Private Banking or RIA?

Hello, I am an undergrad student doing a wealth management summer analyst internship with JPM private bank. I really like the resources, benefits, and connections I could gain by working in private banking as well as the doors I hear it can open. The starting salary + bonus would also be pretty high (about 130k) and allow me to put more into savings in my 20s which is really important to me. From my understanding, it is also much easier to go from a big bank to an RIA vs the other way around. However, long-term, I see myself being happier working at an RIA in the fiduciary environment with more hours flexibility (to my understanding) and ability to learn more directly from higher-ups. I really don't like the idea of being pressured into being a "sales person" who has to make commission, so I am more attracted to an RIA culture. However, starting salaries at RIAs are seeming much lower (around 65-85k) which wouldn't allow me to save as much.

Eventually, when I settle down and have a family, I would like to have more flexible working hours and my own clients who I attend to. From now until then, I am willing to work the longer hours and put in the work to set a strong foundation.

I am conflicted as to whether I should go straight to an RIA or start in private banking for a few years and then transition to an RIA. Also, if I do the second option, I'm not sure after how long I should make the transition to an RIA. 

If anyone has any advice for my situation I would realy appreciate it! Also, please correct me if I have any misconceptions.

Which path is best for my situation?

Start at an RIA and stay
0% (0 votes)
Start in private banking then leave to an RIA
100% (17 votes)
Total votes: 17
 

Choosing between Private Banking and RIA (Registered Investment Advisor) can indeed be a pivotal decision in your finance career, especially considering your long-term goals and immediate financial needs. Here’s a breakdown to help you weigh your options more effectively:

Private Banking: - Pros: - Higher Initial Compensation: As you mentioned, starting salaries in private banking, especially at a prestigious firm like JPM, are significantly higher. This can be crucial for early savings and financial stability. - Resources and Networking: Working in a large bank provides access to extensive resources, training, and a broad professional network, which can be invaluable in the early stages of your career. - Reputation and Credibility: The brand value of a big bank can add considerable weight to your resume, potentially making future transitions smoother.

  • Cons:
    • Sales Pressure: The role might come with a strong emphasis on sales, requiring you to meet certain targets and possibly pushing products that maximize bank profits rather than focusing solely on client needs.
    • Less Flexibility: Typically, larger institutions have more structured environments with less flexibility in terms of hours and work arrangements.

RIA: - Pros: - Fiduciary Standard: RIAs are bound by a fiduciary duty to act in the best interest of their clients, which aligns with your preference for a client-centered approach. - Flexibility and Autonomy: Generally, RIAs offer more flexible working conditions. This could be beneficial as you plan for a family and seek a better work-life balance. - Direct Learning Opportunities: Smaller firms often provide greater exposure to high-level tasks and direct mentorship from senior advisors.

  • Cons:
    • Lower Initial Salary: As you’ve noted, the starting salaries at RIAs are typically lower than those offered in private banking, which could affect your ability to save early in your career.
    • Building a Client Base: Starting at an RIA might require more effort in building and maintaining a client base, which can be challenging without an established network.

Transition Strategy: Given your long-term goals and immediate financial needs, starting in private banking and transitioning to an RIA could be a strategic move. This path allows you to leverage the higher initial salary and robust training resources of a big bank while setting a foundation for a future in a more flexible, client-focused environment. Consider the following transition strategy: - Duration at Private Banking: Spend 3-5 years in private banking. This duration allows you to gain substantial experience, build savings, and establish a professional network. - Prepare for Transition: During your tenure at the bank, focus on skills and relationships that are transferable to an RIA setting. Also, keep abreast of RIA trends and regulations to ensure a smooth transition. - Networking: Continuously network with professionals in the RIA space. Attend industry seminars and workshops to connect with potential employers and mentors.

In conclusion, starting your career in private banking and planning a future transition to an RIA seems aligned with both your immediate financial goals and long-term career aspirations. This approach provides a robust foundation while keeping your ultimate objectives in sight.

Sources: https://www.wallstreetoasis.com/forum/wealth-management/qa-a-bored-financial-advisor?customgpt=1, Q&A: 3rd Year Private Bank Analyst, Q&A: Buy-Side Analyst, Moving from Asset Management into IB / PE, Confused about my career...

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I want to touch on your point about being a "sales person" - if you want to make the big bucks & have flexibility, you're going to have to be able to sell (both PB & RIA). Now, sales is in our industry isn't like selling cars, but you need to build relationships, trust, and have a growth mindset. Advisors 'sell' differently - you don't have to be a type A extrovert to become extremely successful.

On commissions/ pushing product, that's mostly going to pertain to PB and banking in general. If you're at a reputable RIA, they're not going to be doing that sort of thing. 

PB:

  • UHNW clients/ fewer overall clients compared to traditional WM
  • Not just WM - credit solutions, payroll, estate, tax etc

RIA:

  • HNW clients - more relationships, but probably less sophisticated
  • WM/ planning focused, but always in contact with outside attorneys, CPA's, business brokers versus in house in PB

If I were in your shoes, I would take the PB gig and really get to know the local RIA space if/ when you make a move. With a higher salary in PB, you have the luxury of being selective and can really set yourself up well. Plus, going from UHNW to HNW clients will only make things simpler (sometimes lol). 

 

I agree with the sentiment above. It would be easy to go from PB to an RIA. Remember, many RIAs are very small businesses and you have to vet these places diligently before going to one. PB, you are an employee with a bonus selling banking products and investment solutions. Many times, PBs have less investment flexibility than an RIA and use the solutions at the bank. Good career, but in my opinion, going the wealth management route should ultimately lead to a lifestyle where you own a book of business and your own clients. That’s the sweet spot. You cannot do this at a PB. I’d do the PB, learn everything there and start networking with RIA firms. You can also find teams at wirehouses that operate similarly but are under the wirehouse brand. Many of these teams run advisory portfolios similar to an RIA, although not considered a fiduciary, many operate in that capacity. The days of selling stock for commission or other financial instruments for a one time upfront fee are relatively over. 

 

I'm a student in the same boat as you as i'd like to end up in the RIA space long-term and even go independent on my own. I'll be starting out at GS PWM and had an offer to do JPM PB as well. Definitely think that going PB to start is going to set you up for when you decide to make the switch over. Like you said, you can't compare the learning and resources at JPM and you should take advantage before you can then leverage your experience as you enter the RIA space.

 

Can I ask what made you choose GS PWM over JPM PB? Also, do you know specifically how the compensation & entrepreneurial structures differ between the two? I had heard that GS PWM eventually has higher comms down the line and a more entrepreneurial style where your clients follow where you go, whereas with JPM PB you basically have to start over with building a client base if you move offices- do you know if this is true?

 

Was definitely a hard decision to make and there genuinely was no wrong one. Like you mentioned, GS is a lot more entrepreneurial and just harder when you transition to advisor which is what i know it’s gonna take to get to the position i want to be in. JPM has an incredible analyst program and pay starts out on the highest end for WM, but you’re salary+bonus even as a private banker. The issue for me isn’t the money because it would be a lot regardless, but more of the fact that the clients are more the firms clients than your own. A lot of times, you aren’t the only point of contact for the client and you’re really working alongside a team to service the client for the firm and get paid salary for doing that. As i’m looking to transition into the RÍA space, I knew i had to take risks and so I think GS will give me that opportunity to “make it or break it”.

 

Been at it for over 30 yrs. Selling, advising, managing money, building teams, large organizations, run my own business. I highly recommend starting in PB mainly to get structure and training needed to have a better chance of success. This business has a whole different language and spending a year or two in training, learning, etc will provide a nice foundation. It will also give you a better understanding of the industry and framework to gauge and compare RIAs. Out of the shoot, you'd have no way of knowing or differentiating one RIA from another. It's not just about AUM. You want to understand their culture, service model, value add offerings, comp model, support level, etc. If you happened to go RIA, I would only do it for a shop that had you be client centric handling the servicing of their accounts (including speaking with them) with a path to running a book and eventually ownership (at least partial) of the book. That would be a hit the ground running model where you would likely have to sink or swim. Takes a certain type to succeed there. It also takes a certain level of independence and entrepreneurship. Ultimately, the RIA is a small business and it's owners will run it like a small business. 

I've been independent my whole life but most will be far better off with the structure of a large institution at least when starting out.

 

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