General Questions About Private Banking

Hi,
I am an undergraduate student considering going into Private Banking. So far there seems to be a dearth of information about that field scattered throughout the site. Here are my questions, I would appreciate if someone could answer them.
1) Nature of Private Banking: My understanding is, that there are two similar fields in the Financial Advising sector. There are PWM's and then Private Bankers. PWM's seem to deal with less wealthy people, and there seems to be no career progression from analyst>associate>VP>MD, but rather they start out building their own book and are just called financial advisers (or something like that). Then there is Private Banking which has a career progression similar to IB (analyst>associate>VP>MD) and this field seems to be much more lucrative. Am I getting this right?
2) Lifestyle: I am looking for a career with a good lifestyle (therefore I probably won't go for IB/HF/PE). My understanding is that Private Banking has a decent lifestyle with 9-10 hour days and basically no weekends. Is this correct?
3) Pay: My understanding is that the pay in Private Banking, while lower than that of other careers in finance is still very high. The Vault Career Guide to PWM (which I assume really is talking about Private Banking) suggests that it is typical to be making $500,000 a year within 10 years in the field. Is this accurate? (I know that in Private Wealth Management, where one deals with less wealthy clients, that while this is possible it is not by any means typical). Any thoughts on this?
Thanks so much!

 

Depends where you are working. Some places do indeed have the layout you mentioned above for PWM/PB, whereas others are a tad different. I'd do some research on specific places you want to work and speak to bankers/analysts at those places to get a better understanding of how the culture/compensation/hours vary from place to place.

 

Thanks Tangerine. It's a bit hard for me to do that since I am just considering the field in general, have no specific intentions to go with a particular field, and don't have the time to call every firm to take a survey of all this information. I'm just looking for general information.

 

I'm a student, this is what I've heard about it:

1) Depends on the firm. Some "Private Banks" will require liquid assets of $500k+, others (the "real" private banks) may require $2mm, $10mm, or even $30mm. Same with PWM, just flipped around. The "real" private banks usually have a structured progression. PWM does, too, though if you're at a small bank the progression might not matter for shit. And it's a lot more of a flat structure in PWM.

2) I've heard numbers around 50 hours/week, depending on the week. That's not including entertaining clients, I don't think. You may have to entertain clients on the weekend occasionally.

3) Sure you can, but it's also a matter of making it 10 years in the business. The reason certain people make that much money is maintaining relationships with clients and bringing new ones on. It also depends on location. If you're in NYC, that's probably a pretty good guess. If you're in, say, Kansas City, that may be lower (less HNW and UHNW clients, cost of living is much cheaper so you may not get as much in base, that kinda thing). It's a sales job, the difference is you're selling to a few people that are rich as fuck. You have to earn their trust to be successful and a lot of what you do will be a team effort.

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 
Best Response
  1. Firms vary the name. For example, at Goldman Sachs they call it “Private Wealth Management”; however, their minimum account is ~$10MM, which many consider “Private Banking”.

What is most important is what kind of program for career progression each firm has and how you prefer to develop your career. At Goldman Sachs and J.P. Morgan, there is the traditional Analyst > Associate > VP, etc route. So when you start as an Analyst, you are not tasked with brining in clients (which is difficult for a kid coming straight from college). On the other end of the spectrum, you have firms like Merrill Lynch and Morgan Stanley Smith Barney where you come in as a “Financial Advisor”, go through a short training program, and then are tasked to start developing your own book of business. If you don’t hit your minimums, you’re out! But, if you are well connected and a good salesperson, this is the shorter path to take as far as making more money.

  1. In general, the lifestyle is decent. However, you are always at the whim of your clients and nothing typifies being on the sell-side any more than being a financial advisor. Also, how successful you are – especially if you decide to go the Merrill or MSSB route – will depend on how much you put into your prospecting efforts (networking events on the weekends and evenings, cold calling non-stop, researching prospects, etc). On the other side of the equation, once you have established a solid book of business, you tend to get to do a lot of fun events with your clients (golf outings, dinners, etc).

  2. Pay is pretty solid. You are not going to have guys with multiple mansions across the world and their own private jets, but being an upper-middle class to upper class guy is easily attainable. I’d estimate that a 40 y/o guy who is a VP makes $150K on the low end and $3MM on the high end.

 

Good question.

People at all of those firms you mention deal with clients across the full specturm of wealth (for the most part). However, GS and JPM tend to favor the ultra high net worth clients, whereas ML and MSSB work with retail, high net worth and ultra high net worth clients.

To give you an example, a ML advisor's book of business average client may have $800k, but some of his clients have only $200k and some may have $50MM.

A Goldman Sachs advisor's average client may be $15MM ($2MM on the low end and $500MM on the upper end).

 

I see. So it would seem that working for GS/JPM would be more lucrative, right? Is it also harder to succeed, though (because there are fewer HNW/UHNW people then there are just normal people)?

 

It is not more lucrative to work at JPM if you are a high performer, as it is not commission based. If you can do a fantastic job creating a strong book of business, you'd be better off working at a place like Merrill (by better off I mean you'd have a more lucrative career).

 
BANKING100:
Tangerine, Do you know what salaries are like in JPM?

In an NY office you will get 70+10, and in a regional likely around 60+7500 for an analyst role. I've heard varying things on bonuses, but have heard they can get as high as 30,000 for analysts (I've heard differing things here though, maybe tan86 can touch on this).

I'm not sure exactly how it works as you move up the ranks to Associate, and then to Banker (VP, ED and MD), but I'm sure bonuses get bigger as your role in increasing revenues and bringing in new business becomes more substantial.

The good news is that if you do the analyst program and want to switch careers, you will have the JPM name on your MBA applications so it is doable.

 

Good info from tangerine.

Regarding compensation compensation at various banks, it depends how that firm structures the salary for their advisors. Like tangerine said, JPM is salary + bonus, which in theory is suppossed to align the advisor's interest with their clients. Also, it's more stable from an advisor's perspective (i.e. if they don't reach their goals, they still get a salary, just a smaller bonus).

On the other hand, ML and MSSB are commission based, which some may argue is a conflict of interest because every product being sold means more money (commissions) in the advisors pocket. With this structure there is the "eat what you kill" mentaility. So if you knock the ball out of the park one year you can do VERY well. But if you have a awful year, that means less commissions. So it's a more lumpy compensation structure.

 

Of course in PWM after building a solid book, you can always break away and start your own boutique firm. I have talked with advisors who have done this and are pulling in some serious cash. They are typically charging about 1.25% of assets with no commission fees. Get up to a few billion and you are working 30-50 hours a week, and pulling in 10mm in net profit. Best lifestyle in finance is pwm after building a large book. Of course it's a bitch building it which is why most fail.

 
craigmcdermott:
This is the most selfish and pushy post I've ever read on the internet. Therefore, I will not answer any of your questions even though I know the answers to all of them.

This had me rolling.

I think that we are all clinging to a great many piano tops...
 

[quote=tito0817]look at this tremendous oppurtunity for experience private bankers http://webconnect.sendouts.com/CN_Frame.aspx?ID=AdvantageTalent&SiteID=…]

If I got paid commission at McDonalds to sell hamburgers, i.e. 10 cents a burger, if I sold 10mm burgers I could make 1mm a year. Now is that likely? No, but its theoretically possible. Its just like that ridiclious job posting you linked us to. A, thats not an analyst level job. B, you wont be getting that job regardles because your sentence structure sucks and you use words incorrectly.

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 

[quote=tito0817]look at this tremendous oppurtunity for experience private bankers http://webconnect.sendouts.com/CN_Frame.aspx?ID=AdvantageTalent&SiteID=…]

This is for extremely seasoned wealth advisors/private bankers who have MANY MILLIONS of assets they can bring into the bank. Your piddly ass out of college couldn't even get an account open at a private bank, let alone run the show and be a rain maker. Yes, with 15+years you could be there....gotta start somewhere though so pick which you think you would better at and which you would enjoy the most.

We've got half a million shares in the bag!
 

1) Yes, it's easier to get into private banking than investment banking. 2) Yes, less of the people in private banking will be ivy league, etc. 3) No, it's not "easy" to get into private banking - you still need to be somewhat put together 4) Yes, the pay tops out at 1million plus for people with a long and successful career 5) No, you don't make anything close to 1 million as an analyst... you make 60-70k ish I believe

 

Forget it...What do you think you do in banking that can return $1mm. Use your common sense dude. Invent Google or Facebook, fine you can make a some serious dough, but that takes talent, vision and hard work. Why would someone ever pay an analyst $1mm? Unless, i got some super connections and facebook does IPO with my firm just because of me, then maybe. Hear what i am saying??? You gotta something great to earn $1mm quickly. Otherwise, prepare for a long, hard and painful career.

Do what you want not what you can!
 

Titto do you have some weird abnormality that people have a fetish for? If so you should do porn, prob have a better shot at making a million in that than you do as and IBD analyst.

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 

On the Troll Scale of 13-69, you get a 17.

For reference, blastoise is around a 52.

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

in private banking, you'll need to rely heavily on making connections and being likeable. i know analysts bringing home a few hundred thousand after commissions/bonus, but it's all about who you know and who you impress. also....it can depend on what region you're in.

 

Ah, I highly doubt that, 2010: Blankfein (GS)- $14.1 mil Dimon (JPM)- $20.8 mil Gorman (MS)- $15.1 mil Stumpf (WF)- $18.9 mil

Then there's Pandit, who said he'd only take $1 in comp until the company is profitable again or something and Gruebel (UBS) said he wouldn't take a bonus, so he made $3 mil off salary. I could see a PB making more than Gruebel or Pandit. The private bankers taking home more than them in salary are outliers, to say the least. Maybe in the top 1/2%, if that

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

I could answer your question or let you search the forums. Guess which option I chose?

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

Uh, how is laying out base+signing and possible bonus numbers nothing detailed? It's not like you're getting stock in the company as an Analyst.

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

That's because most people that are on here aren't looking to become an FA for Smith Barney or Merrill Lynch (actually not sure what the deal is with those two for fresh-out-of-college kids, just assuming they do commission). Plus, the most knowledge (as far as I've seen) tends to come from a number of people (tan86, for one) who worked for JPM or another of the banks with "standardized pay". The best we have to go on is salary $70k, signing $10k, and bonus $15-40k. At least that's what I've come to see and I've been looking through the AM and WSO forums for a decently long while.

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

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"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee

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