Comments (17)

Aug 1, 2009 - 3:00am

Usually two names for the same thing, retail wealth. However, some places (JPM comes to mind) have a distinction in terms of minimum account size - PB there is more prestigious if I recall correctly ($5MM minimum vs. $1MM or something like that).

All the BBs have fairly strong PWM operations, it's essential as a steady income stream in the down years of IBD (incl. the S&T guys here under IBD).

Aug 1, 2009 - 4:48pm

There's a significant difference in the market, level of service, and product offerings.

Private Wealth Management (PWM): $1M+ liquid at some firms, $5M+ at some of the more prestigious ones.
Private Banking (PB): $25M+ liquid generally.

In terms of prestige, the BBs with substantial PB operations are Citi, Goldman, and JPM. PWM is pretty universal.

Aug 23, 2009 - 9:37pm

I suppose so, just because the portfolios and strategies are more sophisticated. But this industry is really more suited for a career on the buyside (institutional asset management, hedge funds, mutual funds, financial advisory, etc).

I know personally, I would never do investment banking. Way too many kids have some image of what they think IB is like, and put it on a pedestal, when finance is really a much larger field.

Sep 10, 2009 - 6:15pm

Seems like hours and pressure would be more intense for Private Banking since more money and more sophisticated clients are being dealt with. Any truth to that?

"Give me guys that are poor, smart, and hungry. And no feelings." - Michael Douglas as Gordon Gekko in "Wall Street"

"Give me guys that are poor, smart, and hungry. And no feelings." - Michael Douglas as Gordon Gekko in "Wall Street"
May 1, 2014 - 10:10pm

I think I might be stealing a thread topic here, but does anyone know the differences in roles between a PM for PWM/Private banking and a PM on the buy side?.. Are they both involved with research companies and investing in stocks, but one is more individual based and one is just a large fund?

May 1, 2014 - 11:10pm

Where I come from, PWM is a more general term-- synonymous with private client services, private client groups, wealth management, etc. Within PWM there are 3 basic client segments, with the min/max AUM variying depending on the firm. At my firm, its like this:

Affluent: Private bank: $5M - 50M
Family wealth: >$50M

In the affluent segment, often client PMs are more internal-type roles-- heavy on asset allocation and port construction, but less F2F contact. Private bank (HNW) usually requires more 'white glove' service, and that's multiplied for family wealth. Due to the complex nature of the relationships as you move into private bank and family wealth segments (from small to large AUM), a PM here often is part of a team, with a wealth advisor or private banker as the 'quarterback' of the relationship, and then specialists in other areas-- investments, planning, insurance, loans, etc.

Make sense?

May 2, 2014 - 9:34am

this is typical at commerical banks as well. at my firm (one of the big 3 wirehouses), we don't segregate like the above, every individual practice is allowed to take whatever clients they wish, but the firm has special resources depending on the level of net worth. this is the case at the other 2 wirehouses as well, though I cannot speak for the next tier (Ed Jones, Wells Fargo, Raymond James, Ameriprise, etc.) or the regionals (Davenport, Baird).

basically you have the wirehouse model which basically lets everybody run their business however they want under the umbrella of the firm (so long as they produce and stay in compliance), regardless of client size, products, etc. the wirehouse simply aims to have the resources to allow the advisors unlimited options. in this model, there is little reliance on proprietary models. the days are gone where firms (at least mine) push their products on advisors, many of the best use outside managers or are their own PM (my practice is a mix, we outsource fixed income, international, and commodities, we manage US EQ in house).

the private bank model is accurately described above, won't beat that dead horse, although what I will say is that while your income is less volatile than if you were at a wirehouse, your job security is dramatically less.

as for boutiques/family offices, I've seen both outsourced & in house. if in house, I'd imagine it's similar to getting a PM job at a bigger firm but different just like BB IBD is different from boutique IBD. at boutiques however, you will wear more hats (have a friend who's a VP at one), simply because you don't have the manpower that a bigger firm does.

PM me if you have more questions, but I'm most familiar with the wirehouse (PWM) model.

May 2, 2014 - 10:43am

This is correct but adding to the brofessor post:

PWM is more investment centric with some additional focus on estate planning, liquidity issues, lending, risk mitigation, etc but the major focus is on Asset Management. Private Banking tends to have a greater range of services and the focus seems to be more evenly distributed. Also addressing someones comment above....I don't feel that PB has a more sophisticated business model at all. In fact I have found that they tend to lack some sophistication in the money management side of things.

HH asset levels are not a number set in stone and the asset size does not automatically make one client work with the PB and another work with PWM. It generally has to do with how the client was aquired and the services that they need. Where I work (PWM) we have plenty of 100MM+ relationships and there a few that are north of 1B. The difference is that we need to bring in our own clients where at the PB you are assigned a book of clients. This gives the PWM advisor far greater job security (because we can always leave and take the clients to another firm) and the top earnings in PWM are higher than PB.

May 2, 2014 - 11:20am

Agree with posters above, but want to add a small distinction about risk/job security. At a place where the salesperson is commission based (like most PWM shops, Merrill/Morgan Stanley etc.) the failure rate is extraordinarily high in the first few years. Something like 80% or more. However, once you bring in sufficient revenue, it is the probably the most secure job in all of finance. The reason is because you can take your book with you to a competitor whenever you want. The reason it's hard to get established is because it's really difficult to develop a book of business when you are handed exactly zero from the firm.

I would think of the private bank job as a similar kind of position but with a collar around it. The failure rate is substantially lower, but the upside is also lower. You are generally given a book when you start to get more money and referrals from. You also have instances where a client deposits $20 million in a checking/savings account and the teller in one of the retail branches calls someone in the private bank to meet with the client.

I would imagine if you compared median earnings: the private bank would be higher; if you compared average earnings: the broker would be higher. There are a relatively few number of brokers that are absolutely killing it that will bring up the average significantly. You won't find anyone in a private bank making $5 million and will find very, very few that clear $1 million. You also won't find any making less than $100k after the first year or two out of college.

May 2, 2014 - 11:47am

couldn't agree with you more here, Dick. earnings for PB (and a lot of other finance jobs) are steep at first, then plateau. in my business, it's flat at first as you build your business, and then assuming you survive and stay in growth mode, it's exponential. there is literally no ceiling to the earnings you can have, and there are advisors out there making 7 figures as Dick suggests. but, as Dick also mentioned, starting pay is much lower. at a wirehouse, rookies start out in the 40-60 range, depending on age and prior experience. but after that, the sky is the limit.

one quick comment though, Dick. The average production at all of the big 3 is skewed by a few gorillas at the high end. guys like Ira Walker, Brian Pfeifler, and Taylor Glover (used to be ML, now out of the business) are few and far between. while at most of the big 3, the average production is about 800k, which would equate to income of about 350k depending on tenure and other things, the presence of wirehouses in smaller markets and my travels to visit colleagues tells me that very few people are putting up those kinds of numbers. there are some offices like our Park Avenue office where you'd be hard pressed to find someone who wasn't making at least 500k/year, but that's the exception, not the rule.

If you added Marty Shafiroff in, the "average" would be about 1.5mm. many people don't get that averages are deceiving until they hear the story about the 6 foot tall man who drowned in a lake that was 5 feet deep...on average.

May 2, 2014 - 12:01pm

Difference between Private banking, Wealth Management, Retail Banking, Family Offices? (Originally Posted: 11/22/2014)

Could anyone elaborate the difference between the above in detail from the point of view of an employee?

May 2, 2014 - 12:02pm
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