Popular Wealth Management Intern Interview Questions

During your college career there are few internships that are better to complete than one in wealth management.

Not only will a wealth management internship show you the ropes of one of the most coveted areas of finance, it's also one of the best resume line-items to have if you plan on going into other areas of finance such as investment banking, sales and trading, or equity research.

Because of how beneficial these internships are, they are wildly competitive. This is particularly true at private wealth management (PWM) firms such as Goldman Sachs, UBS, Morgan Stanley, JP Morgan, and BAML. 

Below are some interview questions you need to have answers for. There's no need to feel daunted if you don't know these answers. Nothing you'll face in an internship interview will require years of accumulated background knowledge.

However, you do need to prepare for certain types of questions and have clear, concise answers. This takes preparation, but any internship worth doing requires preparation in order to get the offer.

What To Expect

Like in most industries, there are a set of questions that most frequently come up in interviews. In other words, your interviewers won't be crafting questions from scratch for every interview, but rather picking questions out of a large pool of them.

Because of how little info there is on what these questions are, this site was created in order to detail what exactly these questions are and more importantly how to answer them. If you want immediate access to over 180 of these questions, be sure to check out the guide. 

Generally speaking, the kinds of questions you get asked in an internship interview will be the same kinds of questions you would be asked in a full-time interview.

The distinction is that in an internship interview setting, the bar is simply set lower for the quality of your answers. 

This is great news for you as what it fundamentally means is that if you knock your answers out of the park, you stand a very high chance of getting the offer. 

Wealth Management Internship Interview Questions

In a prior post I went through the types of questions you'll face. In an internship interview you should prepare for each of the four type of questions I brought up there, but you should anticipate most questions coming from the behavioural and market-based categories.

Question 1: What's the mandate of the Federal Reserve? Do you think they are living up to it?

Question 2: What are alternative asset classes?

Question 3: How do bond prices and bond yields move?

Question 4: What are the two major types of life insurance?

Question 5: What makes a great wealth manager?

Question 1: What's the mandate of the Federal Reserve? Do you think they are living up to it?

You should approach answering this question in a four step process.

Step 1: State the Fed's Mandate

The Federal Reserve - usually just called the Fed - has a dual mandate that has been handed to them by congress. This dual mandate is price stability - which means inflation maintained at roughly 2% - and maximum employment.

Step 2: Show Why the Mandate is in Conflict

A good answer to this question will immediately state that the two objectives of the Fed's mandate are in conflict. Maximum employment - which is usually defined as somewhere between a 2-3% unemployment rate - will occur when the economy is running hot.

However, when the economy runs hot that generally leads to more inflationary pressure! In order for the Fed to lower the acceleration of inflation above 2% they will raise interest rates - technically they will raise the overnight federal funds rate - which will cool the economy and thereby lower inflation.

Step 3: Show How the Fed is Meeting (or Not) Their Mandate

After stating this, you should then proceed to talk about how the Fed is living up to their dual mandate by stating the unemployment rate and the most common measure of inflation looked at (CPI). 

At present, unemployment is roughly 6.5% and CPI (on an annualized basis) is 3.2%. You can see the future inflation expectations below (but make sure to look them up before your interview, as they'll obviously change overtime).

Step 4: Provide Your Own Opinion

The next step should be provide your opinion as to whether the Fed is really meeting their mandate. 

On the one hand, obviously the economy of the U.S. - like in the rest of the developed world - at present is not at maximum employment and inflation is under the target of two percent. 

However, the economy has gone through a major shock with COVID and the Fed took immediate, drastic action in order to try to stimulate the economy.

As a result, a good answer to this question would state that while the Fed is not currently meeting their mandate, they are trending in the right direction due to their aggressive actions by bringing unemployment down and trying to stimulate inflation.

Question 2: What are alternative asset classes?

If you're planning on applying for a wealth management internship at a large investment bank, you should be aware of what makes their platform unique.

One of these things is their capacity to get their clients access to alternative asset classes that smaller wealth management shops may not be able to.

These alternative asset classes are generally private investment vehicles that have some esoteric risk-attributes that can't be found in public markets and that individuals would not be able to invest in.

For example, one of the classic alternative asset classes is private equity. Most private equity firms operate by raising private funds primarily from large institutional clients (like pension funds, endowments, etc.) and then locking up that capital for years. 

While these funds would never take funds from an individual - since their contribution is so small - a firm like Morgan Stanley can get their clients access to some of these funds by pooling the funds of many of their clients together and then investing them on their behalf in the private equity fund. 

Goldman Sachs has a good listing on the major alternative asset classes here. 

The reason why alternative asset classes are looked to by investors is that while they are less liquid (you can't sell out of your position easily, like you can with equities), they can provide either different forms of risk than you can obtain in public markets or they can potentially provide higher returns. 

Goldman also has a good podcast that's worth listening to on what's been driving alternative asset classes recently. 

Question 3: How do bond prices and bond yields move?

In an interview you can expect some basic "technical" questions to crop up. These questions are defined by being objective facts that don't require you to provide your opinion.

All these questions are meant to do is figure out if you understand the basic mechanics of finance.

For this question, all you need to know is that bond prices and bond yields move inversely. As bond prices go up, bond yields go down. 

JP Morgan Asset Management has a good flow chart illustrating the relationship, but you don't need to memorize it. 

Question 4: What are the two major types of life insurance?

It's important to remember that wealth management isn't just about getting high returns for clients (in fact, that's not even the objective of every client!). 

Instead, a wealth manager is really trying to figure out how to take the goals of a client over decades and meet them. Part of what this means is helping them in areas such as by ensuring they have proper estate planning and life insurance policies that will protect their families. 

Fundamentally you just have two types of life insurance: whole and term. With whole it is more expensive, but you can draw out the funds you put in (almost like an investment vehicle that doubles as insurance).

With term you are paying a lower amount, but it is essentially what you would consider to be a traditional form of insurance: if something happens to you, your beneficiary gets a predetermined amount of benefits.

Question 5: What makes a great wealth manager?

This is a typical interview question in that it seems simple on the surface, but providing a good answer is harder than it may appear. 

What this question is really trying to do is figure out if you understand what the job actually involves and what attributes a great wealth manager would have.

You should start your answer by noting that wealth managers come from many different backgrounds. Some get started right after college, some have a substantial career in finance before joining, and some have a completely unrelated career before joining.

You should then hit on a few key themes:

• Wealth managers must be eternal optimists and be capable of dealing with constantly being told, "No" by potential clients
• Wealth managers must constantly put their clients best interests first in everything that they do
• Wealth managers must be excellent communicators 
• Wealth managers must enjoy autonomy, because ultimately as you become more established you are the one responsible for making your own success

If you hit on these key themes, you will have an incredibly impressive answer. In particular, noting the need to always put clients first and the need to enjoy autonomy will impress your interviewer. 

Final Thoughts and Further Resources

As previously mentioned, this site was created because despite wealth management being an industry full of extroverts, there was barely any information out there on the interview process.

Internships provide an opportunity to try something new and there are few internships better than one in wealth management. I would strongly encourage you to try to get one even if you don't think the industry is quite right for you.

This is because even if the industry is not right for you, the experience on your resume will help you land other jobs within finance much more easily. Also, many people do internships in wealth management, thinking it won't be right for them, and then end up loving the work!

If you're looking for over 180 real interview questions and answers, be sure to check out the prep guide. Also be sure to check out some of the other articles done on top private wealth management interview questions, how to prepare for interviews, and the best way to answer why you're interested in wealth management.

As always, best of luck in your preparation. If you end up getting the internship, and found any of this helpful, be sure to let me know. It always makes my day to hear that what I've put out there has been helpful.