Private Wealth Management Resource Guide 2008-2009

Wharton Finance Club, 2008-2009
Private Wealth Management Resource Guide

This guide was prepared by Naila Makhdumi (WG 09) on behalf of the Wharton Finance Club in September, 2008. Special thanks go to Danica Griffith (WG 09), Rachel Brenner (WG 09), Tyler Hardt (WG09) and MBA Career Management for their contributions. This guide is intended for the sole use of Wharton Finance Club (MBA) members. All contents of this document remain the property of the Wharton Finance Club (MBA). This guide (or extracts thereof) may not be reproduced, posted on the internet, distributed, copied or modified without the express written consent of the Wharton Finance Club (MBA).
TABLE OF CONTENTS
1 Private Wealth Management in a Nutshell 1.1 What is Private Wealth Management? 1.2 Who is a High Net Worth Investor? 1.3 Industry Today 1.4 Career Paths within Private Wealth Management 1.5 How to Build a Book 1.6 Training and Placement 1.7 Incentive structure 2 Main Private Wealth Management Programs and Recruiters 2.1 JPMorgan 2.2 Goldman Sachs 2.3 Lehman Brothers 2.4 Credit Suisse 2.5 Morgan Stanley 3 Recruiting and Interview Process 4 Useful Resources and Interview Questions 4.1 Industry Research 4.2 Sample PWM Interview Questions 3 3 3 3 4 4 5 5 6 6 7 8 9 9 10 10 10 10
Private Wealth Management Resource Guide Page 2 of 12
1 Private Wealth Management in a Nutshell

1.1 What is Private Wealth Management?
Private Wealth Management or Private Client Services is the management of the assets of a high net worth individual or family. It involves a close working relationship with clients having complex financial needs and an understanding of the various products available to create a portfolio which achieves the goals of a client. Understanding the clients risk and return goals are critical to success in this industry. Private Wealth Management representatives need to not only be relationship managers but also need to provide money management and advice. Investment Banks, as well as other asset management funds, are very involved in Private Wealth Management. High-net-worth investors often use the institutions that manage their assets for other financial services, such as banking services (mortgages), estate planning, trust services, legal or tax work.
1.2 Who is a High Net Worth Investor?

A high-net-worth investor is an individual with minimum investable assets of $5 to $10 million. These investors are typically taxable (like mutual funds but unlike institutional investors), but their portfolio accounts are managed separately (unlike mutual funds, but like institutions). There are generally two classes of high-net-worth clients: those in the $2 million and above range, and those in the $500,000 to $2 million range. Those with $2 million and above to invest, receive customized and separately managed portfolios, while those in the $500,000 to $2 million range do not.
1.3 Industry Today

Lucrative career opportunities exist because of the increasing demand for money management services. Tremendous stock market wealth that has been created over the past few years and analysts have estimated that the total global investable asset universe is worth around $60 trillion, having grown by roughly 10 percent annually over the past decade. According to Merrill Lynch, there are 9.5 million people around the world with greater than $1 million in financial assets, up from 8.2 million in 2004.
1.4 Career Paths within Private Wealth Management

Culture-wise, Private Wealth Management attracts a spirited, entrepreneurial group of people. MBAs generally enter as Associates. They are given a salary and training but are expected to create a book of clients very early (within the first two years). Once they are established, the salary gives way to a commission structure which can be very lucrative. Account and product managers manage client relationships and distribute the investment products to wealthy individuals. Account management/Sales associates assist in creating portfolio review presentations and developing promotional presentations for potential new clients. They are also in charge of managing and servicing existing clients. Sales associates can pitch directly to wealthy individuals or to investment consultant firms that help the client decide which investment manager to choose. Product management/Product specialist associates serve as a liaison between the portfolio manager/investments team, account manager and client. They typically have a greater in depth knowledge of the particular products (i.e., stock mutual fund, mortgage) strategy and investment focus. Product associates often seek new assets to put into their fund and have a strong understanding of both the funds investment performance and external markets.
1.5 How to Build a Book

In Private Wealth Management as a sales person, phone calls, networking and visiting potential clients are critical. In order to find leads and ultimately build a book, sales associates use the following strategies. Keep abreast of market news. Many news articles in the markets discuss liquidity events like companies merging, companies going public, companies selling out, management selling stock in their companies, etc. These events lead to company executives with newfound wealth that would need to be invested. Sales associates will typically reach out to these executives.
Follow up with leads from other areas within the investment bank. The advantage of being part of a large investment bank is the referral business that is generated. Corporate finance bankers represent management teams selling stock in public offerings, or selling stock in mergers. These bankers can introduce the company executives to Private Wealth Management representatives. These representatives can also refer their clients to the Corporate Finance bankers for their investment banking and capital markets needs. Tapping into your networks. Introduction to potential clients by friends, family or former classmates is a useful source of leads.
1.6 Training and Placement

Extensive training is required in the first six months of joining the firm because Private Wealth Management representatives need to have a broad based knowledge of the market, equities, bonds, and derivative products. Training also includes cold call simulations, client meeting case studies and classroom learning. Once training is complete, a new associate will join a team with one or two experienced Private Wealth Management representatives. The process of matching a new associate onto a team is driven largely by personality and fit. On this team, the associate will gain experience managing client relationships and bringing in new business.
1.7 Incentive structure

Associates straight out of business school earn the typical Wall Street firm salary ($95,000 plus a $35,000-$55,000 bonus in the first six months). They shift towards a commission based structure soon after. Private Wealth Management firms charge clients a fee based on the percentage of assets under management. A typical fee might be 1 percent per year of total assets under management. This fee increases as the value of the assets increases, thereby motivating the money managers to generate solid returns on the portfolio. The average compensation is somewhere around $500,000 for a Private Wealth Management representative working for a Wall Street firm and it takes an average of five or six years to reach that level.
2 Main Private Wealth Management Programs and Recruiters

2.1 JPMorgan
The JPMorgan Private Bank provides a broad array of sophisticated and innovative services to ultra high-net-worth individuals in 36 countries around the world. JPMorgan divides the Private Wealth Management role into relationship managers and portfolio managers. This means that some representatives solely manage the portfolios of the various accounts, and are even paid a straight salary and bonus, depending on returns, while other representatives work on building and maintaining client relations. JPMorgan Private Bank Summer Associates are offered the opportunity to work as fundamental members of an integrated business team for ten weeks over the summer. During their time in the program, Summer Associates participate in training classes, senior speaker series, market discussions and networking opportunities; all of which are geared to provide extensive exposure to the multiple aspects of the firm. Summer Associates work with a dedicated program management group who provide guidance and feedback throughout the summer. Placements are primarily available in New York and may be available in other major U.S. cities. There are also opportunities available in Asia and with the NY based Latin America team. Relevant language skills and cultural knowledge are essential for placement on Asia and Latin America teams. There are three primary roles within JPMorgan Private Banks integrated team. These roles are: Banker: A Banker focuses on new business acquisition and on maintaining existing client relationships. In addition, Bankers ensure that each clients needs are met across many spectrums such as banking, lending, trust and estate planning. Global Investments Specialist: A Global Investments Specialist (Investor) leads the investment dialogue with clients, and ensures that the proper investment plan is created and executed. In addition, the Global Investments Specialist executes trades across all major asset classes.
Global Product Specialist: A Global Product Specialist creates innovative and cutting-edge investment solutions to implement the Private Bank Strategy Team's recommendations. In addition, the Global Product Specialist partners with the institutional traders to provide seamless execution for all investment offerings. A Global Product Specialist develops expertise in specific areas such as: alternative investments, foreign exchange, fixed income, equity solutions and due diligence.
2.2 Goldman Sachs

Job Location: Five weeks in New York and five weeks in a Regional Office. Office locations include Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, Philadelphia, San Francisco, Seattle and Washington DC. Job description: Goldmans Investment Management Division is broken down into GSAM (Goldman Sachs Asset Management) and Private Wealth Management. Private Wealth Advisors are dispersed across 12 regional offices around the country. This work entails serving as a holistic wealth advisor to clients with at least $10M in investible assets, covering everything from asset allocation/investing to trust and estate planning, tax implications of various investments, lending, and philanthropic advisory. This job requires a long-term commitment given that it takes time to grow your business from scratch. Summer Description: While Private Wealth Management is primarily a sales job, particularly starting out, the summer program focuses heavily on Goldmans investment platform and training summer interns on all investment vehicles including internal strategic investment strategies, equity, fixed income and cash products as well as alternative investments. As such, its a very structured summer with much class room training, particularly during the five weeks in New York. Summer associates will gain exposure to the sales process by going through sales training, interacting with current clients, working on prospecting exercises and working on a business plan that entails principles of commercial success. Another significant portion of the summer includes staying abreast of latest events in fixed income, equity, option instruments, hedge funds, and private equity funds. Finally, networking is key to success both in this business and during the summer experience. Get to know as many people during the summer as possible.
Offer Specifics: Summer Associates receive mid-Summer and end-of-Summer official reviews, the first in the regional office and the latter at the end of the summer. Interns receive office-specific offers, but not to a particular PWM team, around mid-September.
2.3 Lehman Brothers

Lehman Brothers Private Investment Management sits within the firms Investment Management division, and is mandated with providing high net worth individuals (deemed as $5 million of liquid net worth or higher) with wealth management, estate planning and financial advisory services. PIM teams are organized geographically, meaning that they service clients within their respective markets. Teams are comprised of 1-5 Investment Representatives, who are responsible for acquiring new clients and serving as the day to day contact for existing clients. Investment Representatives employ Sales Associates and Client Analysts to assist them in executing the daily tasks clients require, whether it be trading, wiring money, lending, or account management. Within PIM, there are several groups that help the Investment Representatives service their clients needs. These are Portfolio Advisory Group, which conducts macro level equity and fixed income and asset allocation research; Client Solutions Group, which helps Investment Representatives allocate clients assets to the proper managers and products within asset classes; and Wealth Advisory, which works with clients and Investment Representatives to conduct estate and tax planning. Summer Associates in a PIM Sales role spend a majority of their summer as active observers of the sales process. They undergo 3 weeks of training, which includes cold calling drills, market updates, product pitches, and information sessions where they learn about the firm structure. After that training, Sales Associates rotate amongst PIM teams, all of which will be looking to hire an Associate in the following year. The hope is that the Sales Associate finds a matcha team that they believe their skills set compliments. Lehman Brothers Private Investment Management has branch offices in: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, Palm Beach, Philadelphia, and San Francisco.
2.4 Credit Suisse

Private Banking Associates become experts in a comprehensive range of investments, including domestic and international equity and fixed income securities, derivatives, restricted stock and direct private investments. Working in a team or on their own, Relationship Managers advise high net worth clients on the optimal asset allocation designed to protect and grow their wealth. The role pairs the relationship and account management roles. There are two components to the training within Private Banking: A formal training and development program designed and delivered by some of the most skilled professionals in the financial service industry as well as Credit Suisse Relationship Managers and product specialists. Associates also prepare for and take series 7 and 66 exams. The Private Banking Training Program aims to prepare associates to become a successful RM (Advisor) and to successfully perform on the job. Associates are provided with an in-depth overview of the products and services provided by Private Banking and acquire the skills needed to launch and manage their own business and develop and maintain strong internal and external relationships. Associates are assigned a mentor to help them through the program and support them with their integration. A rigorous performance management process ensures that associates are clear on their objectives and development points on a regular basis throughout the program. Positions at Credit Suisse are available in Atlanta, Boston, Baltimore, Chicago, Dallas, Los Angeles, Miami, New York, Philadelphia, and San Francisco.
2.5 Morgan Stanley

At Morgan Stanley Private Wealth Management, new associates participate in a 16-week intensive training program held in New York, where they learn how to effectively access, deliver and advise on the full PWM offering for ultra-highnet worth individuals and families. Upon completion of the training program, the new associates are assigned mentor teams in their regional offices. This mentor team will oversee the associates continued training, incorporate him/her into the team and assist him/her in building the teams business. Ultimately, the associate should have the option to become an equal partner with the Investment Representatives on the team over the course a few years.
Positions are available in Atlanta, Boston, Chicago, Houston, Los Angeles, Miami, New York, Philadelphia, San Francisco, and Washington DC.
3 Recruiting and Interview Process

Companies hold firm-wide presentations at Wharton. Students are highly encouraged to attend and meet Private Wealth Management representatives at these events. The recruiting style varies from bank to bank and it is important to build contacts and follow up with them. Some banks have invited students for dinners in Philadelphia while other banks like JPMorgan and Goldman Sachs have invited students to New York for a Day on the job. The interview process typically begins on campus, with a subset of those interviewed on campus being asked to return to the companys office for subsequent rounds. For summer positions there are typically two rounds before a decision is made.
4 Useful Resources and Interview Questions

4.1 Industry Research
In order to learn more about the financial markets, which is necessary to succeed in Private Wealth Management, students can use the following resources: Periodicals: Business Week, CNN Financial Network, The Economist, The Wall Street Journal, Investment Advisor, Investors Business Daily. Websites: Bloomberg, FT.com, Money.cnn, Investorlinks.com, MarketWatch, MoneyCentral.nbc, Yahoo
4.2 Sample PWM Interview Questions

1. Tell me about yourself. 2. Why PWM? Why do you want this job? What have you done to get here? Why do you know this is the job for you? What else are you considering job-wise? 3. Why our firm? Who have you talked to at each firm? 4. How would you go about getting clients and building your business? Broader market questions: 1. Where is the Federal Funds Rate right now? When is the next fed meeting? What do you think they will do? 2. Where do you think the dollar going? How does a weak dollar affect the economy? 3. What is the price of a barrel of oil? What's your view on oil prices? Where do you think the price of oil will be in one year? Would you go long or short on oil? How do you think OPEC will react to the current oil situation? 4. What are your thoughts on currencies? China? 5. What are your thoughts on the sub-prime crisis? How did it start and when do you think it will end? What are the repercussions? 6. What are your thoughts on the market right now? Where would you advise someone to invest right now? 7. Where do you think the economy is heading? Where will the market be in 1 year and why? 8. What do you think of President Bushs plan to help the economy? 9. Speak a little about stocks youre following/your personal investment policy (what asset classes are you passionate about investing in?) 10. What did the Dow/NASDAQ/S&P 500 close yesterday? 11. How do you feel about emerging markets (what countries would you choose - top 3? 12. What was on the front page of the WSJ this morning? 13. What's happened in the markets during the past 3 months? 14. Where do you think the interest rates will be in the next 12 months? 15. Where is our companys stock? 16. Who is the CEO of our company? 17. Pitch a stock 18. Tell me about a time when you, as part of a team, succeeded/failed. Same thing, but as an individual. 19. Talk about your lack of financial experience. 20. Do you have any questions for me? 21. Is there anything else you want to tell me? 22. What are your strengths/weaknesses? 23. What achievement(s) are you most/least proud of?
24. Describe an ethical dilemma youve dealt with. 25. Talk a little about the other interests on your resume. 26. Tell me a joke/ your most embarrassing moment /3 most important events in your life so far/3 words best describe you /3 things with you on a deserted island; what book are you reading right now /Favorite Book of all time? /If you could invite 4 people over for dinner, who would they be and why? 27. What are you involved with on campus and why? 28. What recent books have you read? 29. Whats your favorite subject at Wharton? 30. How would your Learning Team describe you? 31. Tell me about a time when you had to sell an idea to your classmates or coworkers? How did you do it and did they accept it? 32. What do you expect to get from your summer experience?

Private Wealth Management Resource Guide 2008-2009

Caricato da

Informazioni sul documento

Descrizione originale:

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Private Wealth Management Resource Guide 2008-2009

Caricato da

Copyright:

Formati disponibili

Wharton Finance Club, 2008-2009