Is Private Wealth Management Underrated?
Been doing some reading on PWM recently and although a completely different beast to IB, PE etc the compensation for a top tier adviser/relationship manager compared to the time they actually work looks pretty good.
From what I gathered, an adviser with fum circa $300 mil, can on average bring in $1mil plus pa.
Seems like a good option for someone who wants to start a family later down the track without working 90+ hours each week.
The problem with wealth management is that it's very easy to get in but very hard to succeed in. On the other hand, banking, once you get in (which is hard), you're pretty much guaranteed to make good money and there is a straightforward promotion path (up until MD, where it gets harder). So, while IB and PE are relatively low risk/high reward paths, wealth management is more of a high risk/high reward one
Also, WM is slowly but surely declining, so something to keep in mind as well
Banking and private equity are the opposite of low risk career paths and are not straightforward you joke.
Lots of bankers and pe folks know that finance as an industry is in a structural decline and are facing the chopping block everyday but by all means continue to jerk off to the thought that you are going to fare better.
Might be a hard reply, but he is pretty right. No need for monkey shitting him.
PB is struggling as well. IB, PE, PB - Finance is being democratised little by little
Although it's hard, don't be consumed by the dollars with any of these. It really comes down to what you see yourself wanting to do, what you'd be good at it, your overall acumen, etc. PWM is all about client relationships and money management. Of course there is an institutional version of this where your client is a foundation, endowment, pension, etc. (That's more to do with AM than PWM but PWM does go there a bit, especially in the Private Banking world.)
If you hate the idea of dealing with actual clients and being accountable to them for the stewardship of their money, than PWM is not for you. If you think you would thrive there, then it's a great gig. Lots of shops are taking a team approach these days so the success rate is higher than going at it alone. The trend in the business is a tremendous graying of the advisor base which means a surge in succession plans which means coming in to a group, learning the business with them, handling some of the smaller accounts, and eventually buying in to the practice (many times from cash flow). In the right situation, this is a great deal vs. building from scratch (90% failure rate).
I think that Rickle is mostly right, but there's an item that he didn't emphasize enough: It's a completely different skillset from most of the other jobs on this board. The critical skill is getting and maintaining clients. You can be completely f---ing clueless when it comes to investing, planning, and taxation, but if you can convince valuable clients otherwise you can be quite successful. Obviously, providing valuable services helps convince clients that you're worth it though.
On a more serious note, outside of client gathering, the value add that a FA/IA provides is still very different from what everybody else around here is doing. Financial planning is likely the biggest value-add: Do you have enough life insurance, is everything titled the right way with the right beneficiaries, etc.? After that tax alpha like using the right tax advantaged retirement accounts and the right estate strategies is likely next. Lastly will be investment calls. You are unlikely to add significant value there, but clients will judge you most severely on it. I fight for basis points with the funds I work on, and most FAs aren't even mediocre in the space, but it is the most client visible.
As said before, there are a lot of 'churn and burn' shops as well, where they'll have you sell to family then dump you hoping that the family sticks around. I think that's part of how WM gets a bad reputation. It is pretty easy to get a 6, 63, Life & Health and start selling. Making the job stick is a completely different animal.
I've met a few top PWM and tried having conversations with them about market fundamentals or macro movements and they barely know surface stuff. However, they are phenomenally social people, they can wine and dine someone like no other. They bring the capital in and have an associate determine the rest.
What are exit opps for PWM? Can it lead to fundraising positions if you have built and maintained a solid network?
interested in the reply to this
I know a guy who was a top fundraiser for various causes (and was even appointed by Bush Jr. to fundraise for a DC museum) and then moved in PWM so maybe it goes both ways haha?
Interesting. I am sure he was able to bring in an immense amount of business. I would wonder if it can transition into roles fundraising for PE or a HF? Given it’s a prominent WM role like GS/BS etc. and not some lower tier shop.
Exit ops for PWM comes up frequently on this forum. Must be the IB undertones.
PWM is quite different than IB. It's a destination and a career, not a stepping stone to another career. Assuming one "makes it" in PWM, they would have a decent client base and lots of meaningful impact with those clients. That takes several years to achieve and is not something one wants to leave. If you're good at it, you'll stay as it's quite lucrative. I have seen young people exit to AM companies because they didn't want the retail client life, weren't good at it, couldn't make it grow, etc. within a few years but I don't consider that an exit op but rather a reset.
Do you want to be client facing, client hunting, client everything? That's PWM and it's great for the right people. Don't have to be a knee slapping, joke telling extrovert at all (most people don't actually like that in more than tiny doses.) Just be genuine and interested in helping others solve their financial issues and learn enough about the markets and insurance to actually make a difference.
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