Top Bank of America Merrill Lynch Private Wealth Management Interview Questions

In the United States Merrill Lynch wealth management - housed within Bank of America - still has a dominating position despite the best efforts of those like Goldman Sachs who have put a significant amount of resources into trying to build out their franchise.

Merrill Lynch has over three trillion in assets under management and rakes in tens of billions of dollars in fees. Bank of America was one of the few large banks to double down on wealth management - along with Morgan Stanley - immediately after the financial crisis. 

As with the other major banks, Merrill Lynch provides services that stretch far beyond just wealth management. Services include estate planning, tax planning, and trusts to name just a few.

As has frequently been brought up on this site, joining the right platform when you get into wealth management is absolutely imperative. Merrill Lynch wealth management is a fantastic platform to join and, much like the other major banks, has dedicated significant resources into training new joiners of the firm compared to how things used to be a decade or more ago. 

The kinds of interview questions you can expect from Merrill are in-line with what you would expect at the other large banks. You should expect lots of behavioural questions with market, investment, and situational questions thrown into the mix.

Large wealth managers pride themselves on having very "technical" employees who deeply understand markets and market trends. The following questions are meant to give you a feel of what to expect and if you're looking for even more questions, be sure to check out the over 180 wealth management interview questions here. 

Merrill Lynch Private Wealth Management Interview Questions

The following are the top five Merrill Lynch private wealth management interview questions. I've made these a bit broader in scope than I usually do to demonstrate how you craft narrow, specific answers to questions that can seem a bit ambiguous at first blush (which is common at Merrill).

Question 1: Tell me how you keep up-to-date with markets?

Question 2: Your client comes to you and says they want to put money into a hot stock, but you think it is likely a pump-and-dump, what do you do?

Question 3: There's a lot of talk about options or derivatives lately. Should clients of Merrill Lynch be using options as part of their portfolio?

Question 4: If we're looking to buy corporate debt, how do we go about doing this?

Question 5: What are TIPS really? Are they worthwhile?

Question 1: Tell me how you keep up-to-date with markets?

This is a very common interview question. You may think that there's no wrong answer, and perhaps that is true, but there are most certainly excellent and mediocre answers. 

An excellent answer will not involve you trying to show off that you are deeply plugged in by reading equity research reports or doing technical market analysis all day.

An excellent answer instead will focus on you following the market in such a way that understand the breadth of what is happening, not only in the equity markets, but also in areas like rates and FX that heavily impact most wealthy clients due to their exposures. 

You should of course answer truthfully, but in my view an excellent answer will say that you skim the Wall Street Journal, Bloomberg, and the Financial Times. You should mention that you focus primarily on the United States (or whatever your home country is), but that you also try to stay reasonably up-to-date on the major headlines coming out of other areas of the world.

You should also add that you spend time reading about rates, about FX, about commodities, and about equities as you understand that any portfolio of a wealth management client will have exposures to all of these sectors. 

Question 2: Your client comes to you and says they want to put money into a hot stock, but you think it is likely a pump-and-dump, what do you do?

Given the time of this writing - in early 2021 - this is a very timely question. As a wealth manager, regardless of if you're at Merrill Lynch or a smaller shop, you are going to have clients coming to you wanting to do incredibly risky things because they read about it online, heard about it from friends, etc.

A great answer to this question will note that in frothy equity markets there is a real potential for FOMO (fear of missing out). 

You should explain to your client that as a stock rapidly appreciates the volatility can become nearly untenable. For many of these "hot" stocks the likelihood that they crash back down is greater than any meaningful upside. It's always a good idea to make it as clear as possible that many who are getting in at levels that are utterly divorced from fundamentals will end up losing out; it's only those lucky enough to have been in early who are insulated from the risk.

Question 3: There's a lot of talk about options or derivatives lately. Should clients of Merrill Lynch be using options as part of their portfolio?

This can seem like a bit of a leading question where the right answer is to say that of course they shouldn't! 

However, you need to separate out what we mean when we talk about derivatives. Some derivatives are entirely safe and some options are embedded in the kinds of products wealth managers often put their clients into (like structured notes).

You should note that you would never advise your clients to buy or sell call or put options on hot stocks, where there is a strong likelihood they will lose at least their investment if not more (depending on if they are writing the option). This is the kind of trading that has become so popular over the past year among retail traders and, despite some getting lucky, is a tremendously risky proposition.

However, at the same time structured notes, or various kinds of FX derivatives that lock in a certain exchange rate, can be entirely sound practices as part of prudent wealth management.

Derivatives can be used to "lock in" certain returns. While locking in certain returns can preclude further upside, it can be prudent to use derivatives in order to try to create certainty for the client (especially if they need to draw down cash later). 

Question 4: If we're looking to buy corporate debt, how do we go about doing this?

This is a great practical question to ask. If you're trying to get a client exposure to corporate debt, you can't just go out and start buying up bonds or loans on the market for them (as they trade in lot sizes that are far too big for your average wealth management client, even if they are high net worth).

Instead, just like in most other areas of finance, you can get them exposure via index funds that track certain parts of the capital structure.

The latter point is important to note. You can get clients exposure to secured debt - that has lower interest rates, but lower volatility (chances of default) - or you can go further down the capital structure and get them exposure to high yield bonds. For example, if you had purchased index funds tracking high yield bonds in mid-2020 you would have seen significant gains as credit markets tightened after the initial shock of March-April 2020. 

Of course, the benefits of index funds for corporate debt are two fold. First, you can invest any amount you desire within them. Second, they are by definition very well diversified so you have general credit exposure, but not too much specific credit exposure to any one company.

Question 5: What are TIPS really? Are they worthwhile?

TIPS are a common security held by many wealth management clients. Treasury Inflation Protected Securities (TIPS) allow you to earn a set coupon that is insulated from the effects of inflation. 

So while normal treasury bonds can potentially have real returns that are negative - even if they were positive when you purchased them - due to rising inflation, that is not true of TIPS as they go up in concert with inflation. 

The way that TIPS work is that the principal balance rises with CPI (the primary measure of inflation) and thus the coupon rate while staying static will lead to increases in the amount paid out to the investor as the principal balance grows (due to inflation).

TIPS are a popular way to insulated oneself from the effects of inflation while providing no credit exposure. The reason why there is no credit exposure is that TIPS are backed by the full faith and credit of the U.S. government -- just like treasuries are.

Almost every country has the equivalent to TIPS although they will be called different names. However, the TIPS market is by far the deepest and most liquid inflation-protected class of securities in the world (as you'd likely expect given that they emanate from the U.S. Treasury). 

TIPS (treasury inflation protected securities)


Merrill Lynch (bank of America) private wealth management is one of the strongest platforms in the United States to join. It has a long, storied history despite the fact that Merrill obviously ran into a bit of trouble - when they were a full-scale investment bank - during the great financial crisis.

However, Merrill Lynch has always had a strong platform with particular focus on high net worth individuals. Like many large banks they've gone "down the curve" over the past decade to begin to service clients who aren't at the extremes of wealth and have had great success in doing so. 

Like with all private wealth management interviews you need to be prepared for a wide diversity of questions that go beyond the behavioral. Further, as I've stressed many times, you need to focus on making sure your behavioral answers are what your interviewer is really looking to hear.

As we went over in the first question laid out here, often you can think you're giving a fulsome, strong answer, but in reality your interviewer won't be entirely impressed. Wealth management interviews are a bit of a black box and that's why I decided to dedicate some of my spare time toward trying to better elucidate what to really expect in interviews. 

Hopefully this has been helpful and be sure to let me know if you have any questions.

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