Private Banking: Make Bank without Selling Your Soul or Imprisoning Yourself in a Cubicle 80 Hours per Week?

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Private Banking“I’ll miss you a lot, but it’s a good call to move to private banking – that’s the best way to meet rich guys.”

I was about to leave the institutional sales department at my old bank, and my supervisor was giving me the proper send-off.

Girls in finance might have the gold-digger reputation, but I didn’t get into private banking because I wanted to meet rich guys – I got in because I was in the right place at the right time.

Little did I know what I had gotten myself into…

Private Banking: What You Do

I had received a 3-month notice at my old bank when I refused to transfer to a division that the department head wanted me to transfer to – so I had to find something else quickly or leave.

I interviewed across all departments and even different banks, and landed an offer as a relationship manager at a private bank.

I ended up not staying too long, but learned enough to tell you all about private banking – from what you do to the different roles to how to break in to how much you get paid.

What is Private Banking (PB)?

The private banking division at an investment bank manages assets for high net worth (HNW) individuals. You can read that as, “You’re rich but have no time to invest your money – let us make investment decisions for you, and we’ll collect a fee for those services.”

Usually these HNW individuals are worth over $5 million USD at the bulge bracket banks, but sometimes lower net worth individuals can also sign up depending on the group.

Teams are usually split into those that manage regular HNW clients and ones that manage ultra HNW clients – no, the “ultra” ones don’t have superpowers, but they do have financial assets of more than $30 million USD.

As you might imagine, the ultra HNW clients tend to be more demanding and banks devote more resources to wining, dining, and advising them. The minimum account size for PB clients is around $2 million USD, while the minimum account size for ultra HNW clients might be around $10 million USD.

Private Banking / Private Wealth Management vs. Asset Management

In PB / PWM, the money comes from wealthy individuals, while in asset management (AM) it comes from institutions – the likes of Fidelity, pension funds, insurance companies, sovereign wealth funds, and so on.

Roles in Private Banking

The two main roles are investment professionals and relationship managers (RM) – investment professionals manage clients’ money and recommend products, while RMs manage the relationships, respond to clients’ requests, and also sell products to clients.

It’s similar to the split between execution and relationship management in investment banking, or the industry vs. product group distinction.

RMs and investment professionals usually attend client meetings together and support one another when answering clients’ questions.

How Do Private Banks Make Money?

As you might expect, private bankers make money from fees charged to clients – but there’s more to it than that.

First off, they sell managed accounts (also known as controlled or discretionary accounts), which are professionally managed and can be personalized to cater to clients’ needs – banks charge a fee for this depending on the size of the account and get recurring revenue since the fees are collected each month or each quarter.

Private banking clients also have brokerage accounts, which allow the bank to earn money by selling products such as IPOs and secondary offerings – so if a PB client wanted to buy shares of LinkedIn’s IPO, private bankers would coordinate with the equity capital markets team to ensure that the client received a fair allocation.

Then there are other services like estate planning, income tax planning, and philanthropic planning – so the fee parade never halts.

Private Banking vs. Investment Banking

One common, yet incorrect line of thought is that private banking and investment banking are completely separate – nothing could be further from the truth.

There’s a ton of overlap because many HNW clients want direct access to the investment bank’s products – IPOs, secondary offerings, bond issuances, and even access to the most exclusive hedge funds and private equity funds. So private bankers must work with investment bankers to ensure that their clients can invest in all of those.

And PB clients – many of whom are business owners – might also want advice on restructuring or selling their businesses and may contact investment bankers to get their advice.

There’s even more overlap in Asia because family businesses dominate the IPO market – so private bankers work closely with investment bankers to make sure that their banks win new IPO mandates.

Breaking Into Private Banking

So now you know something about what you do in private banking, how you make money, and the difference between private banking, investment banking, and asset management.

Now, how do you break in?

My Own Story

I broke into private banking by building contacts throughout the investment bank – I only had 3 months, so I focused on places with specific positions available.

I was lucky because private banks were expanding when I started looking for positions, and because many private bankers were impressed by people with investment banking backgrounds and top schools on their resumes.

You don’t see degrees from places like Harvard as much outside the US, and those types of schools are especially well-regarded in Asia.

Plus, my boss was looking for someone smart, efficient, good-looking, and charming, and I fit the bill perfectly. :)

I’ve found that it’s easier to get into private banking than investment banking – the prestige and pay are both lower, so there’s less competition and you don’t see as many of the OCD overachiever types spending months preparing for interviews.

If you want to work in private banking in Asia, you should know a local language such as Mandarin or Cantonese so you can talk to clients – you also need to understand the local culture, speak fluent English, and come from a well-known university. PBs like MBAs, but you don’t need the degree to break in.

Private Banking Interviews

Most of the interview questions were variations on “Why do you want to do private banking?”

I had worked with clients in equity sales before this, so I could sell my experience working with institutional clients and use that to convince them that I could also work with HNW clients.

That strategy doesn’t always work because it depends on the institutional clients and HNW clients in your region – in some places they can be very different in terms of personality and culture.

I didn’t go all-out with interview prep, but one friend of mine did his homework to break in: he studied for and passed the CFA to prove his literacy in finance and read all sorts of annual reports and filings to learn about the bank’s culture. The interviewers asked him very few finance questions and focused on his personality instead.

The top questions my friend and I both received in PB interviews:

  1. Why do you want to do private banking? / Why do you want to work for us?
  2. How can your previous experience add value to PB?
  3. Tell me more about your interpersonal relationship and analytical skills.
  4. What do you think about the markets?

Most of these are self-explanatory if you read the interview guides on this site; for the first question, you want to point out how you enjoy working with people and investing in the markets and that you see private banking as a perfect blend between the client-centric nature of IB and the public markets investing you would do in trading.

For #2, focus on previous experiences where you worked with clients – especially demanding or difficult ones – and show how you resolved problems and accomplished your mission anyway.

The Private Banking Culture and What You Do Day-to-Day

The pace is slower than IB and the culture tends to be more political / bureaucratic because everything is relationship-driven and merit doesn’t always count for much.

Since there are more girls in PB than in IB, people can be catty at times (and yes, I’m female so I’m allowed to say this).

As the relationship manager, I attended a lot of client meetings and took notes on what the client liked doing for fun, what his/her kids did, where their kids planned to go for college, and so on – all that is fine if you like getting to know people, but overall my learning curve in institutional sales was much steeper than it was in private banking.

My average day usually began with the morning meeting where bankers discussed what was happening in the markets, and I would help my boss prepare investment analysis and anything else she had to present. I worked closely with the investment professionals to talk about specific clients and figure out what products might be good for everyone.

The RM role is much fuzzier than the investment professional role – that’s more for the quantitative and analytical type. If you do that, you’ll act more like a trader’s assistant by preparing account statements and sales pitches for personal investments – you don’t get to see clients, but you do work closely with the RMs.

Hours are roughly 8:30 AM to 7:30 PM – with 2-hour lunch breaks, so life is not exactly difficult. That might not be enough to become Don Draper, but you could probably still squeeze in at least one affair at lunch each day.

Show Me the Money!

As you might expect, pay is significantly lower since the lifestyle is so good and since the work itself is lower-stakes and not as stressful.

The analyst base salary is around $70K, with bonuses ranging from $18K – 35K depending on the economy.

Those are good numbers for your first job out of school, but bonuses will always be less than what you’d earn in investment banking since the fees are lower and overhead is higher.

Got Exit Opps?

The most common exit is to go to another private bank, or another PB division at a large bank.

Some people do get into private equity firms and hedge funds, but they’re mostly in roles such as investor relations or fundraising – without transaction experience, your chances of getting to work on actual investments aren’t great.

Some investment professionals also move into research or help funds analyze investment products and market trends.

Overall, your exit opportunities are definitely more limited than in investment banking since you don’t get deal experience and since the accounting and finance involved are much simpler.

Why I Left Private Banking

So, back to my story in the beginning: why did I decide to leave early on after I got into PB?

The short answer: another bank gave me an offer in their ECM department, and I was more interested in capital markets than private banking. I felt that it would be easier to go back into private banking whenever I wanted, but that IB would be much tougher to get into.

If you can deal with bureaucracy and you want stability, a balanced life, and decent pay, private banking could be a good option for you – I preferred the work environment of IB, so it wasn’t a good fit for me.

The Guy Made a Million Dollars!

Don’t hold your breath if you want to make millions in private banking – it’s much harder than it sounds to bring in ultra HNW clients and to win their trust.

If you already have loads of rich contacts, you might catch a lucky break and rise to the top quickly. Otherwise, you’re better off working for a relationship manager who can share his/her accounts with you.

If you’re smooth and good with office politics, private banking might be great for you – but if not, you’d make money faster in hedge funds, private equity, and investment banking since bonuses in all of those are much higher.

If you can bring in a lot of new assets as a relationship manager you can earn good money, but a rolodex of clients takes a long time to build – and building trust takes even longer than that.

As a senior RM you might have a good life wining and dining HNW clients and hanging out in high-end golf clubs and restaurants – but then you also have the stress of hitting “targets” (assets under management) set by banks.

If you decide to leave private banking, you could leverage your contacts and help them manage their businesses in exchange for equity, or even start your own firm to help them manage and invest their money.

The Best Way to Meet Rich Guys?

I never met the quality rich guys that my supervisor in institutional sales promised – but then I didn’t stick around long enough to go after all the fish in the sea.

But if you don’t mind playing the office politics game, you’re OK with lower pay in exchange for a more stable and balanced life, and you don’t like super-technical work, private banking might be right for you.

And hopefully you’ll meet more rich guys than I ever did.

About the Author

has worked in institutional sales, private banking, and investment banking in Hong Kong. When she's not working, she enjoys kiteboarding at exotic beaches, jumping off planes and bridges, and shark-diving.

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215 Comments to “Private Banking: Make Bank without Selling Your Soul or Imprisoning Yourself in a Cubicle 80 Hours per Week?”

Comments

  1. DBS says

    Thank you Nicole.
    the ability to sell and develop relationships is the only skill i can see which comes from PB. But is it something like a core skill at IB? Perhaps, not as they are more focussed on deals, financial modelling, etc etc.
    I have never comes across someone who has moved from PB to IB like in M&A, PE, VC which are more lucrative careers instead of PB.
    If anyone on the forum has made a change and it turned out more productive then please share your thoughts and experiences. As i’m in a dilemma at the moment and on the cross road where its really confusing to decide what to do next after spending 9 years in PB.
    Appreciate your help and thoughts.

  2. Alex R. says

    Great article.

    I am a junior and will be doing a Global Wealth Management internship with Merrill Lynch this summer. How helpful is this internship in getting a FT offer after graduation? Thank you for your insight.

  3. johnny bananas says

    The salary numbers definitely seem skewed. I cannot see an PWM analyst base salary being $70k + 18-35k bonus. From my experience and what I have read, PWM starting salary is $50-60 TOPS if part of a development program, or much less if it is sales focused given commission.

    It also may be at the office team/manager’s discretion – say you get hired as an analyst for a team in a random city (lets say with UBS PWM): the manager or director there could probably pay the analyst an hourly rate of his choice, to come out of his office’s cost budget.

  4. KL says

    Hi Nicole,

    I am in a similar situation to you. I just got an offer from a BB private bank as investment professional in Hong Kong. Given the current markets I am of course glad that I even have an offer.

    But my concerns are because PB deals with personal finance and not corporate finance, would it be difficult to move into PE, IBD, GCM, or a company’s corporate finance department? I have a junior internship experience at another BB’s DCM in Hong Kong but didn’t receive the return offer. But do you think it would be possible to transfer to corporate finance/investment management/research in the future? Do people with PB background rise into executive positions within the bank or to other companies?

    Also could you tell me in more detail how you made the transfer to ECM? How many years were you into PB that time, and how did you make the connection with the other bank?

    It would be great if you can provide me your contact email to discuss things further.

    • says

      I think you can transition, especially if you have the DCM internship. It will probably be easier to move into capital markets from PB vs. some of the other groups. I will let Nicole respond to the rest.

      • KL says

        Hi Brian, thanks for the comment. By saying it is easier to move into capital markets from PB than some other groups do you mean PB can more easily move to capital markets than IBD, S&T? and could you please elaborate on why it is easy to transit from PB to capital markets?

        Many Thanks!

        • M&I - Nicole says

          Yes, it may be harder to move into corporate finance going forward because most banks prefer analysts with some sort of deal/transaction experience, unless you have connections with HNW clients and can bring in IB deals. If you work on the Investments team in PB, it may be easier for you to transition into research/investment management as long as you can demonstrate your technical skills and knowledge of the market. Taking the CFA/having taken the CFA will help if you want to progress in PB/move to research/IM too.

          Yes some in PB take executive positions within the bank. I made the transfer to ECM because I was given an offer there when I was in PB. I have already been speaking with the other bank many months prior to my role in PB.

          Adding to Brian’s point, it may be easier to move into Capital Markets from PB vs other groups because PB is still considered front office (assuming you’re working for a RM or an IM) and your sales/interpersonal/pitching skills are transferable to Capital Markets. It would be best if you could build relationships with HNW clients – that will be useful for IB/Capital Market roles going forward.

    • KL says

      Hi RCP,

      How did you come to the conclusion that she worked at JPM PB? Are there any special traits in JPM PB that’s different to other banks’ PB?

        • KL says

          Hello RCP,

          Can you please tell me some of the differences between JPM PB and other companies’ PB? or what are some distinctive job natures between these different major banks/finance companies in private banking?

          Thanks

  5. Dan says

    Hi Nicole

    Great article ! I’m a financial planner with an insurance company for the last 9 years and at age 32, am thinking of switching over to wealth management . I’m also keen in the area of assets management , hedge funds , private equity and PB . My intention is to do a CFA level 1 end of this year and a Masters degree in wealth management next year, which area do you suggest to go into given my age at early to mid 30s by the time I finish my studies . For PB , do I need a book to go into at entry level ? I do not have a Rolodex of hnw but certainly some contacts which may qualify as hnw given my sales experience . Please advise . Thanks

    • M&I - Nicole says

      Thanks for your comment. You don’t need a rolodex of clients to break in at the entry level. Your CFA is a smart move. I think you may be able to break in at the associate level. You may still have to generate commissions as you progress so you’ll have to develop your contacts fast and it may be challenging at first.

      • Dan says

        thanks for reply Nicole . Just to check how does one break into Pte banking at entry level ? Most jobs adverts on efinancialcareers always want expericed bankers with min book $50m Aum in first year .so how can one apply at entry level without any experience ? Also any idea what’s the base(usd) and bonus like at associate level ? Thanks

        • M&I - Nicole says

          To break into PB at entry level, I’d suggest you to apply online (they have job postings online) or through your own contacts. efinancialcareers isn’t the best place to go to if you want to look for a good role in IB/PB (other firms) in my experience! Base is similar to IB. Bonus may be less, though I don’t have the numbers on had so I can’t comment!

  6. Ronnie says

    Hi Nicole , great article.
    Quick question, I have little numbers experience and am not so confident with the quantitative side of banks (I study history&politics at university). I also don’t know much about banks and banking culture in general. However I just got a PB internship this summer at a global firm (Family connection) and I’m wondering if a being a RM is better for someone who is better with words like meand not so good with numbers like me? Or are there other roles that may suit me? Sorry for the wordiness, trying to find my footing in this industry

  7. Anna says

    Hi Nicole, very insightful thoughts. While I understand there are many relationship hires in PWM/PB for summer internship, is this also the case with full-time hires? I know in fulltime many hires in IBD have strong backgrounds especially in Asia. But what about in PWM/PB? would there also be many relationship/strong background hires at full-time level? And how would the quality of these relationship hires in PWM/PB compared to those in IBD/GCM?

    Thanks

    • says

      I think they do still happen with full-time hires – it is less competitive to get into PB so you don’t necessarily need to have as much of a pedigree background to get in. I’m not sure what you mean about the “quality” of those hires, but as I mentioned, generally it’s less competitive so you won’t see as many people with perfect grades from top schools there.

  8. Ayushimona says

    Hey Nicole,

    great article !could you tell me a bit about the different asset and structured liability products available to HNWs in PB ?
    How does it vary from place and institution ?
    Thanks !

    • M&I - Nicole says

      Thanks for reading! You can invest in alternative investments like hedge funds, IPOs, FX linked structured deposits etc. It depends on the bank, and unfortunately I don’t have all the information! I will keep you posted though!

  9. sarah says

    hi nicole, thanks so much for the article! i’ll be starting as a PB first year analyst (RM track) in a couple of months, and was wondering how being in PB will affect one’s chances of gaining admission to a good MBA program, especially since the business schools receive so many “finance” applications from the more competitive IB/PE side. while you were in PB, did you know of colleagues who applied and got into top US business schools?

    • M&I - Nicole says

      Congrats! I don’t recall of any colleagues who applied and got into top business schools, though I’m sure quite a few from PB did end up going back to b-school. I think it really depends on your reference letters (be nice to your boss), your responsibilities and your essay. I think you can differentiate yourself by making an impact at work such as ..being the top rated RM in PB. Having extracurricular activities (if you have the time) would also help. For instance, if you could start getting involved in organizations like the Ocean Conservancy and doing solid work for them you may also increase your chances.

  10. Gregory says

    Hey,

    I’m from HK as well. Would it be easy to break into private banking with a degree from UCLA?

    Thanks.

  11. Jonathan says

    Hi Nicole,

    Thanks for the post. Right now I’m a junior college and I’m still thinking between IB and PB/PWM. They’re just two options I’m highly considering. In terms of my summer after junior year, assuming I’m still uncertain should I shoot for an IB or PB internship? Down along the road is it hard to move from IB as an analyst/associate to PB/PWM? I’m just thinking in the long run. Thanks.

    Jonathan

    • M&I - Nicole says

      I’d say choose IB first. It’s probably easier to move to PB from IB than vice versa. I don’t think its hard to move from IB to PB/PWM down the line (in my personal experience).

  12. Kevin says

    Great comments about politics and bureaucracy at pbs, Nicole! I hear thing about the industry especially when turnover rates are rather high.

    Couple of sites out there are fairly good for general private banking news but http://www.asianprivatebanker.com has some good analysis on the regional business.

  13. Barton Yip says

    Hey Nicole – honest question: did you get your original job straight out of college (the institutional sales one) through connections?

    • M&I - Nicole says

      Yes though interviewers may wonder why you’d want to do so, unless you work for a small PE fund that isn’t doing too well

  14. Georgiana says

    Hi Nicole, thank you for the insightful article. I am interested in pursuing a PB career in Asia, with HK at the top of the list. Just wondering though, how important are language skills in HK PB? I would consider myself comfortable with speaking mandarin, but I am not totally confident of being able to discuss a product with clients, for example. Is there a great deal of emphasis placed on analysts being 100% fluent?

    • M&I - Nicole says

      Yes there is though there maybe groups/roles that don’t require fluent Mandarin – it depends on the role and group

  15. Jean Paul says

    Hi Nicole,

    First of all, kudos for this article. It garnered my unequivocal attention. I for one believe that bureaucracy and PB go hand in hand, ironic I suppose.
    I have a question for you. What happens when one don’t meet his or her targets? or for example if one is a experienced hire and if he or she will not able to bring her previous clients (AUM) into the new boutique or bank as promised in the interview (not all clients will be interested in moving their assets to a new firm)

    • M&I - Nicole says

      Thank you for your compliment. I think three scenarios can happen (1) You don’t get a raise (2) You get “demoted” (3) You get let go …

  16. amjad says

    hi Nicole
    I started my banking career as RM wealth management for 5 years then I switched into PB but I am not satisfied with my career kindly suggest me what to do for elevation in my career. either through any degree or switching to other industry.kindly help me to choose better

  17. Jessica says

    Hi Nicole.

    I know you mentioned that it’s easier to move from IBD to PWM than the other way around. I’m a little torn because I’m considering accepting a summer internship at PWM in a BB or IBD in a mid-market bank. Long term, I believe my skill set and strengths suit PWM a lot better than IBD and I like the BB I received an offer at, however, I am curious about IBD and I like that it gives me more exit opps if I want to move into PWM or consulting or corporate strategy in the future. Do you think IBD at a smaller bank (BMO Capital Markets) can be leveraged easier when switching jobs or even industries or the brand name of a BB, in the PWM division is more valuable? And, should I value the idea of learning a lot and being able to leverage it for exit opps (IBD) more or value the opportunity to try something I might want as a career but with less exit opps if I find I don’t want to do it long term (PWM)?

    Thanks!

    • M&I - Nicole says

      Congratulations – great spot to be in!

      Yes IBD can potentially offer you better exit opportunities. If you’re pretty sure you want to do IBD I’d go with BMO. One thing I’d do is to research on the growth of BMO – is the company growing fast? How is their deal pipeline? Do you fit into the culture? If the company is growing fast, has a good deal pipeline and niche position and great culture, yes I’d try it.

      Otherwise, JPM may offer you a better brand name and you can leverage that in interviews, or try to transfer internally.

      Be prepared that you may have to go through fall recruiting again though, since you may not necessarily like BMO as a firm or JPM’s PB division or itself as a firm. So I’d network a lot and continue to hone your pitch and valuation skills during the summer.

      • Jessica says

        Thank you! I am definitely very happy with my choices :)

        BMO is actually growing really quickly in the US recently and I love the people I have talked to but I don’t think I will stay in IBD long term because of the lifestyle…I’m just curious about IBD and interested in learning more and I think the summer would be a great way to determine my level of interest/fit/gain more transferable skills.

        PWM at JPM is more of a long term career move that I could see myself staying in for a while…it just doesn’t have as many exit opps as IBD if I change my mind. And another area I am interested in long term is consulting, which I think will be harder to transfer into from PWM. (Although some people say the brand name of JPM is enough to trump IBD at a lesser known firm…do you know any truth in this?)

        • M&I - Nicole says

          Yes brand name of JPM can help you transition to IBD at smaller firms. If you feel that PB is more suitable for your lifestyle, I’d probably go with that. With the above being said, if you really want to give IB a try and like the people at BMO, this maybe a better option for you.

          Consulting – this is a different area, I would focus on the first two first. I think it’d be difficult to move from either to consulting, unless you go back and get an MBA though I may be wrong.

          If you’re looking at gaining skills, getting exposure to IB and joining a fast-growing firm which can potentially offer you more responsibilities and perhaps compensation down the line, try BMO.

          If you’re looking for solid reputation and PB work, choose JPM.

          Consulting – http://www.mergersandinquisitions.com/banker-vs-consultant-why-the-banker-wins-with-a-knockout-in-round-1/ However, if you’re looking to start your own business, consulting maybe a good starting point

  18. Doug says

    Glassdoor has a banker associate at JPM making $150k all in. Does this sound correct? What does it take to be an associate?

  19. Larry says

    I am in a bit of the same position as Jessica above. I have an intern offer from the Private Bank at JPM which I look at as more of a long term thing and an offer from a rapidly growing investment bank (Stifel). I originally saw myself as only doing a stint in IBD but the training, big-name, etc. of JPM is a big pull. Both are in NYC and I would have the opportunity to network at both firms. The value for working in an Investment Bank would be leveraging the opportunity to go into Private Equity (Lower middle market or middle market PE) either directly (after 2-4 years) or after going back to get an MBA. A successful career in Private Banking, using the BB name on your resume to go into IBD at a smaller bank, or eventually leveraging the opportunity to go into Asset Management is not a bad position to be in either. Alumni at both firms have reached out to me and the culture at both seem to be very positive which makes the decision harder on my part. Any thoughts on my dilemma would be greatly appreciated! Thanks!

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