1. Wealth Management 101

1.1 What Is Wealth Management?     

Wealth management consists of two main areas of work: financial planning, and private portfolio management. 

The former focuses on developing plans and strategies to achieve financial goals, while the latter is about a professional manager responsible for monitoring the investor’s portfolio and is often given discretionary authority over trading securities and other investment products.

1.2 Wealth Management Business Structures

Varying from businesses to businesses, wealth managers are likely to hold different job titles, specifically financial consultant or financial advisor. They can either work for small-scale or large-scale corporations, but often in the field of finance. For example, an individual can seek consulting services directly from a single designated wealth manager, or from a whole wealth management team.

1.3 Why Is Wealth Management Important?

It is worth discussing the line of services that a wealth manager get to offer:

Get prepared: The sad thing is that many people only seek professional financial guidance after encountering unexpected events such as divorce, inheritance, etc. That makes wealth management ineffective and inactive. Having an expert help you will get a comprehensive financial picture and have quicker responses when unexpected things strike.

Build wealth: The ultimate goal we have with our assets is how to maintain it, and create more blocks of value for many generations to come. Take an example of land, which is an asset that increases in value over time. But what about other uncommon assets? Like antiques, or old cars? Should it be sold or held and prayed to increase in value over time? The wealth managers have been trained to find a value above what the investment market can see. And so, trusting the wealth management team, you can be more assured about the future of your wealth.

Manage tax: Tax administration is a very important part of maintaining wealth. Whether it is income tax, inheritance tax, etc., a wealth manager with expertise can help you reduce your tax expenses and maximize your portfolio’s potential.

Manage tax: Tax administration is a very important part of maintaining wealth. Whether it is income tax, inheritance tax, etc., a wealth manager with expertise can help you reduce your tax expenses and maximize your portfolio’s potential.

Embrace financial expertise: To some clients, with the help of wealth managers, they have more confidence in the market to invest, and thus expect higher returns.

That’s where wealth managers step in: They can provide clients with detailed insights regarding market situations, and advice to maximize profits. Some companies even offer educational services to their clients on personal finance, to help them fully understand how their prosperity can expand.

2. Wealth Management – Industry Outlooks

2.1 Wealth Management Firms – Categories Breakdown

The following firms offer wealth management services:

  • Brokerage firms
  • Insurance companies
  • Investment consultants
  • Large banks
  • Money management firms
  • Trust companies
  • Multi-family offices

Okay, so we have already known that wealth management firms only work with wealthy individuals. But what’s more?

Some firms distinguish between “private wealth management” for the wealthiest clients and “wealth management” for less wealthy clients. 

For example, Morgan Stanley Private Wealth Management and Bel Air Investment Advisors work only with individuals, families, and foundations that have $20 million or more in assets to invest.

Some wealth managers work with moderately affluent people, as they work to build their wealth. For example, TIAA-CREF Wealth Management works with clients who have as little as $500,000 in investable assets.

Wealth management firms work under several models: Some firms are fee-only and don’t sell products, while other firms earn commissions on products sold. A combination of fees and commissions is common. Some firms charge a fee based on services, while others charge based on the number of assets under management.

2.2 Best and Biggest Wealth Management Firms

Annually, the Wall Street Journal released a list of the top 40 wealth management firms based on U.S high-net-worth private-client assets under management (AUM) in accounts worth over $5 million. You may want to find the detailed report rankings. 

Ranking

Firms

Assets Under Management Values

Net Income

Structures

1

Bank of America

$1.35 trillion

$4.1 billion

20,000 managers – 750 branches

2

Morgan Stanley

$1.26 trillion

$8.9 billion

15,600 managers – 600 branches

3

J.P. Morgan

$774 billion

$7.1 billion

1,300 managers – 48 branches

4

Wells Fargo

$604 billion

$22.4 billion

15,000 managers – 1,468 branches

5

UBS 

$601 billion

$4.5 billion

7,100 managers – 208 U.S. branches 

6

Charles Schwab

$421 billion

$3.3 billion

2,000 managers – 345 U.S. branches

7

Vanguard Group

$1.77 trillion

$2.4 billion 

 

8

Fidelity

$400 billion

$6,3 billion

2,400 managers – 200 branches

9

Goldman Sachs

$300 billion

$7 billion

500 managers – 13 branches

10

Northern Trust

$260 billion

$1.56 billion

680 managers – 62 branches

 

2.3 Wealth Management vs Assets Management

We can see the striking differences between assets management and wealth management in these two’s levels of focus. For assets managers, the titles say it all – their work is about paying full attention to clients’ investment/ assets. Wealth managers, however, covers a broader work scope, involving clients’ entire financial circumstances with a view to not only optimizing the profit potential but also accomplishing individual goals and ambitions.

Moreover, wealth management emphasizes clients’ financial preservation. On the other hand, asset management expects to carry out feasible returns on investment.

With the experience accumulated when working as an investment specialist, asset managers tend to deliver internal products with a sophisticated approach with the aim of bringing your assets to the highest value. The wealth managers, however, have a more organized and complex workflow, with support and synergy from many professionals in the fields, insurance services, lawyers, etc. 

 

2.4 Wealth Management vs Investment Banking 

When putting investment banking and wealth management on a comparison scale, there is a significant amount of overlap and interaction. Having said this, these two are distinctly different.

Investment banking brings financial services and advice to businesses and organizations, while wealth management places more weight in providing personal services to high net worth individuals.

And, clients of wealth management could also be business owners and big corporate’s executives, and they may seek help from investment bankers regarding their firms’ issues, too.

3. Wealth Management Career

3.1 Wealth Management Job Descriptions

In addition to investment advice, wealth management can also cover all the finances of a person. But instead of trying to integrate various advice and products from many professionals, rich individuals can be most convenient and benefit from having a manager that covers all their services need. Since then, the source of money is transparent and rationally planned, with higher profitability. As a wealth management associate, you are expected to fulfill the following roles:

  • Manages relationships with clients and proactively helps to resolve issues and concerns 
  • Coordinates resolution of complex issues/concerns received from the client with input from senior team members 
  • Identifies practice management opportunities through various firm channels 
  • Provides support on products and services 
  • Utilize financial planning tools to analyze complex financial information and lead client/prospect financial planning presentations in conjunction with senior team members 
  • Utilizes knowledge, experience, and expertise to lead a comprehensive discovery analysis that identifies differentiating information and variables to be used in the financial planning process 
  • Participate in internal research projects and special client assignments as needed 
  • Develops customized presentation materials for existing clients 
  • Independently improves and streamlines the service model and operational procedures for the team
  • Assist in business development efforts and from time to time participate in RFP responses  

3.2 Wealth Management Job Requirements

  • College degree and 5+ years of relevant work experience 
  • Ideally a CFP, CFA, or CPA designation or progress toward 
  • Additional licenses may be required
  • Financial industry, tax, or financial planning knowledge preferred 
  • Excellent written and verbal communication skills with careful attention to detail 
  • Strong presentation skills in a large group setting  
  • Able to work independently, as well as in a group setting 
  • Advanced user of Excel and PowerPoint 
  • Self-motivated with a strong work ethic

3.3 Career Path

Most veterans in the wealth management industry follow the same ladder:

Starting as an assistant relationship manager/ wealth manager 

You’ll be doing this for a few years, with the main task of being an assistant to help Relationship managers, teamwork with internal teams, take care of the paperwork, and other operations.

After a while, you may be trusted and allowed to do transactions and interact with clients on their service issues. And finally, you can take your own clients and become a full-fledged wealth manager.

Wealth management is a field full of potential, and fast-growing, with lots of opportunities for you to spend all of your career years there.

Banks are developing this segment very quickly, as the foothold for investment banking and business is becoming increasingly cramped. Nearly every bank has a wealth management team or a group of private bankers. There are even firms that only focus on this business section and do not have retail and corporate banking operations.

The higher-level positions will require you to run a different group of wealth managers, and ensure that the revenue targets will be fulfilled. In the end, if you excel, the highest position you can achieve is the management of an entire country, even the region.

Enhance your personal values

If you decide to start with a smaller regional bank, you can expect to reach the front-end client engagement role a lot sooner than with a large global bank. This would also be the case if you are handling clients at the lower end of the HNI brackets.  The advantage of this is that you get a head start in taking the lead and can prove yourself in the field sooner rather than later. 

Eventually, you can shift to banks which offer more compensation or start handling bigger clients which means that you will generate more revenue and thus get paid a lot better.

Switching from relevant roles

From the initial positions like investment analyst, or even salesperson in the service industry where your client is High net worth individuals, you can switch to asset management work.

If you have relevant skills such as communication, persuasion, and knowledge of investment products, this is probably possible.

3.4 A Day In The Life

Wealth managers should expect to interact with their client’s staff on a pretty frequent basis. This would mostly be for operational things though like completing paperwork or following up on some transactions. In addition to this, there are likely going to be detailed monthly or quarterly meetings where the client’s portfolio is reviewed with her, and major tweaks are agreed upon. The frequency does depend on the size of the client.

You should expect to spend a lot of time with the internal team as well. Your Relationship Management assistant may seek for your help when they encounter something they do not know. Investment analysts may come to you for discussions about their models, and whether clients’ portfolios need adjustments or not. 

So if you consider wealth management work from a day-to-day viewpoint, it is much about the problem solving and people management activity.

3.5 Salaries

If you are an assistant Relationship Manager or an Assistant Wealth Manager, your starting point is definitely lower than $100K, about $60K on average. But it should go up soon. 

An official wealth manager can make $100K – $200K, plus the average bonus rate of 30 – 60% of the fixed salary component. And this part is greatly dependent on the bank you are working for, the clients it has, and the location where it is based.

All in all, the pay rise in Wealth Management is strikingly impressive when compared with other banking divisions such as corporate or investment banking. As a Director, you can expect to earn $500K or even millions if you know how to play your card. 

The key to success in a wealth management career is to maintain and foster strong relationships with clients, which makes them stay longer with the bank.

3.6 Exit Options

If you decide to move outside of wealth management after spending some time there, you still have some rather nice options.  

Option 1: Investment Management roles

This can be a bit tricky, but if you are really good with some asset classes, you can move into asset management, hedge funds, sales and trading etc. If you want to pursue this, you need to build some expertise and network with the right people.

Option 2: Start your own firm

If you have built enough of a reputation and can convince clients to trust you, then this is a good long-term exit option. This is impossible in corporate/ investment banking but doable for wealth managers (although it’s far from easy).

Option 3: Other Luxury Sales Roles

You can just decide to quit financial services and service your high networth individual (HNI) clients in some other industry. What matters most are your relationships.

Don’t discount this option as such roles have very generous commission structures. You would be ideally placed to be a top salesperson to HNIs given your prior position as their banker. 

4. How to Get Into Wealth Management?

4.1 Academics

A finance, business or economics degree should be sufficient in most cases at the entry level, but an MBA is highly recommended. With an MBA, you can directly join at a higher level and would probably be assigned a more affluent client base than otherwise. In all honestly though, that advice holds true for any banking career, but it is what it is. 

Having some sort of investment and front-end sales experience would also be beneficial and can really provide you with an early boost. It’s much easier to break into wealth management from other industries (if you have investment/ sales experience) than it is to break into corporate/ investment banking.

4.2 Certifications

There are certain regulatory certifications that you need. In the US for example, you would need  Series 7, 63 and 65 at the very least: Series 7 is the first core examination of the Financial Industry Regulatory Authority (FINRA) The Series 63 tests the registration of persons and securities under the USA and ethics in the securities industry. And the Series 65, questions on the subjects of economics, investment vehicles, investment strategies, analysis, and ethics. These requirements are unique to the country you decide to operate in, so you should check up on the local requirements. In my opinion, these certifications should be fairly easy if you have at least a basic college-level understanding of finance.

4.3 Resume Building

Once you have the necessary academic credentials and certifications under your belt, it’s time to put it all together. Try and highlight skills that are necessary for the job. Getting a shortlist is going to be your first and perhaps biggest hurdle so you really need to focus on your Resume.   

 The recruiters value 2 crucial factors in your resume.

  1. Your record of past achievements: They could be your GPA/ test scores, awards and honors, leadership experience, high-profile work experiences.
  2. Your genuine passion for accounting and finance: This can be shown through your chosen major, extra coursework, past internships, etc.

However, many of you out there still have not figured out a way to differentiate yourself from the heavy crowd with many common mistakes made. We are here to help. Check out our resume guide to make you shine with your dream employers.

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