Five Wealth Management Superday Interview Questions and AnswersLast Updated:
If you're applying to the wealth management division of a large investment bank - like Goldman Sachs, JPM, Morgan Stanley, etc. - then you will go through an interview process comprised of several 30-minute rounds, followed by a superday.
A superday can be thought of like a series of first-round interviews strung together. Generally, you'll have 25-30 minute long interviews one-on-one with between three and five people back-to-back.
All of these individual interviews will follow a similar format of having behavioral, market-based, and situational-based questions thrown your way. These questions will be similar - or even identical in some cases! - to what we've discussed in other posts thus far.
For many interviewees, superdays can be quite intimidating. However, you should keep in mind that it's not like you're being cross-examined by a panel. You're just having one-on-one interviews that happen to be back-to-back.
To give you a little insight into how offers are handed out, everyone who interviewed you will gather around and be asked to give their views on whether or not you should be given an offer. If there is unanimity, you'll get the offer. If someone vouches for you, but another person has reservations, then you may be put on a waiting list until they've discussed all the other candidates they've interviewed.
While there is no substitute for being well prepared and giving good answers in a superday, one thing you should be mindful of if that confidence is always looked for in candidates. This is because, by definition, part of the job of a wealth manager is to be open to being thrown into situations where you may be rejected. You aren't going to land new clients being overly nervous or anxious, and the same is true for interviews themselves.
Wealth Management Superday Interview Questions
Since we've already covered quite a few of the more "technical" questions in other posts, I figured in this post we'll cover more open-ended questions that can come up in superdays. Because without a doubt, one of the skills needed as a wealth manager is to be able to talk about anything, at any time.
This is a great question because it requires you being able to breakdown how inflation impacts different kinds of companies, and how it does so.
The key here is to realize that inflation acts as a conduit. When inflation rises that puts pressure on the central bank to raise interest rates given their inflation target mandate. This, in turn, causes the cost of capital for companies to go up.
If we assume that the value of all companies - on some basic level - is just the present value of their future free cash flows, then those companies that will be impacted the most by rising rates are those whose value is derived primarily from free cash flows far into the future.
The types of companies who primarily have their value derived from free cash flows far into the future are technology stocks that are growing quickly. So in a rising rates environment, you'd expect technology stocks (generally speaking) to be the most impacted.
Of course, throughout 2022 this is largely what we've seen. While industrials and commodity-linked companies have done quite well, technology stocks have dropped significantly. Meanwhile, during 2020 and 2021 when rates were incredibly low, technology stocks did very well (partly due to the low rates environment).
This question may sound quite similar to the first one, but keep an eye on the terminology utilized.
What is being asked about here is an asset class - meaning equities, commodities, credit, fx, etc. - and how rising rates will potentially hurt it.
While there are many potential answers to this question - for example, you could talk about a certain sector of equities like technology - the clear and obvious answer is treasuries (government debt) or corporate bonds.
This is because both treasuries and corporate bonds have fixed coupons, and when yields rise, the price falls. As rates have risen through 2022, we've seen relatively sharp price declines in both the treasury and corporate bond markets.
This is only exacerbated by the reality that yields were historically low in both of these markets through 2020 and 2021. So, as a result, even if yields just normalize to where they were in 2019, treasuries or corporate bonds that were issued over the past few years will have their yields spike sharply, which will correspond to a sharp price drop.
One of the classic tropes of wealth management you may have heard of is the 60/40 portfolio. This question may be asked not because everyone thinks in terms of constructing 60/40 portfolios anymore, but rather just because if you're generally interested in asset or wealth management you will have probably heard of it before.
A 60/40 portfolio generally refers to keeping 60% of your assets in broad equity indexes, and 40% in rates or credit. This is because, historically, there tends to be a negative correlation at play here. As equity markets go up, yields tend to go up, which in turn causes treasuries or corporate bonds to go down in value. Likewise, the inverse is true as well.
So by constructing a portfolio this way you create a quasi-hedge against market volatility (meaning during bad times for 60% of your portfolio, you should make some modest price gains in the other 40% of your portfolio).
The reality is that the negative correlation between equity returns and rates has been sporadic over the past few years. For example, through 2022 equities have modestly gone down while the price of treasuries and corporate credit have gone down as well.
However, that doesn't mean that there isn't still a benefit to diversification -- it's just likely the case that using a hard-and-fast rule like 60/40 isn't the best way to construct a modern portfolio.
A convertible bond, as the name would imply, is a traditional bond that pays a set coupon rate. However, at the election of the bond holder, it can be converted in the future into a set number of shares.
Generally investors in companies will buy convertible bonds if they feel uneasy buying the equity. However, they'll accept a lower interest rate than they otherwise would demand because convertible bonds give the option, in the future, to convert their bonds into a predetermined number of shares at a predetermined share price. Of course, investors in convertible bonds will only convert to equity if the shares they're converting into will be worth more than the bonds they currently hold (if they never are, they'll just keep holding the bond until maturity).
From the company's perspective, they may like to issue convertible bonds because the conversion option has value to the buyer (so they won't seek as high of a coupon rate compared to if the company were to just offer traditional bonds).
Chances are you'll get some question like this during one of your interview rounds (either during a first-round or superday).
What you should do in concede that of course it's impossible for you to ever truly know if being a wealth manager is the right choice before beginning. However, you should then talk about how you've come to the decision to pursue being a wealth manager.
Ideally, you should mention that you've talked to people in the industry and feel like you've tried your best to figure out what both the pros and cons are. For example, you can talk about how you know that the majority of those who get into the wealth management industry end up leaving within five years, but that you've weighed that against how appealing the career is to you and that you think it's worth taking a chance.
While it's always daunting to do a superday - especially if you haven't ever done one before - keep in mind that all they really involve are a series of first-round interviews back-to-back.
Hopefully this post has helped you figure out some of the kinds of questions you can expect. If you're looking for even more questions - especially of the more technical variety - then be sure to take a look at the long list of wealth management interview questions that I've put together. You can also take a look at the list of asset management interview questions as well (these are similar to wealth management questions, but a bit more technical).
Finally, if you're gearing up for interviews be sure to check out the wealth management guide, which lays out over 180 of the most common wealth management interview questions and how to approach answering them.