Wealth Management Career

Anyone here work in Wealth Management? This can be a broad term so specifically referring to a professional that manages high net worth individuals $10M+ money, financial planning, taxes, family planning, etc.

Considering exploring a career path in this area & would be interested to hear perspective from those in it now and all else who wouldn’t mind sharing. What’s the future look like for someone that builds a substantial book $200m+? Will this be a need in 2040? What do you like about it and not like about it? Any regrets? Any advice to someone considering that path?

 
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So don't work with the UHNW community (have but not as a core client), but I can tell you it's really not different than other areas of wealth. WM is about solving people's challenges and transforming their fear and confusion into confidence and clarity by setting a course that gets them where they want to go. Every bit as important for the working professional earning 200k as it is for the UHNW guy who wants to set up a legacy plan via a family foundation. Their needs are 100% the most important thing in the world. The primary difference is the level of knowledge you need to transform that fear and confusion into confidence and clarity and your personal comfort level dealing with that level of wealth.

I have literally worked with a range of clients from school teacher (very simplistic but needed a strategy to retire comfortably) through UHNW owner of many assisted living facilities worth over 300M for whom we financed a 100M life policy in order to avoid liquidating assets / tax ramifications. Lot of charitable giving involved in that last one. 

You know what? They were essentially the same meeting. Find out their issues and solve their problems. The difference is in  understanding the issues and having both the knowledge and access to solutions.

Problem solving will never go away. Not about active vs. passive ETFs. That's just one way to manage money and a very small part of financial planning which is where WM is headed. The pure commoditized WMer who simply gathers assets and puts them in a third party UMA will feel / is feeling fee compression but that can change if they find other ways to create value. Being a financial consultant  will not go away as people need that service. 

 

100%. It's about the value, not the fee. I have a certain knowledge base about planning, taxes, retirement, estate, laws, regs, general investing, asset protection, and products/ portfolio design etc. Combined, they create value. So Mr. X or Mrs. Y pays me for me. I am the product, not the actual money mgmt which can be found anywhere. Now I do pick managers and I do construct portfolios (because I enjoy doing that), but in reality, they wouldn't care if I outsourced all of that to some strategist or TAMP (third party asset management program - hundreds to choose from). So if money management is part of the solutions (almost always is) they pay x.  My X is generally 100 - 125 bps. I have several 2M-3M retail accounts who are fine with that fee. 5M gets a break to maybe 80bps. I've never had a problem justifying the fee. Obviously institutional accounts are different but they are also much bigger (I don't deal directly with them). The cool thing from a business development perspective is there are always more things to do. Asset protection becomes a big thing so insurance products get involved and they generate commissions. So a typical client may have 1M managed with me, a bunch of life insurance for business succession & wealth transfer, long term care / disability for other asset protection needs, annuities for guaranteed income streams in retirement (this is a big one - transitioning from accumulation to preservation requires a shift in thinking and repositioning some assets to create predictable stable income without ANY principal risk), etc. All in, very generous fees and commissions but VERY HAPPY client base.

Thinking of one in particular where I serve as FA to four generations. Started with a buddy. Added his parents then his kids and now on to grandkids / great grandkids for college planning. Both my buddy and his parents have about 2.5M with me, kids are just starting and grandkids are newborns. Not a year goes by when we don't have to move things around sometimes generating more fees or commissions. Clients like this will always value/need an advisor as I've become essentially their personal CFO. Not the biggest clients. Certainly not UHNW. But they generate about 50k / yr in fees net to me. One client! Year over Year!

 

I didn't join a team as that wasn't available many years ago. Just kind of figured it out myself. However, if I was starting today, I would join a team and learn the business from them. Typically you'll earn a salary/bonus. As you learn, you'll take on more responsibility and get exposed to more things. You might even get an opportunity to be part of the succession plan as older advisors retire. 

I think there are programs that offer training but essentially are preparing you to go at it alone in terms of building a book. May be 3 yrs and then it's eat what you kill. That's another option if you feel confident about bringing in clients. That's what I did (without the training) but it's tough to get started. Again, if it were me, I would join a group.

 

@thebrofessor I must admit I really appreciate both of y’all’s input on the industry. I feel like there’s so much misinformation peddled on this forum about WM being a “shitty sales job.”

 

go to my profile and read my "then and now" and maybe my 4 parter on PWM

real quick

What's the future look like for someone that builds a substantial book $200m+? VERY good all else equal

Will this be a need in 2040? people have always wanted financial advice, I don't see this changing. details will change, the desire to have advisors won't

What do you like about it and not like about it? too much I like about it to be comprehensive but real quick: pay, autonomy, fulfillment. what don't I like about it? compliance training, half baked regulations, asset management companies who don't know shit from shinola, strategists who don't post their track record, performance reporting on alternative investments, silver spoon kids who inherit money and think they inherit intelligence, lack of flexibility on budgeting for business expenses (too complicated to get into here but this is a champagne problem)

Any regrets? none

Any advice to someone considering that path? read my posts on the topic, there's a lot there, and feel free to PM if I've left something out

 

there's obviously some fear around automated / AI solutions... I think that can work for the very low end of the market, but that's not a meaningful portion of today's PWM world. It might delay some people moving into PWM solutions... they may engage a person later than normal, but that pressure should be offset by the ageing of the current PWM landscape and wealth managers eventually retiring. [Aging Advisor Workforce Highlights Need for Succession Plans (advisorsmagazine.com)]

There's two pools of capital... old money and new money. Old money is used to paying for high quality advice and that likely will not change. And for new money... the #1 thing new money is afraid of is losing the money they've acquired (potentially over decades of work)... and automated solutions aren't going to give them the confidence they need/want. 

I don't know about fee compression... if that's as big of an issue in PWM as it is on the fund mgmt side (where I sit). 

 

Worth noting that there are so many types of settings for WM.

You have established RIAs (including the multi-family office types) where the career is more of a traditional corporate climb to a Partner position. You get paid a salary + bonus. You’re singularly focused on giving advice, managing client relationships and when you hit Partner more origination / biz dev work. 

You have broker/dealers where you can either a) go through the advisor training program with the view of building your own book coming out of the program or b) join an existing team as a client services assistant to learn the biz before maybe starting to pitch in with origination as a junior advisor. Good thing about broker/dealers is you don’t have to rely on just advisory fees for income you can also get paid from commissioned product sales. Salary basically doesn’t exist in this model as an advisor - everything is commission-based after a while. 

Then there’s the private banking model where you’re, like in RIAs, again more of an employee scaling the corp ladder. You start off, like in IB, as an analyst out of school or as an associate out of b-school supporting a team of more experience private banking staff. Then eventually you start to own relationships yourself once you get to the VP level. The scope of your relationships + production determines whether you get promo’d to ED / MD etc. Base salary and bonus model of comp. 

Then there are essentially product distribution arms masquerading as WM shops - you’re an “advisor” but really you’re flogging your parent insurance company’s or asset management firms’ products. Wouldn’t recommend working for these shops unless you can accept that reality - prime example: Northwestern Mutual.

Then for people who have a book or who are particularly entrepreneurial you could start your own RIA or move your book to an independent broker/dealer. Pros are you keep more of your production, cons are all the fun stuff that comes with being an entrepreneur. A flip side to this is instead of starting your own company you can buy-out an advisors’ book - there are pretty creative earn-out structures whereby you don’t necessarily have to front capital to close the transaction. 

So it really depends where you see yourself fitting in. 

 

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