This article for the NYSSA was written by Janet J. Mangano, Co-Chair, Private Wealth Management Committee. It offers good insights into the career path offered in the area of private wealth management. We have had several AIM graduates each year begin their careers in private wealth management or private banking.
Do you enjoy working with individuals helping them with their most challenging investment issues? Do you have expertise managing money for yourself and others during the most volatile times in the market? Perhaps you want to put your skills in asset allocation to work for individuals and their families. Private wealth management contrasts with institutional asset management in that its focus is strictly on individuals, families, and non-person entities such as trusts. Yet, the common ground for both rests in one’s ability and interest in analyzing macroeconomic forecasts (especially as related to defining associated risks to principal) and applying comprehensive analysis to individual investment circumstances.
Private wealth management begins with an inventory of an individual’s investable assets. You may not be called upon to invest all of the assets, but ideally, you should know what they are. Knowing what is owned and stating current and future needs of the funds will assist you in stating an investment objective for all liquid assets as well as accounts under consideration for management. This is especially important as it relates to one’s retirement savings in annuities, 401(k) accounts, 403(b) accounts, and similar investments. When the investment objective is determined, along with special considerations for the account (such as managing low tax costs, concentrated positions, less liquid securities, high exit cost mutual funds), the asset allocation can be determined considering the investor’s requirements for returns and the tolerance for risk.
Some wealth managers/financial advisors conduct asset allocation and inaugural structuring of investments. Investments are automatically rebalanced unless the investor’s objective changes. Portfolio managers monitor all investments on an ongoing basis, whether they are managed accounts, mutual funds, exchange-traded funds (ETFs) or individual securities. They typically work within a range of weightings for securities, asset classes, and sub-asset classes. In fully discretionary accounts, they implement changes to optimize returns while mitigating risks and maintain high sensitivity to income and capital gains taxes in non-qualified accounts.
I always wanted to work on the buy-side, and realized about fifteen years into my career that I would love advising individuals and help them do what they could not accomplish on their own with their money. I started my career as a financial intern at a huge corporate pension investment management office at a time when defined benefit plans still dominated the retirement fund landscape. After my internship, I began working as a fundamental research analyst on the sell-side because demand was so strong—and also because I could not find a buy-side position. It took quite some time to make the switch to the buy-side because hiring managers considered me to be best-qualified on the sell-side—with an institutional focus. When I had an offer to work as a research analyst at a regional bank, I leaped at the opportunity!
As I look back at my own career path, I realize that it has always been difficult to find a position as an institutional or private portfolio manager. I recommend that if private portfolio and wealth management is your ideal career, look for work at well-regarded firms such as Fidelity Investments, The Vanguard Group, or BlackRock. They work on the behalf of individual and institutional investors, and have remained leading-edge with their research, managerial, and technological capabilities. Remember to earn your credentials, too, such as the CFA® (Charter Financial Analyst) and CFP® (Certified Financial Planner) designations.