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In Private Client Business, Personal Traits Are Essential

Executives who hire asset managers to serve the very wealthy assign a high priority to people skills, breadth of life experience and an affinity for tackling unique problems that fall outside of the institutional fund manager's toolbox.

The private wealth management business is growing both assets and career opportunities, as economic expansion lifts more families into the upper strata that make it worthwhile for private bankers to manage their portfolios.

While definitions vary within the industry, "private wealth management" can be thought of as encompassing the level of wealth that comes after the $1 million minimum in investable assets that defines the high net worth market. Some firms define this level as starting at $5 million, others at $10 million, and still others at even higher plains.

While big global banks and investment houses manage both institutional and private client funds, industry executives say the private wealth market differs from the institutional market in crucial ways. As a result, private wealth management not only requires separate techniques and separate business units, but also calls for a type of person that's distinct from those dedicated to institutional clients.

What They're Looking For

A successful private banker is likely to have an outgoing, service-oriented personality, strong communication and listening skills, a broad base of personal experience, self-reliance and emotional maturity, says James H. McLaughlin, the managing director who heads the New York office of Lydian Wealth Management. The Rockville, Md.-based firm concentrates on the ultra-high net worth market.

"There is a tremendous need for client-facing professionals" in private wealth management, McLaughlin says.

Unlike research or trading, this is a role best suited for people who enjoy observing and figuring out other people, says Alec Haverstick, executive director at Morgan Stanley Trust N.A. "Empathy and listening are without a doubt the two most important skills you have to have," he says.

Managing money for pension funds and other institutions revolves around asset allocation and similar well-established tools. Although private wealth managers must understand and be able to apply such techniques, their special talent lies in devising intelligent, original solutions to problems that arise when substantial wealth is concentrated in a narrow activity, such as a family business which tax or other factors make impractical to sell.

Empathy and the Client

"You must be client-focused, not product-focused," Haverstick says. "Each private client has a unique set of needs, which makes this a challenging and interesting area." He gives this example: A client might say, "I have $300 million in real estate, and with interest rates going up, how can I lock in the value without selling?"

Because the challenges posed by particular clients vary widely, there is no road map to guide those working to assist them. Says another private wealth executive, who asked to remain anonymous: "There aren't generally intellectual right answers in this business. There are emotional right answers."

That's what makes empathy so important. "We at Lydian have a test for this intrinsic quality. You can't fake it," says James McLaughlin. "You can acquire the competencies and professional designations. (But) the intrinsic talents are not fungible. They are a narrower universe of people."

The contrast with Wall Street stereotypes like the hard-charging dealmaker, big-swinging trader or genius number-cruncher, can be dramatic. Unlike most other senior roles in finance, private wealth management leaders say they're not obsessed with hiring MBAs or even business majors, candidates in their 20s or early 30s, or specialists who hewed to a single well-defined career path.

A diverse background is helpful, because the clients are very diverse, says Edward J. Orazem, managing director in Citigroup's Family Office unit.

Moreover, "This business favors older people," says Lydian's McLaughlin. He explains that people who have experienced more of life won't be awed by "the trappings of the wealthy."

When hiring an intern recently, McLaughlin actively sought candidates who majored in

anything but business or economics. "I want people who can write and communicate," he said. While he will consider "people-oriented" business majors who show true interest in reaching out and working with others, McLaughlin leans toward candidates "who like learning for the sake of learning, rather than to pursue a narrow professional path."

But private wealth managers also need a competitive streak if they're to attract assets and grow their business. However, competitive needn't mean greedy or ruthless, McLaughlin Notes. "You have to be both service-oriented and competitive."

AUTHORJon Jacobs Insider Comment
  • gm
    7 January 2009

    I agree with Mr. McLaughlin and have personal experience that solidifed client relationships with my firm. I am client facing on realtionships from a technical aspect. I am involved in a pre-sales role and also client by demonstrating our firms account aggregation and reporting web tools.

    My background was with HNW software with Finance/Marketing degrees. However, I have always been a writer and interested in architecture. We had a client that was leaning to move his business elsewhere. The family patriarch felt that over the years our firm lost interest in his business and needs. I was assigned to his account and when I met with him to discuss our tools, we chatted first and I discovered he had an interest in Prairie school architecture. We talked at length on architects and homes we had both experienced and I made some introductions to like-minded people for him. We not only still have the business, he is adding assets. Another prospect mentioned in a sales meeting that he liked a certain lesser-known comedian. I mentioned that through a comedy writing class I had taken, that I talked with the comedian once. That prospect became a client because our firm meshed.

  • Ma
    Mark Feffer
    26 April 2007

    We can't share our sources' e-mail information, but we're sure you could look him up in the phone book.

  • yb
    y badril
    26 April 2007

    I would like to get in touch with Mr McLaughlin .Can I have his email address

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