Wealth management is an exciting, dynamic, and often misunderstood sector of the financial industry. For the right professionals, wealth management offers nearly unlimited upside potential. Realizing that potential, however, can require years of dedicated work and sacrifice.
Given recent trends, wealth management looks increasingly promising as a career path. The field is growing rapidly, with industry revenues set to double by 2030. Further, global wealth is expected to climb by 38% over the next five years, which should create ample opportunity for wealth managers.
In my career, I had the opportunity to work at an independent wealth management firm serving high-net-worth investors and institutions. I eventually worked my way up to Chief Strategist, where I was responsible for developing overall investment strategy and managing asset allocation models.
In my experience, wealth management is a truly unique niche in the financial industry, offering generous compensation with lower stress than sectors like banking or trading. With that said, you’ll be expected to learn a tremendous amount of information across a wide range of subject areas, and advanced roles typically require cultivating excellent client skills.
In this article, we’ll outline the key factors to understand as you consider embarking on a career in wealth management. To start, we’ll explore what wealth managers actually do for their clients.
What Does a Wealth Manager Do?
Even among financially sophisticated individuals, wealth management is often associated solely with investment management. In reality, while stewarding a portfolio of assets is certainly a key component of wealth management, it’s just one aspect of what wealth managers do.
While the scale of service offered by wealth managers will depend on the clientele they serve, high-end professionals can best be thought of as personal CFOs. Wealth managers are entrusted to take care of almost anything related to their client’s financial life, including:
Investment management – Managing the client’s portfolio of financial assets, frequently including non-standard investment categories like hedge funds and private lending.
Financial planning – Depending on client needs, this can range from creating a simple budget to consolidating family accounts into formal financial statements.
Retirement planning – Advising clients on which retirement accounts to contribute to, how much to save, and when to start taking necessary distributions.
Capital raising & borrowing – Helping clients raise money for their businesses through a network of investors, as well as sourcing options to borrow against the client’s assets.
Research & due diligence – Analyzing client investment opportunities, frequently including those in niche industries, as well as performing thorough due diligence on prospective business opportunities.
Clearly, wealth managers can wear many different hats in pursuit of effectively servicing their client’s financial lives. Not all wealth management professionals perform every role we discussed, however. Let’s take a closer look at the various paths you can take in this industry.
Career Paths
The services provided by high-end wealth managers can be wide-ranging. As such, effectively delivering all those services, especially to high-net-worth clients, can take an entire team. This team-based model encompasses the three broad career paths available in the wealth management industry – the relationship manager, the specialist, and the administrator.
Relationship Manager
The relationship manager is what many traditionally think of as a “wealth manager.” This individual is responsible for managing current client relationships, finding new clients, and quarterbacking advisory services for the client.
Relationship managers still play an essential role in delivering client services, especially since they are frequently the most experienced members of the team. But ultimately, the relationship manager career path is very sales-based, with soft skills proving most vital. Common job titles for a relationship manager include “Wealth Manager,” “Investment Advisor,” and “Financial Advisor.”
The key to being a successful relationship manager is to have strong people skills. Analytical skills are still important, but complex tasks are often delegated to specialists.
Specialist
Specialists are rarely tasked with managing client relationships directly. While they may support the relationship manager in certain client meetings, their role is based on specializing in a few key service areas.
Some quantitative specialists, for instance, may leverage programming and modeling skills to build asset allocation models for client portfolios. Others may be responsible for conducting macroeconomic research and distributing reports to clients. While soft skills are important in almost every job in finance, specialists are ultimately valued for their technical and analytical abilities.
The actual tasks performed depend on what clients need, and it’s not uncommon for multiple wealth management teams in the same firm to rely on one specialist. Job titles vary heavily as well, but can include “Analyst,” “Strategist,” “Head of Trading,” and “Head of Planning.”
Administrator
Administrators are an underappreciated part of wealth management teams, but they are essential to ensuring effective service delivery.
This role typically acts as the first point of contact for clients when they call or email the firm. Administrators can help clients directly with routine questions while passing more complicated requests on to the relationship manager or specialists. Further, administrators often play an assistant-lite role, helping set the relationship managers’ schedule and managing office operations.
Working as an administrator requires less hands-on financial work than other wealth management career paths, but requires a strong capacity for organization and people management. Typical job titles here include “Client Service Associate,” “Client Relationship Manager,” or “Office Administrator.”
Business Models
Just as career paths can differ widely in wealth management, many distinct business models permeate the industry. These business models frequently come with differing work environments and compensation structures, so finding the right fit is an important part of building your wealth management career.
With respect to wealth management business models, the first distinction to be made is between wirehouses and independent firms.
Wirehouses
A wirehouse is a large, national firm that has many different wealth management teams working under their umbrella. Some wirehouses are household names, including Morgan Stanley, Merrill Lynch, and UBS.
It’s common for wealth managers working under a wirehouse to represent themselves as part of the larger brand, which helps build trust with clients. Some wirehouses, though, fly under the radar, offering teams institutional and execution support, but letting teams build their own brands.
Independent firms
Rather than work for a wirehouse, some wealth management teams operate as independent firms. This allows for more flexibility and potentially larger compensation, but also usually requires relationship managers to navigate the difficulties of running their own business.
Dual registration and the fiduciary standard
The fiduciary responsibility refers to the legal obligation some wealth managers have to act in their client’s best interest when delivering advice or making decisions on their behalf. As such, fiduciaries only charge money directly to clients via management fees or hourly fees, avoiding the incentive problems of commission-based products.
Wealth managers operating under the purview of a registered investment adviser (RIA) are held to the fiduciary standard. In contrast, wealth managers operating under broker-dealers (BD) are only held to the suitability standard, a less stringent requirement. Confusingly, though, many wealth management professionals are “dual registered” under both a BD and an RIA.
Dual registration is more common for wealth managers working under wirehouses, with most independent firms acting solely as RIAs. This might sound like a technical distinction, but it can significantly alter the way wealth managers are compensated, and thus the nature of their work.
Compensation Structures & Salaries
Given the myriad roles and business models possible in the field, compensation structures and expected salary ranges can vary wildly.
Typically, relationship managers earn a percentage of client assets under management. Firms generally charge clients a management fee in the range of 1% annually – in other words, a $1 million account would be charged around $10,000 per year.
If a relationship manager works at a wirehouse, they may only get to keep 20-50% of this fee. At an independent firm, the portion the relationship manager keeps may be higher. Moreover, a dual-registered wirehouse usually expects relationship managers to generate commissions on brokerage products as well, a pressure that’s not as common at independent shops.
Since the fee a relationship manager earns is so closely tied to their client book, it’s hard to make generalizations about their earnings. But it’s safe to say this is the wealth management career path with the highest potential upside – so long as you’re good at working with clients. Relationship managers can frequently advise on client books exceeding $100M in assets.
In contrast, specialists and administrators typically earn a more regular salary. Starting salaries for junior specialists can be in the $75K-100K range, which can quickly jump to more than $150K as they grow in experience and value. Salaries for administrators are generally on the lower end of that range, with comparatively fewer opportunities for increases.
It’s not uncommon for administrators to pursue specialist roles or specialists to pursue relationship manager roles in order to increase their upside, but this transition becomes challenging as professionals cement their careers.
Education & Certifications
Getting started in wealth management almost inevitably requires a college degree, as spots for entry-level jobs at wirehouses or independent firms are competitive. Common undergraduate majors include business, finance, and economics.
Wealth management professionals will need to complete a range of regulatory exams to be allowed to work, with the exact exam set depending on the specific job. Independent firms may just require you to pass the SIE and Series 65, but dual-registered firms may require the Series 66 and Series 7.
As you advance in your career, continuing education will likely prove advantageous. Many prospective relationship managers will pursue an MBA, but specialists may benefit more from the rigorous CFA exam. Finally, there are many helpful, but not mandatory, designations a wealth manager can pursue to differentiate themselves to clients. These include the CFP, the CIMA, and the CAIA.
Whatever education and credentials you pursue, cultivating the skills necessary for the career path you want will pay dividends as you pursue your wealth management journey.
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