eFinancialCareers

Combining diplomacy with product knowledge.

As their name suggests, private wealth managers help very rich people to manage their money. They fall into two categories:

• Private bankers, who 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 clients develop a strategy for charitable giving and advise them on bequeathing their wealth.

• Private client brokers, who assist their clients to buy and sell financial products, particularly equities or stocks. They also advise on the best products to invest in.

Private banks typically look for clients with at least $1m (£503k) to invest, but many deal only with clients whose financial assets (so not their houses or yachts) are worth more than $30m.

Trends

Private banking is a growth business. The number of rich people in the world just keeps on growing: at the last count in mid-2006, there were 2.8m ‘high net worth’ individuals (people with more than £500k in financial assets living in Europe), and their numbers were rising at a rate of 5% per year.

Private banks have cashed in on customer demand. A study by Scorpio Partership, a consultancy working in the sector, found assets under management rose 18% in 2006, to over £4.3 trillion worldwide.

As the industry grows, its profile is changing. Whereas in the past, private banks would turn their noses up at anyone with less than £10m in liquid assets, they are increasingly courting the £1m club and below. Kleinwort Benson, for example, will open its doors to people with a mere £500k to invest.

The new focus on the merely wealthy as opposed to the mind-bogglingly rich is creating demand for a new breed of private banker, and for plenty of them. “If you’re looking after someone with £10m, you’ll still need to be a very civilised cosmopolitan type who speaks 10 languages and has great table manners,” says one recruiter. “But if you’re looking after someone who has £500k, you’ll just need to be affable.”

Key players

In strict private banking terms, Swiss companies such as UBS and Credit Suisse are the world’s leading bankers to the very rich. However, in broader ‘wealth management’ terms, which includes private client broking, the big US brokerage houses such as Citi and Merrill Lynch are heavy hitters too.

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.

People working on the investment side of private banking either invest their clients’ money themselves or offer their clients detailed advice to help them invest their own money. They are typically product specialists, who are expert in a particular asset class, including fixed income, equity, structured products of any kind or investments in the private equity and hedge fund sectors.

People working on the relationship side are sales people. This can involve a lot of travelling and close contact with interesting, unusual and demanding people. When a relationship private banker has established a client’s needs, investment specialists are brought in to put a more detailed solution together.

Banks such as Coutts (now part of Royal Bank of Scotland), Goldman Sachs, HSBC and UBS all run graduate schemes for private bankers. If you don’t find a place on a graduate training scheme, then it is possible to move into private banking with a background in corporate finance or, more particularly, fund management. There are two types of private client broker: those working on discretionary mandates, in which wealthy clients state their general investment strategy and the broker buys and sells the products they think appropriate; and those working on advisory mandates, in which the broker advises the client what to invest in, but needs their permission before making a move. Junior brokers are more likely to work on advisory mandates. However, making the first move can be challenging, with few brokerage firms offering graduate training courses.

Pay

Like investment bankers, private bankers are paid a combination of a base salary and a bonus – but not quite as big. According to Morgan McKinley, salaries for managers in private banking roles (typically with around eight years’ experience) start at around £80k; total pay is around three times that.

Skills

It’s no good going into private banking if you have a taste for gossip or celebrity intrigue. Private bankers stress discretion and an understanding of client confidentiality as key attributes in this sector, argues Sam Anderson, HR business partner, UK wealth management at RBS.

“You don’t necessarily need to have a finance-related degree but a background in law or accountancy can sometimes help. But you do need good relationship management skills. We don’t just want people who are product pushers, we look for people who can provide unsurpassed client service,” she explains.

Languages are also increasingly sought after and attention to detail and an understanding of companies and what will make them successful also helps. “We want all-rounders who are good at dealing with people at all levels, from industry leaders to lottery winners. We look for the Freddie Flintoffs of graduates,” says Andrew Butler-Cassar, executive director at Williams de Broe.