They used to call them stockbrokers. Today, these same professionals go by more vaunted titles such as wealth managers, investment advisers and private bankers.
The name change reflects the evolution of the money management business over the past several decades. The vast increase in wealth across the United States has spawned a wealth management industry that provides an array of services to individuals and families with sizable assets – for a sizable fee.
The account minimums vary, but those considered “high net worth individuals” are typically those with liquid assets of more than $2 million to invest. Some firms will work with clients that have $250,000 in liquid assets. Services range from the pedestrian (checking accounts, mutual fund investing) to the more complex (asset allocation, estate planning, private equity funds).
But the industry stands at a crossroads. After a 25-year or so run of solid investment performance, the wheels have come off the money-management business. The Great Recession, or whatever this steep downturn is ultimately called, has made people question the soundness of entrusting other people to manage their money. “I could have lost this money by myself, why am I paying someone to do it for me?”
That said, a need for smart and trustworthy professionals with an expertise in managing other people's money will always exist.
WHERE THE ACTION IS
It might seem counterintuitive, but in a time when so much wealth has been destroyed, the market for money managers is hot. Banks recognize that people need somewhere to put their money, and in the age of Bernie Madoff they're looking to large institutions where their money is perceived as safe.
In February, the industry collectively gasped when UBS Financial Services Inc. said it had hired more than 200 brokers in the fourth quarter of last year, one of the worst periods for the financial markets since the Great Depression. The Swiss bank paid big bucks, too. It hired a team from five managers in Dallas from Goldman Sachs Group Inc. with $4 billion under management, and a team five from Morgan Stanley in Houston with about $2 billion. UBS poached these professionals by offering them signing bonuses of as much as 260% of the revenue they generated for their firms over the past year. Top brokers can bring in at least $1.5 million to $2 million per year.
With the upheaval at the large investment banks over the past year, the market is particularly fluid at the moment, with large firms bidding for brokers across Wall Street. Merrill Lynch & Co. Inc., which has one of the largest wealth-management businesses, sold itself to Bank of America Corp.. JPMorgan Chase & Co. and Barclays PLC enveloped the brokerage units of Bear Stearns and Lehman, respectively.
Some of these firms are adding brokers during a time of economic weakness in the hopes that they can gain market share by stealing away unhappy customers from other banks.
Are you a litigator at a big law firm who spends all day checking your stock quotes when you should be drafting interrogatories? Or maybe you're a computer saleswoman who has more interest in the yield curve than software code? Or perhaps you're a commercial real-estate broker obsessed with tax planning?
If you answer any those “yes,” wealth management might be the right career for you. But the real point of that string of questions is to emphasize that there is no clear path to getting into the wealth management business.
While there is a small group of professionals that start out as junior analysts and work their way up to become full-fledged investment professionals, many move laterally from other fields, as well as from other areas within their banks. So a globetrotting investment banker looking to have more steady hours might look to move into a private wealth management role. Or a derivatives saleswoman who wants to work with a broader range of investment products might be a good candidate for the business.
A maxim of the wealth management world is that people will give you their assets to manage “if they like you, trust you and think you can make them a little bit of money -- in that order." While it will have you dealing in sophisticated financial matters, at bottom the job is about selling yourself and serving your client’s interests. Keep that in mind when exploring opportunities.
GETTING THE JOB
To persuade wealthy individuals to hand over their money to you, you have to be polished, persuasive and persistent. Those qualities will serve you well in trying to break into this field.
Networking is a huge component of the private wealth management job, and you can also put these skills to work in finding one. Continue to build professional relationships and a referral network of attorneys and accountants. These professionals routinely work with many private wealth management professionals and can possibly help you get your foot in the door.
Many of the top firms have excellent training programs that teach you the business before sending you out to gather assets. To score a job at some of the larger firms such as Goldman Sachs or Morgan Stanley, a graduate degree is required. In other cases, firms might require that you already have prior experience as a financial advisor with a “book of business” that you will bring along with you.
Finally, learn all you can about rich people. Just as wannabe cardiologists master the human heart and tax lawyers-in-training study the internal revenue code, you should become an expert in the ways of the wealthy -- they are your subject. For starters, pick up a copy of "Richistan," a 2007 book by The Wall Street Journal's Robert Frank. The book does a deep and entertaining sociological dive into the lives of the new rich in America, shedding light on what will hopefully be your future client base.