46 Financial Services
Wealth Management sophisticated diplomats managing money for the world’s rich
Private wealth managers help very rich and, occasionally, famous people manage their money, ensuring that it grows and that they’re able to pass it on to the next generation.
They fall into two categories:
Private bankers – help clients invest their money wisely and avoid any risks that might reduce the value of their assets. They also offer tax and pensions advice, help develop a strategy for charitable giving, and advise on bequeathing wealth.
Private client brokers – help clients buy and sell financial products, particularly equities or stocks (hence the term ‘stockbroker’). They also advise on products to invest in.
The clients of private wealth managers range from company chief executives to property tycoons, sports stars or members of privately run family businesses.
The fastest growing type of client is the ultra- high-net-worth (UHNW) individual or family – those with at least $10m in investable assets
key players
Top global private banks by assets under management ($bn) Firm
1. UBS
2. Bank of America 3. Wells Fargo
4. Morgan Stanley 5. Credit Suisse
6. Royal Bank of Canada 7. HSBC
8. Deutsche Bank 9. BNP Paribas 10. Pictet
AUm
1,705.0 1,673.5 1,400.0 1,308.0 854.6 628.5 398.0 387.3 346.9 322.2
Source: Scorpio Partnership Private Banking Benchmark 2013
(although some banks only deal with clients worth $30m or more). However, there’s also the high-net-worth market – those with at least $1m to invest – and the ‘mass affluent’ clients who have at least $100k.
Roles and career paths
If you work as a private banker, you can expect to perform one of three broad categories of job: investing money for existing clients, building relationships, or managing back-office functions such as human resources or accounting.
People working in investing either invest their clients’ money or offer them detailed advice to help them invest their own money. They are typically product specialists: experts in a particular asset class, such as fixed income, equities, structured products, or investments in the private equity and hedge fund sectors.
Those on the relationship side are effectively salespeople who cultivate links with clients and sell the bank’s services. This can involve a lot of travelling and close contact with demanding people – relationship managers have been known to compare themselves to general ‘family advisers’ akin to the family doctor. After a relationship private banker has established a client’s needs, specialists produce a detailed solution.
There are two types of private client brokers. The first works on discretionary mandates, in which wealthy clients communicate their investment strategy and the broker buys and sells the financial products they think appropriate. The second works on advisory mandates, where the broker advises the client what to invest in, but needs their permission before making a move.
Junior brokers are most likely to work on advisory mandates. However, making the first move can be challenging, as generally only the larger firms offer graduate training courses.
the overview
Private banks want emotional intelligence and a natural curiosity
High-net-worth clients are demanding and short of time
Banks need relationship managers as well as technical specialists
7/10 7/10 8/10 5/10
Personality is a key factor behind the success of a private banker or wealth manager, given the importance of chemistry in building and sustaining trusted relationships.
Joanna Thornell
Managing director and head of
banking services, Coutts
How hot? Money Kudos Opportunities
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