-holding or supremely well-thought-out arguments for each move you think they should make. Even your best clients will make you want to pull your hair out every now and again.
  • Conservatism. Many of your clients will be risk adverse, and investments that could make them (and you) a pretty penny could be summarily rejected despite your best arguments.
  • Income fluctuations. Feeding into the above, you may end up having a run of low bonuses or commissions due to uncertainty in the markets or a conservative investing trend. Just as your clients can fall prey to the vagaries of the market, your own income will as well.
  • Always on. While the majority of your clients will leave you alone on weekends, holidays, and vacations, you’ll constantly have to be ready to spring into action at a moment’s notice. Don’t think of even heading to the grocery store without your smartphone, and if you’re going on vacation, a laptop or tablet with a reliable wireless connection is essential. An understanding domestic partner is also important should a client call in the middle of a honeymoon or family holiday.
  • Limited geographic potential. You’re going to have to live where high-net-worth individuals live, which means a major U.S. or world city, with all the expense and headaches that come along with it. You can certainly live in the suburbs, but if you’re hankering for a small-town lifestyle, you won’t get it—at least not without a major commute.
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