Why is wealth management looked down upon?

Why is wealth management/financial advising looked down by most people on Wall Street? It's one of the highest revenue generators for the banks. I understand it's a glorified sales position when starting out but after you've built your book, you pretty much have full control of your clients assets on how they should be invested.

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Comments (43)

Oct 17, 2012 - 4:06pm

building a book is very difficult now a days unless you have family willing to invest with you so you can built a track record. yes in the long run, the upside is there, but only for a select few

Frank Sinatra - "Alcohol may be man's worst enemy, but the bible says love your enemy."
Oct 17, 2012 - 4:23pm

people i know in PWM dont like finance. they like the name of their firm, their pay cheque and the lifestyle.....

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
Oct 17, 2012 - 4:42pm

PWM has nothing to do with finance. You're not managing a portfolio, you're not doing analysis, etc. You're taking clients to lunch/sporting events and hoping they don't take their money elsewhere.

I'll do what I can to help ya'll. But, the game's out there, and it's play or get played.
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Oct 18, 2012 - 11:24am
Bobb:
pplstuff:
PWM has nothing to do with finance. You're not managing a portfolio, you're not doing analysis, etc. You're taking clients to lunch/sporting events and hoping they don't take their money elsewhere.

Thats pretty wrong. You just described a salesman on a sell side desk

It's not all that different, except one is retail and the other institutional.

"For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."
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Oct 18, 2012 - 3:04pm
Bobb:
pplstuff:
PWM has nothing to do with finance. You're not managing a portfolio, you're not doing analysis, etc. You're taking clients to lunch/sporting events and hoping they don't take their money elsewhere.

Thats pretty wrong. You just described a salesman on a sell side desk

All I know is in PWM the saying "It's about who you know, not what you know." doesn't ring quite as true anywhere else.

What's the difference between a hedge fund manager and a PWM advisor? The HF manager is concerned about making money, the PWM advisor is concerned about making friends.

Oct 17, 2012 - 6:08pm

People look down on it because it's a sales job, which is ironic since most of the people here want to go into banking, which ultimately is a sales job.

It is a very difficult business to succeed in, but if you like dealing with people and can make it, it is easily one of the best jobs on Wall Street. The long-term success rate is probably about 10%. You really need to be a little older than most people here on WSO for that to be a viable career option though...no rich person wants to give money to a kid.

Oct 17, 2012 - 6:37pm

pwm is really only feasible if you have some experience and reputation somewhere else, then it's an easy switch. to start out of undergrad you are going to be cold calling like fucking crazy and even then, have a very small chance of actually succeeding.

If the glove don't fit, you must acquit!
Oct 18, 2012 - 8:14am

PWM is sort of the red-headed stepchild of FO roles, whether it deserves to be or not. The guy quoted here is a former Paine Webber employee who was brought into the UBS fold when PW was acquired by them.

"Our investment bankers treat our FAs like they're retarded children," one person at the bank told me.

http://www.cnbc.com/id/43180621/UBS_CEO_s_Nightmare
Oct 18, 2012 - 8:05am
Luis Winthorpe III:
You could go to Chico State and be in PWM...

And I could teach my grade schooler to run a DCF model or diddle with Powerpoint.

Like the retarded stepchildren comment below yours, it just shows that bankers ultimately don't understand what their job entails, just another subset of the 'being a bitch for old rich dudes' industry. It just comes down to preftige.

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Oct 18, 2012 - 8:25am

I have lots of respect for those guys because it is a cutthroat job and basically you alone are responsible for results. You either are adding clients and selling them products or you aren't making money. Not how I would want to make a living. On the other hand, the reason I think most people look down on them is because to be good at it you actually don't need to know a single thing about finance you just need to be able to sell yourself/your firm.

This to all my hatin' folks seeing me getting guac right now..
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Oct 18, 2012 - 8:50am

You also serve retail investors as opposed to institutional clients in PWM. Unless you are dealing with ultra-HNW clients, retail investors will be less sophisticated.

It's great for banks' bottom lines. It's a stable, profitable, and scalable business. But as a career, it is sales. It doesn't require a nuanced understanding of the products, unlike institutional sales and senior level banking. A PWM's skillset has more in common with a car salesman than a guy in Sales at a bank.

Not to say it can't be a good career. Like a lot of sales jobs, if you are good, you can kill it and maintain good work-life balance.

Oct 18, 2012 - 9:45am

Here is my view on it as someone who works in PWM in the UK as to why it gets a bad rep

-> less sophisticated clients (particularly in the retail space) so less knowledge required than those covering institutional clients
-> highly regulated environment, so trading, building a book and selling is harder in terms of process and red tape
-> as a result, comp will be lower than what you get on the instutional side
-> it's very easy to 'scale down' from say an ibank eqiuty derivs sales side role to PWM sales, but its harder to trade up

That said, there is a lack of top young talent from the best universities, especially compared to ibanks. This makes it very easy to stand out with clients and internally and progress quickly if you have a meritocratic firm. This is especially true in the current environment where the PWM business is seen as solid growth area and firms are looking for top young talent to drive an old fashioned industry forward.

Aug 31, 2021 - 10:14pm

Same for HK.

More regulations compared to traditional S&T. 

Appreciation for top school talents yet lack a systematic trainings so juniors are not sticking around after a few yrs 

Oct 18, 2012 - 12:06pm

Ok, I'm going to make a guess that very few posting here actually know what they are talking about.

PWM is really fucking difficult. If you try it you will most likely fail. BUT, if you do well, it is a much better job than institutional sales. The difference between retail and institutional is that retail brokers own their clients and institutional clients are clients of the firm. If you are in PWM and you don't like what management is doing at your firm, guess what, every other firm would gladly write you a large check for you to come to their firm.

UBS was writing guys a check for 3X their trailing twelve revenue a few years ago to switch firms. This equates to getting a check of about 7.5 times what you got paid last year. So, imagine a guy made $1 million last year. He had a gross production of about $2.5 million and got a check of 3X that, or $7.5 million, just to switch firms. Needless to say, that does not happen in institutional sales. I have friends who did this...,the downside is that you get locked in to long-term contracts and you have to repay a lot of that check if you leave early.

Remember though, most people fail at this job, so there is a reason these guys get such a high payout. Also, forget about doing this job at 25 years old, rich people just are not giving their money to a kid.

Oct 18, 2012 - 2:51pm

I somewhat recently interviewed for a "Portfolio Assistant" position for a prestigious PWM in NYC (clients have to have $30MM+ to invest). I knew PWM isn't for me, but the firm's rep brought me in for the interview.

After being told that "Faxes, scheduling, and account maintenance" were some of the main job duties, I promptly said "Sorry, this is not for me." The look on that HR women's face was priceless, like I had just called her fat. Which she was. She goes on how so many kids would "love" to have this job. Well, good for them.

But seriously, I'm not a secretary and that's what entry level PWM means. If you got a bunch of rich contacts when you're 45, they'll be glad to boot that 20 year vet from his office and plop you in.

I did intern at MS PWM when I was a sophomore, which was a good stepping stone so Ill give it that.

Oct 18, 2012 - 3:56pm

A lot of misinformation in this thread. I am not going to say PWM is great, everyone should do it. Infact, I think it sucks and dealing with retail clients are a bitch but it does have its perks.

Top firms like UBS, MS, ML focus on Ultra-HNW. These can be individual clients, foundations, some institutions and endowments where they do a lot of active trading and management. Starting off can vary and yes you can be a glorified admin/secretary. Usually you come in as a sales assistant where you either support a few FA's or a team, get licensed and move onto a FA trainee program. You can also join directly as a FA trainee where you have to build up your business and need certain AUM within a year. Assistants can also join a team (if the team wants them of course) and begin splitting revenue. Can become more of a PM and manage client accounts.

As stated, becoming a FA on your own, espeically right out of school, is hard. If you have a family money or a large network it may be possible but who wants to give a 22 yr old millions to manage? Youll be cold calling all day and hoping people give you a shot. If you do make it the work-life balance is great. Can work from home, fridays off, come and go as you please

It is pretty easy to get a job though. Especially at 'smaller' firms like Edward Jones, Raymond James etc, they are always hiring FA's and bascially throw you into the wild. If you make it great if not you're gone and they don't lose anything.

Bankn:
Bobb:
pplstuff:
PWM has nothing to do with finance. You're not managing a portfolio, you're not doing analysis, etc. You're taking clients to lunch/sporting events and hoping they don't take their money elsewhere.

Thats pretty wrong. You just described a salesman on a sell side desk

All I know is in PWM the saying "It's about who you know, not what you know." doesn't ring quite as true anywhere else.

That quote can apply to any job within "finance"

Oct 19, 2012 - 3:20am

It depends on the organisation/role/set up and person. I have known some Private Bankers, mostly in Europe, who are very well regarded by their clients (have accompanied ultra-high net worth families for even over two generations), and in their banks.

Some of the can generate (almost alone or their 3-4 team) quite hefty fees for their banks (easily +10-20m), on a recurring basis, paid by satisfied and loyal clients with cross-relationship potential (i.e. IB business referred by/generated from them). In contrast with some other parts of the bank no significant legal wso/">suits follow (where a large portion of these profits are reversed in costly settlements, obviously two or three years after bonus time). For the few successful, clients see them as a trusted advisor... not as a commodity, pitching for stuff the client is not interested in and negotiating on fees.

Obviously you have plentyful of "wine & dine" jokers, product-pushers and dodgy guys. Also, old-style business with related legal legacies.

In my experience, yes, it has to do a lot with finance (managing a book of +2bn on a daily basis, with investments in every market) and yes, it can be highly regarded. But I agree, there are kinds and kinds.

Oct 21, 2012 - 7:36am

In wealth management you are pretty much a small version of a family office from what i have seen. My parents use HSBC for are private banking needs and when i need money out of my trust fund our wealth manager has to go through a hell lot of trouble just to move it into my account. It seems pretty boring, wouldn't you rather be sitting at a desk trading flow or prop with discretion over positions then sitting at a desk all day doing someones tax planning and structuring some boring basket of assets that you are told to pick from for 20 different people. Also you do not always start out on your own are wealth manager has a team of 5 people who work on our portfolio and planning.

Oct 21, 2012 - 9:17am

Its a very lucrative relationship role where your knowledge of investment finance becomes important as your practice matures.

Many of the top guys are either very knowledgeable, have team members who are very knowledgeable, or use the resources of their firm. What they all have in common is that they work 40 hours a week or less and make 7 figures.

Oct 22, 2012 - 11:24am

Let me tell how it works in Switzerland: I am a financial adviser ( here it is called a relationship manager) at a small private bank in Geneva. I have mostly HNW clients. My book has been given by a retired FA, thus I didn't have to do anything except some retention. The pay is good: USD 130k fix + 0 to 50k bonus depending on my reviews. The hours have nothing to do with IB. I have worked previously 1 year at a major IB before quitting( you guys are totally crazy with your 80+ hours).

I start my work at 9 pm, take usually 1.5 hour lunch pause and leave work between 5 and 6pm. Thus I am working between 30-40 hours per week. And in my bank this is the average. The bank is totally empty by 6:30 pm.

I have an assistant who does all the administrative work for me, she gets paid USD 95'000 + 0-10k bonus.

Most of my clients are absolutely not sophisticated, my work is to rebalance their account, be carefull about overdrafts and check if the client is not outside his risk profile. I take my clients to lunch sometimes, travel to their places or receive them here at the bank. Most of the time we speak less than 10 minutes about business and the rest of the time (sometime 3 or 4 hours) about their family or anything else. Surely, I have pressure to sell products from my management but I don't care about it.
I count only on my fix salary and therefore I have received 3 years in a row around USD 5 k bonus only. I refuse to be an insurance sales guy who sells inapropriate and expensive product.
The work-life balance is really nice and the pay is good compared to the average salary (all sectors) in Switzerland ( approx. USD 70k per year).

Oct 22, 2012 - 8:13pm
swissy:
Let me tell how it works in Switzerland: I am a financial adviser ( here it is called a relationship manager) at a small private bank in Geneva. I have mostly HNW clients. My book has been given by a retired FA, thus I didn't have to do anything except some retention. The pay is good: USD 130k fix + 0 to 50k bonus depending on my reviews. The hours have nothing to do with IB. I have worked previously 1 year at a major IB before quitting( you guys are totally crazy with your 80+ hours).

I start my work at 9 pm, take usually 1.5 hour lunch pause and leave work between 5 and 6pm. Thus I am working between 30-40 hours per week. And in my bank this is the average. The bank is totally empty by 6:30 pm.

I have an assistant who does all the administrative work for me, she gets paid USD 95'000 + 0-10k bonus.

Most of my clients are absolutely not sophisticated, my work is to rebalance their account, be carefull about overdrafts and check if the client is not outside his risk profile. I take my clients to lunch sometimes, travel to their places or receive them here at the bank. Most of the time we speak less than 10 minutes about business and the rest of the time (sometime 3 or 4 hours) about their family or anything else. Surely, I have pressure to sell products from my management but I don't care about it.

Interesting, seems like a great job if you have a strong/loyal book and a decent economy. When I was at MS PWM, I also met a guy (mid-late 20s) who was, much like yourself, set to inherit a huge book of business from the adviser he was an ASSISTANT to. This old adviser just trusted him and was willing to give him the majority of his book, now that's a great way to start a PWM career. For some reason, I don't think that is too common though (plz correct me if I'm wrong).

I'm not sure that the high fixed salary you are making is common in the U.S. for less experienced PWM professionals, unless they are bringing in or have build a large book. However, in the U.S. the PWM will be payed an unlimited amount based on AUM, which could very likely amount to a higher total take home pay.

Oct 24, 2012 - 5:07pm

I'm curious about this, too. Does a younger FA "inheriting" a book of business happen more often than not? I can see that easily happening in smaller firms and outfits that have a few FAs and assistants, but at larger banks?

It seems that being an assistant FA, putting in your time at a good company with a decent FA with a solid book may be a MUCH easier route than building your own book... often by asking friends and family for business first.

Oct 23, 2012 - 4:57am

Yes, theoreticaly my bonus is also unlimited, I receive CHF 1'000 (~USD 1'100) for each millions I bring in. But let's face it, I have more outflows than inflows.
But I am what they call in my business "a farmer". I take care of my book without having the pressure to bring in fresh new money.

We have "hunters"" who work with a different contract. They receive usually a fixed salary higher than mine ( around USD 200'000 ), but they need to bring in usually at least 50 to 100 millions per year for a couple of years. They will receive 1/3 of the income they produce once this income cover their fixed salary + traveling expenses + assistant salary.

For example a FA with AUM 200 millions USD, having a return on asset of 1% (which is pretty good these days) will make a return of 2 millions USD. 1/3 of that is USD 666'666.
If his fixed salary + traveling expenses + assistant salary = ~USD 300'000, he will receive a USD 366'000 bonus in march.

The best hunter we have here in my bank has a AUM of 2 billions ( most of it from one very rich client), do the math...

But if the FA return doesn't cover his salary, the FA is fired. Those hunters are expected to succeed within a 18 month period.

Best Response
Oct 25, 2012 - 12:22am

The whole premise that 'PWM is looked down upon on Wall Street' is wrong in the first place.

PWM is looked down upon on WSO because everybody has this glorified vision of going into IB or being a sales trader on a desk and making a shit ton of money. The reality is that these jobs are dwindling and going to work for an RIA/Wealth Manager can be just as rewarding financially.

Start-up hedge funds can operate much like a PWM. They must find high net worth individuals to invest and prove their track record before they can even think about bringing on institutional clients.

If you go to HF conferences, you'll notice that a lot of the RIAs swim in the same waters as HF managers. They're targeting similar clientele, at least from the infancy of the start of the HF.

In fact, I would even say that RIAs are growing more and more due to the need for investor transparency and liquidity. Investors who want daily transparency/liquidity (there are more every day) are starting to shy away from comingled accounts and starting to invest in separately managed accounts (advisors).

I think the media (CNBC, etc) also feeds the stigma that the 'elite' jobs on Wall Street are behind the trading desks @ BBs and in the IB divisions. It's simply just a stigma.

Jan 15, 2016 - 9:21pm

Honestly, WM as a whole is much more than just being a Financial Advisor. Banks have positions that are part of the WM divisions such as Research, Equity Syndicate Desk, Alternative Investments, Investing/portfolio management, etc. Look at programs such as the UBS GTP Rotation and you will learn that Wealth Management is not just being a Financial Advisor.

Jan 17, 2016 - 7:29am

The retail vs UHNW spaces are almost different industries. The reason WM gets a bad rep compared to IB is because there are a load of firms adding not much value at the bottom end. But at the top end, $50m+ it's more similar to IB than most people think.

Jan 23, 2016 - 12:57pm

Thank you.

I work at JPM PB, VP 2nd year. My book of client is roughly 1/3 foundations with charity/art goals, 1/3 privately held companies for whom we manage their cash, cover their FX exposure, invest long term and 1/3 UHNW families with 30M to 1+bn USD with us.

We work on a deal basis, i.e. cash out event, meeting with company owners with the M&A bankers: they sell the company, we invest and structure the cash out. Every meeting is prepared by Associate/Analysts with VP/ED supervision, hours are long but not insane (I finish at 8-9PM, analysts finish at 9-11PM, no work on week-end at all)
Pay is now fairly decent.

Jun 4, 2016 - 8:48am

I just rejecting an full-time offer from JPM for UHNW individuals. Yes, it is a prestigious company, something that seems more chilled than IBD (but challenging in other ways nonetheless) but I feel like there is too little finance/analysis involved and a lot of ass kissing instead. It may be interesting down then line when you have an address book but at the start you are just a clerk for senior private bankers, setting up their meetings, formatting fancy documents, helping with prospecting.

Jun 4, 2016 - 12:41pm
Banana hedger:

I just rejecting an full-time offer from JPM for UHNW individuals. Yes, it is a prestigious company, something that seems more chilled than IBD (but challenging in other ways nonetheless) but I feel like there is too little finance/analysis involved and a lot of ass kissing instead. It may be interesting down then line when you have an address book but at the start you are just a clerk for senior private bankers, setting up their meetings, formatting fancy documents, helping with prospecting.

Interesting enough, I am a PWM analyst and my role involves absolutely none of what you described. My PM/FAs that I support actually pick their own stocks for their portfolios/ which PE firms to allocate funds to as well. I am mostly involved in asset allocation analysis, researching new stock ideas my PM wants to look into, adjusting things like stop losses etc., monitoring our stock positions to make sure nothing blows up, internalizing analyst reports and producing quick summaries for my bosses to look through, and other responsibilities related to that. I am in a 2 yr program (last guy went to a top BB within investment mgmt) and it involves zero "setting up meetings", "prospecting", or formatting. Curiously, I work 8-4/5 and all-in comp should be 60-70k. My whole point is analyze the opportunity in front of you before being dismissive and regarding it as a bullshit role.

Array

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Jun 12, 2016 - 4:09pm

WM is not at all related to investment banking - the focus of this site - it also pays substantially less than other finance roles making it less desirable and lucrative of a career path.

If you're into the whole work/life balance thing then it could be the right path for you. Also if you prefer talking to people a lot and not cranking models 13+ hours/day.

At the end of the day it's an easier job meaning there is a bigger pool of people able to do it meaning it will pay less as it requires less skill.

"Well, you know, I was a human being before I became a businessman." -- George Soros
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