Why is WM/PWM so unpopular?
I can’t help but think that you can recruit and succeed in WM as long as you aren’t a robot and have a decent education. It obviously isn’t as glorious as IB/PE, but the comp and lifestyle is unreal. The top ~1000 WM/PWM books at my BB firm are all over $1B in AUM. Say this is similar for the other dominant 2 firms in the space, and include an additional 500 for RIA/other firms. That’s ~3500 VERY successful teams all across the US. For instance, the top team at my location manages $2B and brings in$4.5MM (2 FAs). Advisors do whatever the fuck they want - and still print. Other associates/RMs probably eat around $500k in bonus, but nonetheless that leaves 2M for each advisor. The top 25 teams at the firm EASILY generate over $10M / yr. The average advisor in WM is 61 and the average client is 65. There are so many more advisors looking to retire than young FAs entering the industry. If you can land a spot on literally any of these teams, you can work your way up and eventually buy a book off an FA (given the right criteria). When I read about IB/PE/PC/etc, I can’t help but see so many people burn out before reaching VP let alone MD. How many of these people really crank over 7 figs? I feel like it’s much more likely to be attained in WM and you don’t need to answer to anyone/ work 90 hour weeks. You certainly can and should put in long hours during the start of your career. But definitely do not need to. Am I missing something or why do more people not want to enter the space?
Yeah it sounds great but in reality, getting some random advisor to hand you a book in retirement is just not that common. I know this first hand. In fact, large amount of nepotism occurs and younger already established advisors typically buy off these books. You could technically go in as some like wealth associate but that could literally screw you if things don’t work out because you don’t build your book in that role so you are banking on the advisor giving you the book. I’ve seen people get screwed countless times.
But all in all, it’s a great career vs banking/PE/PC in terms of hours worked and general satisfaction. Your bonus is tied to a % of AUM, and its an annuity. You don’t get some bonus tied to a bank’s division bucket calculated through some complex formula. You can decide how hard you want to work for your money. If you own the clients, you are effectively running your own business. You do what you want, there’s no one but MAYBE a branch manager that checks in every so often (at a wirehouse). Vs PE banking or anything else where you’re a yes man until much later, even then, you are at the whim of the banks direction…you don’t own anything technically.
No one looks down on private wealth management, but it’s not as coveted as investment banking or private equity or hedge fund roles.
Why? Well the other roles typically pay very well right off the bat and you are learning on the job every day.
Whereas in wealth management you typically learn it all within a year or two and the real skill is being a great salesman.
If you can build a solid book, it’s a dream life. Lots of money, low hours worked and clients are financially illiterate or could care less about managing money, so as long as you track the general market and don’t lose their capital, no real headaches.
The issue is you need to be a great salesman. You have to build that book and convince people to give you their money to manage. I would rather kill myself, then go on tons of sales meeting or cold calling people early on to build my book.
But if daddy or daddy’s friend hooked me up with an established book, then yea, it’s a dream life for sure.
Some of the comments here are spot-on but let me summarise some things after catch-ups with WM/PWM friends.
On the plus side, they have a great WLB and while the pay isn't fantastic compared to IB post-undergrad, it steadily tick up and suddently they find themselves doing very well at ~26 with great WLB (evenings, weekends, holidays are never blown up)
On the down side, all of them have complained about being bored and not learning anything new 24-36months into the job. This is coupled with a relative siloing in terms of next jobs (see them enter ILR, fundraising, etc) given lack of a technical / generalist development that you get in IB/Consulting/Corp program/etc.
Been at it a long time (I'm 61). WM/PWM is a great path for those who want a client centric, entrepreneurial life. This forum incessantly focuses on transferrable skills, next jobs, technical skills, etc. What you need to realize is WM is a revenue producing role. You can't have a more transferrable skill than that. What many would call "soft skills" are really the most essential skills in building a career and generating value (in real terms). Getting constituents, both external and internal, to "know you, like you, trust you" is what business is all about. That's really the bottom line.
Within WM, there are all sorts, ranging from quite technical/market granular to heavy relationship based individuals. That's the beauty of it. You get to figure out who you are, what works for you, how best to connect with clients, how to win business, how to keep business. Whether you work for a PB of a BB or hang your own shingle (me), your success comes down to building a client base. That's essentially how all businesses work. In this case, you are the business. Everything in the back office exists to support your efforts of winning business and building a big book.
Not dismissing any of the folks with "technical skills", but those are easily learned and even more easily replaced. Think about where AI is headed. A lot of analyst and associate functions will be replaced by AI within say 5 yrs. Of course they'll still need people. but not as many. Banking is an apprenticeship model so they need entry level to build up future leaders. Future leaders, however, are very much focused on winning business, not technical skills, as again, that's what business is about.
And oh by the way, within WM it is true regarding WLB and building an annuity. I've been on cruise control for about 10 years (by choice). Have a nice income (could have been bigger but haven't tried to build much in that 10 yr period as I was focused on family). Not for everyone, and I would argue it's hard to build, be good at. But for those that can attract a client base and are comfortable with the responsibility of managing others' financial future, it's a great business. Not a job. A business! If you think of it like a job, don't even bother.
Excellent comment. Sales, client service and revenue production is what it’s all about.
Always appreciated for your contribution, sir. May I ask would it be possible to know if you I are good at this soft sales skills before start? If yes, how? Many thanks!
Think about your EQ, not your IQ. Are you good with people? DO they easily trust you, value your opinion? Do you connect with others easily, socially or via work / school? If the answer to these are yes, then you have a decent chance. If not, pretty hard and will have to get much better at people skills.
I've supervised many types. One in particular comes to mind. He's brilliant, extremely technical (kind that tells you how to build a watch when you ask for the time), and ultimately a nice person. He does ok. Has a 75 million dollar book as an independent so he makes 600-700k. BUT he has ZERO people skills. Don't know how he won the clients he has but most people I know can't stand him. If he had better soft skills, his book would easily be 250mm.
Know who you are.
It can be a great job and very well paid. It’s also a rapidly growing industry too. I know a few wealth mangers who have done quite well, but it’s a grind with lots of cold calling and marketing. As others have said it’s more a sales connections /job than an investing job.
Also it doesn’t pay well (low 6 figures) until you’re a partner or the boss. You have to get lucky finding the right team who is generous.
I’m surprised why there hasn’t been fee pressure or more clients doing it themselves. Advisors charge 1% and the parent company takes a big chunk. but it frequently seems clients don’t see the value in it when they can go 100% S&P or put it in a lifecycle fund or robo advisor. I don’t see how it’s not going passive like the rest of institutional active management.
Their “financial planning” services are also pretty pointless too, unless you are super high net worth or have a weird situation. It’s better to hire accountants and lawyers separately
A lot of the slimey ones sell life insurance or annuities that are dripping with commissions and hidden fees
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