Top 4 AllianceBernstein Wealth Management Interview Questions
As we've discussed quite a few times before, one of the benefits of getting into wealth management through an investment bank (i.e., Goldman, JPM, UBS, etc.) is that you'll get access to a robust training program that'll leave an impression on the rest of your career.
This hasn't always been the case: a decade ago the training programs offered by even the largest investment banks were incredibly short and new hires were (largely) left to figure out how wealth management works on-the-job.
But the realization occurred among these banks that this progress of hiring and then (rather quickly) firing under-performers was both costly and leaving a lot of talent on the table. So they began to really invest in those they hired and make the interview progress a bit tougher (in the hopes of getting the best candidates possible.
However, this ethos hasn't extended to all wealth managers. There are still many smaller shops that adhere to the more over-hire and over-fire mentality that used to define the wealth management industry. But things are slowly changing.
One firm outside of the traditional investment banks that has always prioritized training new hires and giving them more leash during their first few years has been AllianceBernstein (sometimes just referred to as Bernstein).
So, if you're looking to break into wealth management, it's a great place to begin your career and also a place where folks tend to stay for longer periods than you'll see with other firms (which is always a good sign).
AllianceBernstein Wealth Management Interview Questions
At AllianceBernstein you're going to have an interview that's middle-of-the-road from a technical perspective. You won't get as intensive a grilling on current market conditions as you would elsewhere (e.g., Morgan Stanley) but it won't likely be purely qualitative as the interview would at smaller local wealth management shops.
Below are some potential interview questions that you prepare, along with some answers that hit the right sweet spot (keep in mind your answers should ideally be around 2-3 minutes in length and definitely not much more).
- What is a major story that you think will define markets this year?
- If inflation is below 2% in a year, where would you expect the unemployment rate to be?
- How would you approach diffusing conflict with a client?
- If equities were to fall further from their current level, what would be some reasons why?
This is an example of one of the more open-ended questions that you're likely to get in an interview. There are many potential ways you could take your answer (i.e., it's not like there's a singular correct answer here).
With that said, there's an obvious answer here because the defining story of the last year, and likely the defining story for the foreseeable future, is rates: how high they're going, how long they're staying there, and what that means for the general economy.
As JPM Private Banking helpfully illustrates in a recent report (that I've appended to the back of the guide) we're currently witnessing the fastest rate hike cycle in modern history -- and it's not particularly close.
The consequence of this blazing-fast rate hike cycle in 2022 was that, for the first time in over a century, bonds and equities declined by over 10%. This had an obvious consequence of hurting one of the most popular wealth management portfolio construction techniques of 60% equities and 40% bonds -- something that has, historically, helped dampen portfolio volatility.
If you're curious about the current thinking of the 60/40 portfolio construction - after having a terrible return profile last year - here's an interesting article on Bloomberg regrading what some folks are thinking about the 60/40 portfolio in 2023.
To my mind, the major story of the upcoming year will be where the Fed ultimately raises rates too (i.e., 500bps or 525bps or maybe higher) and then, more importantly, how long it pauses at the upper level before cutting.
It's a foregone conclusion in the minds of market participants that the Fed will cut at some point. Indeed, there's around two rate cuts priced by markets already before the end of 2023 (as the market is anticipating both inflation and economic activity to fall quite quickly through the year).
Just how responsive the Fed is (i.e., do they cut rates quicker to try to avoid a tough recession, or do they keep rates high to make sure inflation is vanquished and risk a tough recession eventuating) will be what drives all asset classes this year (from equities to bonds to real estate and everything in-between).
This is a great question because it's (indirectly) getting you to tie together a few macro themes that are taking place right now.
As you'd expect, no one is expecting you to give some precise answer here as there's no exact relationship here.
But given that inflation is still running 0.2% MOM and 6% YOY as of this writing, to get to below a 2% inflation rate within a year would require a significant demand destruction -- and that demand destruction would only eventuate through a significant rise in the unemployment rate.
So you'd expect for inflation to fall this quickly there'd need to be (at least) a mild recession and the unemployment rate to be significantly above where it is now. Therefore, a reasonable answer would be an unemployment rate around 5% or higher within the next year would be consistent with inflation falling this quickly.
This is roughly inline with the Fed's own projections. They're painting a relatively rosy picture of inflation returning to just above target (i.e., just above 2-3%) by the end of this upcoming year and unemployment rising to just below 5%.
This is an example of a more behavioral style question that can crop up in interviews. In the end, anyone working within wealth management is vested with a significant amount of responsibility by their clients and, as you can imagine, sometimes tense situations can arise.
Whenever you're dealing with conflict, the best thing to do is to try to fully understand and appreciate where your client is coming from and then to present them a series of actionable alternatives that they can choose from.
This latter point is always important to keep in mind. Whenever you're dealing with a tense situation it's not enough merely to be empathetic and understand where your client is coming from. You also need to have a solution to diffuse the conflict or tension, which is best done through presenting actionable items (i.e., rotating a portfolio, de-risking a portfolio, etc.).
To answer this question, we first need to think about the assumptions that are currently being priced into equities. Then we just need to think about the down-side risks to those assumptions.
This is obviously easier said than done, as it's impossible to say with any meaningful precession what probability equities are assigning to a potential recession or the path of rates moving forward.
However, something that directly drives equity pricing is, of course, earnings growth. And so a negative catalyst (i.e., a reason equities could fall further) is a deterioration of earnings moving forward (most likely due to a recession or from rates staying higher for longer).
JPM Private Banking put together a nice little chart illustrating that the consensus for 2023 earning growth is still positive but many (including JPM) think this is painting slightly too rosy of a picture.
Beyond just earnings growth deterioration, there is a (much lower) possibility that inflation doesn't abate and the Fed needs to materially raise rates higher than what market participants are currently forecasting.
If this were to happen, this would likely hit equities hard (as it did through the last year) as all equities, at some level, are discounting future cash flows back to the present -- and so when rates rise, the amount you're discounting back rises and makes those future free cash flows worth less.
As mentioned in the preamble to this post, AllianceBernstein offers one of the best training programs you're going to get in wealth management that rivals what you'd get at one of the large investment banks.
As a result, the interviews are going to be a tad more technical than what many expect going into them (especially in the final rounds). The most important thing you'll need to do is have a sound understanding of a few market themes and be able to discuss them during your interviews. Beyond that, having answers nailed down for more behavioral questions (i.e., around diffusing conflict, how you've handled challenges in the past, etc.) will be important as well.
So hopefully this post has given you an idea of what to expect. I've also done up some other (longer) posts on wealth management interview questions that you can read through as well.