Wealth Management

IB2PWM:

- Payout : 35% of the revenue (between 25-45% depending the firm)

As you stated in point # 2, what do you mean by pay out. I'm just trying to understand how their salaries are sturctured.

ZiggyMon:

IB2PWM:

- Payout : 35% of the revenue (between 25-45% depending the firm)

As you stated in point # 2, what do you mean by pay out. I'm just trying to understand how their salaries are sturctured.

Payout would be the commission. 35% payout would be basically 35% cut of the fees the firm brings in. If the firm brings in $1m in fees from a client, the rep will keep $350k as his fees. Most of these firms, the "salaries" are really not there (unless you join as analysts or sales/marketing associates).

By the way, in the PWM industry, "associates" are secretaries or other supporting staffs (mostly in sales/marketing). Unlike IB where "associates" are higher than "analysts", in PWM, associates are same level or below than "analysts".

Typically, the top 5 firms would pay very low salaries (before the commissions/payouts) to encourage the brokers to produce. Typically the salaries last only the first 18-24 months, and are typically less than $60k. But most of the brokers make the big bucks from the fees. If the broker is recruited by other firms, they typically pay huge upfront buyout pay (which can go into millions).

If you are looking into the industry for non-broker position - such as a portfolio analyst, etc. - in a PWM industry, a typical pay (post-MBA) would be between $115k-$250k depending on your background. The bonus depends on how the team does.

Wasting Time:

Shouldn't people start out somewhere like Edward Jones and deal with low scale ass people to build up confidence and then move up into PWM?

The PWM industry is very different than the "retail" industry (Ed Jones, Charles Schwab, etc.) Most retail industry services its clients (from average Joe's to "rich" individuals) in retirement and simple small investments (mutual funds, etc.)

The PWM firms typically target $10m+ individuals and families, but the minimum target varies between firms. There are different categories of target clients, and they are,

• UHNWI (Ultra High Net-Worth Individual) : $30m+ in net-worth
• HNWI (High Net-Worth Individual) : $5m-30m in net-worth
• Wealthy Individual : $1m-5m in net-worth

Most retails would target $5m or less and the PWMs would target HNWIs and UHNWIs. But there sometimes are UHNWIs and HNWIs using retail brokers for various reasons.

The business model of PWM firms is, offering institutional-level services to individuals and families. Also when UHNWIs and HNWIs use retail brokers, their investment options may be limited. For example, a person who is worth $100m who is looking into investing in a large PE fund (such as KKR or Blackstone), would have to use a PWM firm, since if he uses a broker at a retail office, his broker may not have existing relationships with such large firms.

Also typically, when a broker is successful at a retail-level, he/she would not leave the retail-level, since their existing retail businesses won't be able to move to PWM with him (for example, a retail broker's $500k client won't be able to move his account to a PWM firm).

Wasting Time:

What does it take to become good at PWM? Do you have to be a really good salesperson? Is PWM easier or harder to get into compared to investment banking (lets say for DB)?

I think the combinations of 1) social skills, 2) sales skills, 3) investment knowledge makes someone good at PWM. I think it is easier to get into compare to IB, but most top-tier PWM firms rarely hire people with no previous investment-related jobs.

What do you mean by DB? Deutsche Bank?

Are you pre-MBA? If you are fresh out of undergrad, it would be nearly impossible to join PWM as a broker.

There are three ways to do this.

1) Start as an analyst and move up 2) Start in retail and move up (not really ideal, since you'll give up your old clients) 3) Do other things first (IB, PE, Consulting, etc.) then make the move.

Also at most top-tier PWM firms, the analyst positions are post-MBA positions. If you are pre-MBA wanting to do the analyst route, look into second-tier firms, too. In PWM, the top tier firms are, JP Morgan Private Bank, Morgan Stanley PWM and Northern Trust (Please note that the PWM, trust services, and private banking are VERY similar in nature, but somewhat different).

There are 21 firms in the industry - Bank of America Private Bank, Bank of New York Private Client Services, Bessemer Trust Company, Charles Schwab, Citigroup Private Bank, Credit Suisse First Boston Private Client, Deutsche Bank Alex, Brown, Deutsche Bank Private Wealth Management, Fidelity Investments, Goldman Sachs, HSBC Private Bank, JP Morgan Private Client Services, Lehman Brothers, Mellon Financial Corporation, Merrill Lynch, Morgan Stanley Private Wealth Management, National City Private Client Group, Neuberger Berman, Northern Trust, PNC Advisors, Smith Barney, SunTrust Banks, U.S. Bank Private Client Group, U.S. Trust, UBS Wealth Management, Wachovia,and Wells Fargo Private Client Services.

I guess the top-tier firms are,

Bessemer Trust Company, Citigroup Private Bank, Deutsche Bank Private Wealth Management, Goldman Sachs, JP Morgan Private Client Services and JP Morgan Private Bank, Lehman Brothers, Merrill Lynch, Morgan Stanley Private Wealth Management, Northern Trust, Smith Barney PWM, UBS Wealth Management,

I guess the second-tier firms are,

Bank of America Private Bank, Bank of New York Private Client Services, Charles Schwab, Fidelity Investments, HSBC Private Bank, Mellon Financial Corporation, National City Private Client Group, Neuberger Berman, PNC Advisors, SunTrust Banks, U.S. Bank Private Client Group, U.S. Trust, Wachovia,and Wells Fargo Private Client Services.

It's just my opinion. Also some of these firms are retail-type PWM, and others are insitutional-type PWMs. Also some offer propreitery products and some are more open. You just need to meet as many as possible to differentiate the differences (sames goes to the clients... most clients can't really tell the difference in the services so the firm's name and existing connection/relationships drive business more than anything else).

Also you listed GS as a second-tier in your message. GS defintely is top-tier is one of the hardest to join. I think GS and JPM are most picky in this industry.

Retail brokerage is easy to get into, but most PWM firms/offices are quite picky. PWMs typically require MBAs or 3-5 years in solid experience in retail-level.

For FAs, your base pay would be about $60k for someone who's starting up (can be substantially more if you are recruited from other firm), and 25%-45% commission plus bonus (new FAs get bonuses for good performance).

The pay for the pre-MBA analysts is typically $50k-80k plus bonus, and post-MBAs do $100k+ plus bonus. The bonuses are typically related to the team's performance.

uh, I'm assuming that the idea was for you to say why you wanted to do that as a job, not why you think the industry is an important one.

Somebody has goldman's miami private wealth mgt superday on friday...

yes I do. I'm happy, after getting interviewed and dinged at JPMorgan for their Honors Program any opportunity is a good one.

what about u Khameer?

Sure you can paint a rosy picture of how the world's wealth rests on the advisers. In terms of working there, it's a different story. Had a friend who went into PWM some years ago. Tells me that PWM is a good industry to get in only if you are ready to live your life as a salesman - everyday! These brokers make cold calls and pay for extravagant lunches (out of their own pockets) all day long. Their P&L consists of them, their analysts and assistants. usually teams of 3-5

In the end they make good money - start off in the $60k area and the highest producers in most Street firms rake in about $3-5MM a year (yes, there are outliers as well!)- takes a whole lifetime to get to that point.

the bottom line of their business model is this "I want YOUR money" period.

If no reply ring them.

hnazary:

Do you guys recommend me just calling them and acquiring them?

Yes, please just take out a loan and proceed to acquire these companies.

Oops, sorry. I meant to say, "Do you guys recommend me just calling them and asking about it." Sorry, it was 2:30 in the morning and I was studying for a German test.

Should I tell the companies I am willing to be an unpaid intern when I ring them up? Also, should I just e-mail or mail them my resume along with a cover letter. Or is it best to just call every single wealth management company in Dallas?

If you call then all that will answer is a secretary...calling is useless unless you have an "in"

Ask your parents and all of your friends parents who they use to manage their investments. Then inform them that you are looking to get into the bus and ask if they can persoinally email your resume or if you can call or meet with them concerning an "informational interview." Hopefully this will lead to him hooking you up.

That simple.

Agree with above, just try to use people you know. Everyone has SOMEONE managing their money, just find out who it is and if they need someone. What year are you?

If you are a freshman you may have to work for free, but only do it for like 3 days/wk if you aren't getting paid. Having that name on your resume will probably help you get something paid for soph summer.

I am a sophomore. I don't mind being a paid or unpaid. Just as long as I can add something to my resume with finance-related work.

I dont see to many small Dallas shops turning down free work.

I began calling some places. I called one place who transferred my call to the MD, I got rejected. She said, "No, not at this time." Then it was getting late so I stopped calling places. I wish my dad had a better relationship with my next door neighbor because he works for Smith Barney.

Dont be a puss! Its your neighbor too. Just drop by and ask. The worst that could happen is that he says no! I am willing to bet that since he is your neighbor, even if he cannot accept you, he will help you in other avenues.

If you really want this then you need to step up your game. One phone call...done. Then you wish your dad could help you? Come on buddy...are you for real?

GROW A PAIR!

Private Wealth Management (PWM) is the term generally used to describe highly customized and sophisticated investment management and financial planning services delivered to high net worth investors. Generally, this includes advice on the use of trusts and other estate planning vehicles, business succession or stock option planning, and the use of hedging derivatives for large blocks of stock.

The CFA Institute curriculum on "Private Wealth Management" indicates that there are two primary factors that distinguish the issues facing individual investors from those of institutions. Firstly, time horizons are different. Individuals face a finite life as compared to the potentially infinite life of institutions. This fact requires strategies for transferring assets at the end of an individual’s life. These transfers are subject to laws and regulations that vary from locality to locality and therefore the strategies available to address this situation vary. A second factor contributing to different portfolio management strategies for individuals and institutions is the fact that individuals are more likely to face a variety of taxes on investment returns that vary from locality to locality. Portfolio management techniques that provide individuals with after tax returns that meet their objectives are necessarily going to be specific to these tax structures.

The term was first used by the elite retail (or "Private Client") divisions of firms such Goldman Sachs or Morgan Stanley (before the Dean Witter merger), to distinguish themselves from mass market offerings, but since has spread throughout the financial services industry. Certain larger firms(UBS, Morgan Stanley and Merrill Lynch) have "tiered" their platforms - with separate branch systems and advisor training programs, distinguishing Private Wealth Management from "Wealth Management", with the latter term used to describe the same type of services, but with a lower degree of customization and delivered to mass affluent clients. At Morgan Stanley, "Private Wealth Management" is the retail division focused on serving clients with greater than $10 million in investment assets, while "Global Wealth Management" focuses on accounts smaller than $10 million.

The general public has become extremely risk averse and you can't expect returns of most asset classes to be attractive for a while. I think the brokerage business is relevant right now because it's the only thing with money even if they're losing it as fast as they can. The frenzy in PWM has more to do with demand-side deficiencies. PWM won't generate revenue outside of management fees as long as the crisis lasts, and when the economy finally recovers, I suspect high finance will still be the favorite destination for top business graduates.

A lot of PWM and retail brokers will be on the streets over the next 6 months amidst the consolidation, which presents opportunities for top brokers/advisors to start their own small shops since customers are loyal to the broker not their firm ( generally speaking)

PWM guys wont be on the street b/c pwm isnt going anywhere... that said it will never be a "hot" sector.

No matter where the market is going or if deals are getting done by banks or not, wealthy people still have a lot of money that needs to be managed. I think it is a focus now b/c as everything else dries up, its one of the few things still bringing in good fees for these banks so its getting more attention temporarily. They market the clients with "hey, if you didn't have us telling you to diversify you could have been down twice as much as the 12% you were last year..."

Get ready to starve for a long time while you establish your book. The benefits are you get paid more, but unless you are a sales jesus you would be better off being the junior guy.

no exit ops

Go for it

pwm not so bad. Did a year there before transferring internally to a much better role. So yes, there are exit ops, in the right size bank. Not in BB--- so if you did a few years at MSSB then went to a smaller WM shop, you could make some good money by the time you are 26+

That said, you have to run with the right crowds, especially in NYC, to grow your book substantially.

BuySide Research Analyst

I can only speak from buyside experience here. In PWM, out of college you may get low-balled and then inched up (10-15% annual raise on good performance.) So, after 4/5 years experience you stand to transfer from a 60-70k base role to a more market-level 80k role, for someone with 5ys experience in a non-IBD role. Of course you have to roll into the equation growth opportunities. It it looks like you stand a chance at making partner at your shop one day, then it would be pretty dumb to throw that away for an extra 10/20k a year, eh!?

lol @ "PWM pays just as well on the junior level while the lifestyle is better." Base may be the same, but total comp far from it.

PWM is a dead-end job unless you want to take a long road to become a financial advisor. Knowledge is basically the same as taking a financial investing class at school + reading about the market. I've done a few PWM internships and I feel very very bad for the analysts there. Frankly, the job sucks

Lol @ LookingForHelp --Did you ever think that the job of a successful investment advisor differs from a summer internship?

At OP - This site started as an IB website --but has branched out recently. There will always be more IB talk than anything else on here

PWM can be a very lucrative job if you are good at what you do. You can't just be a good salesman either, as some on here would argue. You must know the markets inside and out and understand the valuation of all kinds of investments. The lifestyle is 10x better than any other job in finance because you can become your own boss. Little traveling, lots of free time, you set your own hours.

The downside is the first 5 years. You have to work your ass off get clients. Think about it --What 50 year old man wants a 23 year old managing his millions? There is a very high failure rate for this reason --people either aren't good investors, can't schmooze, or get too frustrated at a lack of quick money.

However, the skills for PWM are very different from IB. Extremely tough to transfer from PWM to IB.

Also, MBA is definitely not a requisite for PWM. Why would you get an MBA if you have already started your own book of clients? However, if you want to exit --you probably will have to get an MBA

Lol @ Shmoozer, yes I have actually. Not sure if you read the latter half of my response "unless you want to take a long road to become a financial advisor."

I'm pretty sure the OP was mentioning the position for a JUNIOR role AT A BB. You can't build a book of clients straight out of undergrad, especially at a BB in PWM. You work as an assistant to the advisor for a while (@ GS as a "Financial Analyst") which is straight up processing trades, supporting whatever the advisor needs, and doing bitch work.

not a good place to start man...other experiences will be more broadening. it's tough to break into, but if you can accumulate a book of biz, it's becomes a pretty sick annuity though. kind of like being a swap or futures broker.

Thanks for the feedback everyone.

Should've probably clarified this right away but my original post was meant for the PWM Analyst program only. I wasn't talking about doing PWM for 10 years, building a book of business or becoming an independent Financial Advisor. Am primarily just curious about your thoughts on doing PWM for a few years after college for someone who wants to do something finance-related later on in life but not sure exactly what. Specifically, the pros/cons of doing PWM as opposed to i-banking.

Thanks again!

Pros vs banking: Better lifestyle, and you'll probably like the people you work with more. You also might meet some interesting customers.

Cons: Will pay worse. Prob like a 50-100k a year sort of job as opposed to a 90-150k sort of job. Not sure how much that matters to you. You will be dealing with less sophisticated problems, and will have a less varied set of experience. Exit ops won't value your experience as highly.

PWM isn't a bad spot if you're into it, but it's much more a job you should go to as a lifer.