Top 9 Private Wealth Management Interview Questions

Private wealth management interviews are among the most challenging to prepare for because of the diversity of questions you can potentially face.

The distinction between private wealth management interviews and traditional wealth management interviews (at independent shops) will revolve around the emphasis placed on certain types of questions.

This makes sense, because when you join a private wealth management (PWM) firm you are going to be most likely joining a large investment bank like Morgan Stanley, Bank of America Merrill, UBS, Goldman Sachs, etc. 

If you look at the 2020 rankings or 2021 rankings for the top private wealth management teams, you'll see the top teams at these institutions aren't exactly mom-and-pop operations. They handle anywhere between $5bln and $30bln in assets under management.

Today, in 2022, nearly all top private wealth management teams have grown significantly larger than they were in 2020 and 2021 (with some top teams seeing their AUM grow by 20-80% over the past year). This has predictably resulted in there being a surge in the hiring of new wealth managers in 2021/2022; both at large teams that operate mostly independently and within the wealth management divisions of large investment banks.

What this means from a practical perspective is that your interviews will be more technical - as you'd expect when interviewing at an investment bank - and professionalism along with client-centricity will be main attributes looked for. 

We'll first review the types of private wealth management interview questions that exist, what an ideal candidate should demonstrate in an interview, and where the emphasis is placed for private wealth management interviews.

Types of Private Wealth Management Interview Questions

In any wealth management interview, you can break down the questions into four distinct types.

Behavioral questions go far beyond just, "Tell me about your greatest strength" although those kinds of questions can potentially crop up. However, behavioral questions are generally meant to get a feel of whether or not you really know what wealth management is, whether you've thought seriously about your decision to try to join the firm, and whether you understand what the important attributes of a wealth manager are.

Market and situational questions are meant to see whether or not you know where markets are now, have a view of where they are going in the future, and can articulate this all at a reasonable level. No one expects you to get into whether or not you think implied volatility is too high or too low in the equity markets, but you should be able to talk about markets at a level akin to what you would read in a thorough Wall Street Journal article. 

Technical questions are those that are more objective. There are right and wrong answers. You need to show that you have a grasp of basic finance concepts across markets (not just equities). 

Questions to ask your interviewer are those questions at the end of an interview that you ask of your interviewer. These are critical in a wealth management context as being able to ask articulate, thoughtful questions is a create measure of how you will deal with clients (where, especially when you haven't yet engaged them, you will be asking them a lot of questions). 

In a private wealth management context more emphasis is going to be placed on market and situational questions along with technical questions.

This is because when we talk about private wealth management roles we're talking about roles within investment banks primarily. So as you'd expect the level of rigor is meant to match what other roles within the investment bank would have.

The Ideal Private Wealth Management Candidate

The ideal private wealth management candidate is someone who do a few different things:

• Demonstrate contextual understanding of what private wealth management is all about
• Demonstrate - via the behavioral answers - that you have the right attributes for the job and understand what they are
• Demonstrate an understanding of markets that go beyond just the superficial (but again, no one expects you to be an expert)
• Demonstrate that you have an understanding of markets beyond just equities (such as rates, FX, and credit)
• Have prepared thoughtful questions to ask your interviewer that are meant to draw out their opinion on the industry
• Show throughout your answers that you have seriously and deliberately considered your choice and will not be prone to leave the industry when things get hard

Ultimately, our performance in an interview is a far larger determinate as to whether you get the job than your past experience.

Large private wealth management shops - like those listed above - are looking for those that they can invest time and resources into that will become significant producers in the decades to come.

This stands in stark contrast to areas like investment banking where the focus is really on whether or not you can handle the hours and do the work over a two-year period (since you'll probably be leaving the firm within two years anyway). 

In the wealth management guide I go over some do's and don't's and things to keep in mind. If you can keep only one thing in mind, keep in mind that those interviewing you will be trying to imagine what you'll be able to do for the firm in the decades to come (not in just the next few years). 

Private Wealth Management Interview Questions

Now let's dive into nine real-world questions to give you a feel of what to expect. Since this will be a very lengthy post you can use the links below to navigate between questions, if you'd like.

1. What are some economic indicators to keep an eye on?
2. What do you think is driving equity markets right now?
3. If you were given $1,000,000 personally, how would you invest it?
4. What's the reason why the Fed - or anyone else - cares about having 30-year Treasury Notes lower in yield?
5. What's the difference between nominal yields and real yields? What does this mean for treasuries?
6. What are some of your favorite books?
7. What's the relationship between bond price and yield?
8. What do you think the attributes of a great private wealth manager are?
9. Tell me something about yourself that's not on your resume?

What are some market or economic indicators to keep an eye on?

Broad economic questions will often be used in interviews to get a sense for how deep your understanding goes. 

For example, if when asked this question you only respond with GDP then that signals a lack of market knowledge. However, if you can give three or four important indicators, that signals that you have a much deeper understanding.

Here are some economic indicators you'll want to pay attention to. It also doesn't hurt if you have a rough idea of where these are currently (or if they're higher or lower than they were a few months ago).

• CPI
• PMI
• GDP (QoQ and YoY)
• Latest initial jobless claims
• Moves in the 10-year treasury (or the equivalent government bond in your country)
• Where the VIX is
• Credit indices (high yield and investment grade)
• Where the S&P 500 is (along with perhaps some other major equity indices like the FTSE)

Here's a photo from my Bloomberg terminal, to give you an idea of how the data is presented:

What do you think is driving equity markets right now?

This is a great question because, like with the previous question, there is no per se right or wrong answer. Instead, your interviewer is merely looking for you to show an understanding of what things generally move the equity markets and what currently apply to today's market.

A good answer to this kind of question - irrespective of where equity markets are right now - will do the following things:

1. Demonstrate that you understand key drivers of equity markets generally
2. Understand what sectors are hot right now and moving indices up
3. Understand how other asset classes are performing and how this impacts equities

Let's take each of these in turn.

First, you should articulate that in a falling rates environment that lowers the discount rate on current and future free cash flows from a business. So everything else being the same, if rates fall then equity markets should rise. 

Second, you should articulate what sectors are driving equity markets. In recent years it has been primarily tech stocks. This can somewhat contradict our first point - as many high-flying tech stocks don't have much free cash flow! - however, that doesn't make your answer poor. Rather, it shows you understand the market is nuanced and can't be viewed through any simplified framework. 

Third, what we have observed this year is very low rates and very tight credit markets. One could make an argument that equities have paradoxically become an asset that people look to because there is so little yield to be had outside of equities. This can be observed through the large in-flows seen into the equity markets and lesser flow into rates and credit. 

What an answer laid out in these three parts does is show you understand the fundamental drivers of equity prices, understand what sector is contributing the most to equity index gains, and how alternative asset classes are also perhaps contributing to this all. 

For reference, here are some potential drivers of the S&P 500 if we take a look at the historical precedence of that index.

If you were given $1,000,000 personally, how would you invest it?

This is a classic question. It's been around forever. You may notice a trend in a lot of these questions: they're broad enough that you can really differentiate yourself by providing a comprehensive answer.

Unfortunately, for many they provide simplified answers to questions, thinking they hit it out of the park, without realizing that it's actually not a great answer.

A good answer to this question will show you understand the basics of portfolio theory; have thought about your answer in your own personal context, not some generalized one; and that you have a sound understanding of various asset classes.

To this end, you will want to kick off your answer by noting that it is predicated on you being in your twenties or thirties or whatever your age happens to be. You should then note your risk tolerance and why you have that risk tolerance.

You then may want to note that while bonds and equites have previously been negatively correlated, that correlation has broken over the past few years for large stretches of time. Further, you may want to note that lackluster gains that rates can provide with yields so low thus making you more equity heavy than you would have been thirty years ago. 

You then should break down your answer by asset class and percentage:

• 50% U.S. equities 
• 20% emerging markets equities
• 5% gold (via gold ETFs)
• 5% oil and gas exposure (equities)
• 10% TIPS 
• 5% credit index fund
• 5% cash

This kind of answer shows that you understand a number of different asset classes and several are non-traditional.

A stellar answer may include that if you had your money with a private wealth manager you may seek to get exposure to alternative asset classes such as private equity funds and non-publicly listed hedge funds.

This shows you have an understanding of the kind of service a private wealth management firm provides and why folks come to them.

What's the reason why the Fed - or anyone else - cares about having 30-year Treasury Notes lower in yield?

While you shouldn't expect to get questions about the nuances of quantitative easing, you can expect possible questions that indirectly get at that.

That's because the Fed has taken a much more aggressive role in markets since the great financial crisis and as a result private wealth managers need to be able to communicate rates topics to clients.

A naive answer to this question may be that the Fed lowering yields of treasuries will result in lower future borrowing expenses by the federal government. While true, this isn't the rationale for why it's done.

The rationale is that lowering the yield curve across the board - but in particular in the 10-year and 30-year range - will lower corporate borrowing costs, which are often benchmarked off of treasuries. 

Note: The yield curve is currently inverted with the 10-year yield being above the 2-year yield significantly -- it's actually inverted the most since 1981.

Another argument is that by dampening down yields it makes treasuries less of a safe haven asset and pushes participants "further up the risk curve" into asset classes like credit, mortgage-backed securities, CLOs, and even equities in order to get some level of positive return. 

Note: if you're looking for a brief run-down of QE in practice, the Peterson Institute for International Economics always has good primers such as this one. 

What's the difference between nominal yields and real yields? What does this mean for treasuries?

This is a pure technical question. Nominal yields are simply the prevailing yields of a given bond - whether government-issued or corporate-issued - such as Ford's 2028 Notes, which are currently yielding around 6.8%. 

To find the real yield, you simply take the nominal yield and subtract out the current level of inflation. Real yields are important to follow as you can certainly have nominal yields that are positive, but after adjusting for inflation you could end up with less purchasing power because inflation is greater than the yield on the bond.

This is the case of treasuries right now across almost the entire yield curve. Inflation is higher than the nominal yields. Thus if you are holding two-year treasuries, for example, you are getting a negative real yield. 

The reason why folks hold treasuries, of course, is that they have the same risk profile as cash. Unless the U.S. government is no longer backing their treasuries - which is not going to happen - at least holding treasuries gets you some risk-free yield, while holding cash in a bank account gets you almost nothing.

Note: Given where inflation is, most the treasury curve has negative real yields. Below is a screenshot of what the yield curve currently looks like:

What are some of your favorite books?

Some behavioral questions that can come up in interviews may strike you as being a bit irrelevant to the job, such as this one. 

The reason why questions about your favorite books may come up is not because your interviewer is that interested in your actual answer, but rather what your answer says about you as a person.

For example, you should avoid saying that your favorite books are cliched finance-oriented books. This is for two reasons. First, it can come across as pandering. Second, you will be dealing with a diverse set of clients and being well-rounded is an absolutely essential part of the job. Your entire life revolving around finance is not going to guarantee you success, in fact it's likely an indicator that you will flame out. 

To be safe, I would talk about favorite books of yours that are from the non-fiction or biography section. I'd avoid finance books and I'd likely avoid anything that's too off-the-beaten path (such as sci-fi books). 

It may all sound a bit strange, but answers to questions like these absolutely are informative for your interviewer. Don't be caught off guard here. 

What's the relationship between bond price and yield?

Another technical question that you can face surrounds the relationship between the price and yield of a bond. This is one of those questions where you just need to give a thirty second answer. 

All you need to know is that when prices rise, yields decline. So, for example, when a bond rises in price, investors are willing to except less yield (although the same coupon payment), due to the perceived quality of the bond. 

J.P. Morgan Asset Management has a great flow chart on this relationship here.

A more advanced concept, duration, informs this relationship and makes it not perfectly linear. However, that's too advanced of a concept to ever come up in an interview setting for private wealth management (but it's worth keeping in mind just in case). 

What do you think the attributes of a great private wealth manager are?

In a private wealth management interview you are more likely to be asked about the attributes of a great wealth manager than whether or not you know exactly what you'll be doing on the job.

This may sound counter-intuitive, but it isn't. When applying to a large investment bank you will be undergoing intensive and prolonged training in all aspects of the job.

Therefore, it's far more important, from the bank's perspective, to get the right person in the door even if they don't know every aspect of the job, rather than get someone ill-suited to the job who happens to know what the day-to-day role will be.

The best way to summarize what makes a great wealth manager in general is that they are persistent, optimistic, but fundamentally realistic. Far too many get into the industry who are persistent, or perhaps optimistic, but are not realistic.

By realistic I'm referring to the fact that a private wealth manager needs to be sober and serious. The clients you're dealing with will have complicated needs and errors in judgement will reflect harshly on both you personally and on the firm.

In a private wealth management interview it is also worth stating the an individual needs to understand they are representing not only themselves to their clients, but also the firm as a whole.

There is nothing a firm like Morgan Stanley, Merrill, or Goldman takes more seriously than the reputation of their firm. No matter how good they think you may be in the future, if your interviewer has any belief that you could cause the firm reputational damage in the future you won't get the offer. 

So additional attributes you want to bring up are always putting the interests of the client first along with considerations for the reputation of the firm more broadly.

Another attribute of excellent private wealth managers operating within large banks is that they fully take advantage of the platform they operate under. What this means is that they take the opportunity to connect clients with the unique products - often in the alternative asset space - that the bank can open up to them that other wealth management shops could not.

Further, a great wealth manager will also leverage the human capital within the firm to answer the thorniest questions the client has that needs specific expertise from individuals within the firm. While working at a major bank you will have a rolodex of those you can call on for tricky estate planning or esoteric investing strategies.

So, specifically for a private wealth management interview here are the things you should keep in mind for attributes of strong wealth managers:

1. They understand that everything begins and ends with making sure the client is satisfied
2. At all costs they avoid causing any reputational damage to the firm
3. They leverage the platform they operate under to open up access to investing opportunities that are unique to the bank
4. They leverage the platform they operate under to get access to expertise - internal to the firm - to help a client navigate the thorniest issues they have

These attributes are far stronger to bring up in an interview then boiler-plate ones around being extroverted or loving the markets. Those are of course generally true, but they don't show that you really understand what makes for a great private wealth manager.

Tell me something about yourself that's not on your resume?

This is a behavioral question that's meant to catch you off guard. Like with any kind of behavioral question, there are strong answers and weak answers.

A weak answer to this question would revolve around you speaking about a certain thing you did at a prior job that isn't a bullet-point on your resume. If it wasn't important enough to list on your resume in the first place, then your interviewer isn't likely going to be moved by hearing about it now.

A strong answer to this question would revolve around things totally outside of work. Perhaps you've done some charity work, run a marathon, are a big fan of certain kind of music, or are an avid follower of a certain sports team.

Remember that even in a private wealth management setting, being an interesting person is the name of the game. You want to be easy to talk to and you should have some interesting (non-finance) things to talk about.

In an investment banking interview, it's probably a good idea to guard your true personality a little bit. No one cares about your eccentric taste in music or how much you love the New England Patriots. However, in a wealth management interview you absolutely shouldn't be afraid to show you're a multi-dimensional person with interests that reach beyond where the S&P 500 is at.

Download the PDF of These Private Wealth Management Interview Questions

If you'd like to download a PDF of these private wealth management interview questions so that you can easily print them out,  simply click the cover photo below.

Conclusion

As you can tell, in order to be prepared for private wealth management interviews you have to put some time and effort into it.

As hopefully I've made clear, you don't need to become an expert in every technical niche of finance. In general, you want to just have a broad understanding of markets and have contextual understanding about what's really important in private wealth management (which is crucial for the behavioral questions).

With that being said, while many questions can seem easy, often the answers that are most impressive to the interviewer involve digging a few layers deeper.

This is part of the reason why many go through interviews, think that they crushed it, but end up not getting the offer. They just don't know that the seemingly open-ended question they got are not sufficient; that there was something deeper your interviewer was really looking for. 

If these questions have been helpful, be sure to check out the interview guide for over a hundred additional interview questions across all four types.

As always, best of luck in your interviews and beyond.