Top 4 Neuberger Berman Private Wealth Interview Questions

It’s fair to say that Neuberger Berman isn’t a household name. However, their private wealth practice, along with their investment management practice, hit far above their weight. In fact, one of the largest private wealth management teams in the United States (Finkel Hamerling and Allan) are with Neuberger (with assets under management of around $4b).

The interview questions asked for any junior role at Neuberger Berman are going to be much more similar to those you’ll get at Goldman, Morgan Stanley, UBS, etc. than those at smaller shops. And, just like at GS or MS, what’s being looked for in interviewees is a good grasp of markets and, just as importantly, that you can deliver your answers well.

Neuberger Berman Private Wealth Interview Questions

In any private wealth interview, you’re going to get a variety of questions ranging from hypotheticals about how you’d talk with clients and colleagues to those centered around what’s currently happening in markets. Below are some example questions.

What has been the best performing equity sector of the past twelve months?

What’s an equity sector you’d be overweight moving forward?

What’s a potential black swan that could lead to downside risk in markets moving forward?

What will determine if the Fed continues to raise rates further?

What major central banks have already paused their rate hike cycle?

What has been the best performing equity sector of the past twelve months?

In any wealth management interview, you’re not going to be expected to memorize dozens of different stats (i.e., where every index is trading, where yields are across the curve, etc.). But you should have a reasonable grasp of where we are currently in the grander scheme of things (i.e., where the S&P 500 is and what has been primarily driving it, whether yields have fallen or risen recently and why that’s happened, etc.).

This is why I’ve always tried to structure my answers to interview questions in such a way that you can use my answer as a template and then quickly go over to Bloomberg fill in the current details (as it’s impossible for me to keep every answer completely up-to-date).

Over the past twelve months energy has been the best performing sector, primarily driven by the run up in commodity prices following the invasion of Ukraine. However, as recession fears began to rise in the beginning of the year, energy sold off significantly and has only recently bounced back due to a recent (surprise) cut by OPEC.

Nevertheless, it’s still the case that the only sector within the S&P 500 that has had a meaningful 12-month total return is energy and, if the economy continues to show resilience and supply remains constrained, we could be in for another relatively strong year of performance from energy.

What’s an equity sector you’d be overweight moving forward?

This is a great question because there’s no right or wrong answer. Rather, you need to develop, and then articulate, a little thesis. For example, you could say that given the current macro backdrop, and how high multiples still are in most equity sectors (i.e., tech), you want to be relatively defensive.

As a result, being overweight utilities is an obvious choice because multiples are relatively low right now and the sector has historically shown more earnings resilience through recessionary periods. Therefore, if one believes that a recession is more likely than not, then being in this kind of defensive sector makes sense (and, given how low multiples currently are relative to other sectors, utilities could still outperform even if a recession doesn’t eventuate over the next year).

Here’s a slide from Morgan Stanley giving their (overweight) view on the utilities sector...

What’s a potential black swan that could lead to downside risk in markets moving forward?

Just like the prior question, there’s no specific answer that your interviewer will be looking for (if everyone agreed on the same black swan then it’d hardly be a surprise!). Instead, what your interviewer is looking for is a thesis that makes sense and, preferably, one that draws on current events (not a complete hypothetical).

There are a number of potential black swans you could talk about. Given the events of the past month, an obvious one would be around continued bank failures that could cause a rapid tightening of lending standards by banks and spur a recession (through significant credit contraction).

If you want a less common answer, then one could be around continued tightening in oil supply; perhaps due to further OPEC cuts or perhaps due to geopolitical issues. If this were to occur, then it’d provide a bump to headline inflation, put pressure on the Fed to continue raising rates, and would most certainly lead to more downside risk in equity markets.

The reality is that any event that leads to higher rates than are currently being priced in by markets will come along with significant downside risks, as any additional tightening by the Fed will be viewed by markets as increasing the likelihood of a recession occurring. Therefore, another more general black swan is just that inflation continues surprising to the upside and forces the Fed to keep their foot on the rate hiking pedal.

What will determine if the Fed continues to raise rates further?

Whenever you’re asked a question about the Fed, it’s always helpful to start by noting the dual mandate: price stability and maximum employment (two objectives that are somewhat in tension with each other!).

Today, the Fed is certainly meetings its mandate on the maximum employment side of the coin, given that the unemployment rate was the lowest since 1969 in February, but inflation is still well above target (its slowly moving in the right direction but many fear that it’ll plateau or stabilize at a level still above target if there isn’t a significant economic contraction).

While the market currently anticipates just one further 25bps increase, and even that isn’t fully priced in, it’s still possible that the Fed moves further. The Fed deciding to continue its rate hiking cycle will all come down to inflation remaining stickier and not showing a clear path back down to the Fed’s target of around two percent.

There are a number of reasons why inflation could surprise to the upside moving forward. For example, as mentioned in the prior question, if there were to be a mini oil shock then that’d not only temporarily elevate headline inflation, where energy prices play such a large role, but it’d flow through to other core inflation components as well (i.e., elevated transportation costs from higher fuel being passed through to some goods and services pricing).

However, the most likely reason for inflation showing a level of stickiness beyond what the market expects would be economic growth failing to abate, employment remaining strong, and workers continuing to see healthy wage gains (something that naturally feeds back into the overall inflation rate).

What major central banks have already paused their rate hike cycle?

While the Fed is likely one meeting away from pausing their rate hike cycle, and the ECB is likely several meetings removed from doing so, there are a few developed market (DM) central banks that already have.

Most notably, both Canada and Australia have paused their rate hike cycle. This is largely because both countries not only have highly levered households, but a significant amount of their mortgages outstanding are variable rate (meaning the impact of higher rates on households is felt immediately, unlike in the US where the vast majority of households have locked in their mortgages at record low fixed rates).

With that said, one central bank that has bucked the trend and continued tightening, despite having highly levered households with plenty of variable rate mortgages, is New Zealand. The RBNZ recently raised rates more than expected (50bps) to 4.75% despite the economy having actually contracted in 4Q 2022. But in New Zealand inflation has persisted despite this weak growth backdrop (whereas in Canada, for example, economic growth has been largely flat, and inflation has fallen quite sharply – as you’d expect it to when there is limited overall economic growth).

Conclusion

Neuberger Berman’s private wealth practice may be small relative to those contained within the major investment banks, but it contains some of the larger teams in the United States that have billions in assets under management.

In any interview with NB, you should expect a heavier focus on market-based questions, like what we’ve covered above, along with some more intensive behavioral questions that get away from just asking you to talk about items on your resume.

If you’re curious about those more behavioral questions, be sure to look at the longer post on wealth management interview questions that’ll give you a bit of a feel for what to expect. Like with any behavioral questions, the presentation of your answer is nearly as important as the answer itself. This is something many overlook, since behavioral questions aren’t deemed to be as “hard” as other kinds of interview questions, but you should definitely be rehearsing your answers to make sure you’re delivering them fluidly.