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Private wealth management involves providing personalized investment advice to high net worth individuals (HNWIs — $1-10 million in investable assets) and ultra-high net worth individuals (UHNWIs — $10 million or more in investable assets). The goal of wealth management is to help clients achieve what their definition of financial security is while protecting their wealth.
Advisors work with clients to assess their wealth goals, develop personalized investment strategies, and monitor and adjust their portfolios as needed. They help clients grow and manage their wealth through a variety of investment vehicles, including stocks, bonds, mutual funds, and alternative investments such as private equity and hedge funds.
Wealth Management vs. Financial Planning
Think of wealth management and financial planning as lying on a spectrum of personal financial advisory services. While both wealth managers and financial planners ultimately give personal financial advisory services, they tend to work with different demographics. Financial planners focus primarily on Mass Affluent clients with $100,000 to $1 million in investable assets. Each type of advisor needs specialized expertise in the investment products that they can offer to their client tiers.
Private wealth managers provide a broader range of services, and have a wider variety of investment solutions available — they have a larger “shelf” of products to offer. Wealth management clientele will be comfortably in the High Net Worth and Ultra-High Net Worth thresholds, and as a result, they will already have the basic financial goals like education planning, retirement planning, and tax planning achieved.
Wealth management clients often require extensive tax, succession, and estate planning that requires the advisor to take a much more proactive role. It is not uncommon to see a wealth manager, therefore, end up being a touch point for the client’s attorney, business managers, property managers, and accountants, which is something a typical financial planner would not do.
Required Skills for Private Wealth Management
Private wealth management advisors must have strong analytical and problem-solving skills. They must be able to analyze complex financial data and develop creative investment strategies that meet their clients’ needs. They must also be able to communicate complex financial concepts to clients in a clear and concise manner and learn to engage with each client in the way that they want to be communicated with.
Wealth advisors need exceptional interpersonal skills. They must be able to build and maintain strong relationships with clients, as well as collaborate effectively with other professionals, such as investment bankers, portfolio managers, and even external attorneys or others outside of the financial services industry.
As far as tools go, wealth management advisors should know how to use market data providers like Bloomberg as well as industry-standard financial modeling software, investment research databases, and portfolio management software. They also need to know how and when to effectively use a variety of communication tools, such as email and video conferencing, to communicate with clients and other professionals.
A Typical Day for a Private Wealth Manager
Catch up on markets: This involves a ton of reading and scouring through various news publications and reputable financial columns. Typically you’ll start by catching up on overnight markets, and then see how markets are opening up in your local region, and then read any key headlines that might impact your client base and make for interesting conversation.
Catch up with clients: This may be via in-person meeting, but is more often done via phone, video conferencing, or email, depending on the nature of the conversation you’re looking to have. Wealth management clients will typically have specific ways that they like to be communicated with, and they’ll expect you to respect those and only reach out as necessary.
Review client portfolios: You’ll review each of your clients’ portfolios and do any rebalancing of positions as necessary. If you need to book any trades, you’ll want to get on those early on in your day.
Internal meetings: If you work for a firm, you will likely need to have some meetings with internal colleagues, whether around investment solutions or general admin.
Qualifications and Experience Required for Private Wealth Management
Wealth advisors need university degrees, generally in business, finance, economics, or a related field. However, it is not uncommon to see an undergraduate degree in an unrelated field, combined with an MBA and related work experience as well. Many people working in private wealth also hold industry-specific designations, such as a CFA.
In addition to formal education, private wealth management advisors must have several years of experience in financial services, as well as exceptional interpersonal skills. For portfolio manager roles, candidates must also have a strong demonstrated record of managing money and either have, or will be required to obtain, the necessary regulatory licenses and designations.
Compensation for Private Wealth Managers
Private wealth managers, if successful, are highly compensated relative to other roles in the financial services industry. The compensation can vary dramatically, depending on several factors like whether you’re self-employed or with a larger firm, your years of experience, your demonstrated performance record, and how you’re employed.
Overall, private wealth management is not a place where you can expect to comfortably sit back and earn a steady six-figure salary; you need to build your book of clients as your compensation is ultimately driven by your volume of client assets under management (AUM).
Interested in learning more about a career in private wealth management?
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