Top 4 BNY Mellon Wealth Management Interview Questions

While BNY Mellon may not be a household name the way that Goldman, JPMorgan, or Morgan Stanley are, to say it's a historic franchise would be an understatement (to put it mildly).

BNY Mellon was formed as a result of a merger, just fifteen years ago, between the Mellon Financial Corporation, which dated back to 1870, and the Bank of New York, which dated back to the late 1700s. And, today, it is the world's largest custodian bank.

There's no doubt that BNY Mellon is best known for its custodial business. However, in the aftermath of the great financial crisis - just like Morgan Stanley, UBS, etc. - they began to explore growing their wealth management business and did so through a number of acquisitions. 

The reason why this has been such a trend among the largest banks is that wealth management is a seductive business for any financial services company to tack on given that it's fundamentally fee-based (not risk-based). Making it a safe, but lucrative, business line to get into if you have relationships with high-net-worth individuals, families, foundations, etc.

Anyway, as part of BNY’s attempt to grow their wealth management platform, they've introduced structured internships and full-time wealth management programs that are very much worth looking into.

BNY Mellon Wealth Management Interview Questions

The interviews at BNY Mellon will be somewhat similar to those from Julius Baer. They’ll have traditional market questions and behavioral questions, but they’ll also want you to really emphasize how you exemplify the core values they’re looking for (i.e., integrity, discretion, professionalism, etc.).

During uncertain times what equity sectors would you anticipate having the largest inflows?

What do you think is currently weighing on the Fed’s rate hiking decisions?

How would you describe our client mix?

What are some indicators that can be used to watch and analyze the housing market?

During uncertain times what equity sectors would you anticipate having the largest inflows?

This is a great question because it gets you, in an indirect way, to talk a bit about how various sectors could be impacted by times of heightened market uncertainty. Needless to say, it matters what the uncertainty is (i.e., geopolitical uncertainty, inflationary uncertainty, growth uncertainty, etc.).

This year, as a modest banking crisis roiled markets and inflation remained persistent, we’ve seen a rotation into safer, cash-flow rich sectors (i.e., utilities, consumer discretionary, household products, etc.). and away from less growth-orientated sectors.

And, because the uncertainty over the past few weeks has been driven by bank failures, we’ve seen large outflows from the banking sector as Citi illustrates below…

What do you think is currently weighing on the Fed’s rate hiking decisions?

Despite a string of bank failures, including Credit Suisse, the Fed raised rates on March 22 by 25bps. This didn’t come as a surprise to market participants who had fully priced this in and the decision by the FOMC was unanimous (i.e., no one dissented and argued for a pause).

The reality is that the Fed has a dual mandate (one half of which surrounds price stability) and we’re still a long way away from approaching their inflation target of 2%. In fact, the data we’ve received this year has been anything but encouraging.

If you look at one of the most frequently cited measures of inflation by Chair Powell – core services excluding housing – it gained steam in February after appearing to abate slightly in Q4 of 2022. This data was partly why the market began pricing in nearly a 50bps hike for this past meeting prior to the bank failures of earlier this month.

But, as you can see below, the bank failures did have an incredible impact on market pricing. Even at one point suggesting it was quite unlikely that the Fed would raise rates at this past meeting at all.

Ultimately, the Fed appears to believe that the banking stress exhibited earlier this month was due to one-off factors that won’t necessarily be remedied by pausing the rate hike cycle. So, given this, it made sense in their view to raise rates yet again, wait for more data to come in, and hope that the rate hikes introduced begin to diminish economic activity sufficiently to constrain inflationary pressures.

How would you describe our client mix?

It’s important to keep in mind that the client mix you’ll be dealing with will vary between wealth management practices. For example, in more locally focused wealth management practices it’ll usually just be individuals.

However, in a larger institutional setting, like BNY Mellon, you’ll be covering high net worth individuals, families, endowments, foundations, trusts, and planned-giving programs. Given this, there will be some significant variation in the interactions you’ll be having (i.e., answering to numerous individuals, needing to build consensus around solutions, etc.).

What are some indicators that can be used to watch and analyze the housing market?

There’s no escaping housing: residential real estate is the largest asset class in the world and for most individuals (as long as they aren’t ultra-high net worth) a non-trivial amount of their personal wealth will be tied up in physical real estate assets.

As a result, your clients will often want to talk real estate, and it’s going to be an asset class you need to keep up to speed on (even if you, like most wealth managers, end up trying to diversify your clients away from being too heavily invested in local real estate).

The major high-frequency data points you’ll look to are things like pending home sales, price declines of active listings (what percent of active listings have price declines), mortgage purchase applications (year-over-year declines generally suggest price compression in the future), median listing and sale prices (these are real-time, so can’t be relied upon to foreshadow the future too much), active listings (whether they’re up or down on a year-over-year basis or month-over-month basis), number of homes sold in under two weeks (as a percentage of total listings), and the time current sales spent on the market.

So, for example, right now the residential housing market is sending some mixed signals but the negative signals (that foreshadow future price declines, as we already saw occur on a national level in February) outweigh the positive signals.

The leading negative signals (beyond that price declines occurred last month!) are that pending home sales are down 17% YoY, mortgage applications are down 39% YoY, and active listings are up 17% YoY. So, from a classic supply and demand perspective, there’s more current supply (active listings) and less current demand (mortgage applications and pending sales).

However, there are some positive signals that create a more mixed picture: time that listings are on the market is just 18 days, active listings remain well below the 2019 average, and 46% of homes are off the market within two weeks. This all suggests that we’re far away from seeing declines that’d take us to pre-pandemic levels.

Needless to say, underpinning the entire housing market is the rates backdrop which has become dramatically different than it was just a year ago. It’s difficult to believe with mortgage rates having doubled that it wouldn’t have a significant impact on overall price levels, as most are buying homes based on their monthly payment not the sticker price of the house.

But thus far we’ve seen that average monthly carrying costs have continued to rise even as prices have stabilized or fallen (depending on the region) due to the rise in mortgage rates. In other words, prices may not be rising much, but average monthly payments are. And enough consumers seem to be able to absorb these higher monthly amounts to avoid having wide-spread price corrections occur (at a national level).

As with any market, it’s impossible to truly predict what will happen in the future. This is especially true of real estate where every local market is driven by its own idiosyncratic factors (how many are moving there, how much new supply is in the pipeline, how the local economy is doing, etc.).

But, if you’re ever asked about housing in an interview, you should begin by laying out the positive and negative signals above and then discuss how overlaying all of this are mortgage rates, as those directly inform one’s monthly carrying cost and that carrying cost directly dictates how much house they can buy (i.e., when rates are low maybe $2,000/mo gets you a $500,000 home, but with higher rates maybe it only gets you a $400,000 home).

Note: Everything written above has to do more with residential housing which should be viewed separately from commercial real estate.

Conclusion

There’s a wide spectrum of wealth management practices: from those with just a handful of folks servicing a relatively small local community to divisions within the world’s largest investment banks servicing the world’s wealthiest individuals and foundations.

There’s no right or wrong answer as to which end of the spectrum you should start your career at. It all comes down to personal preference. However, starting at a place like BNY Mellon will provide you with a more structured introduction to the industry, a phenomenal training program, stable income for your first few years, and insight into how a more diverse client mix (from ultra-high net worth individuals to foundations) are treated.

If you’re applying to BNY Mellon, or any wealth management division within a larger investment bank, then your interviews will be a bit more technical (i.e., covering market-based questions). For more insight into these kinds of questions, make sure to review the listing of top wealth management interview questions and also take a spin through the asset management interview questions (as asset management interviews tend to be more technical and less behavioral, given the nature of the role).