Interview Question: Why Asset Management?

In a prior post we covered how to approach answering why you’re interested in wealth management. But since then I’ve had a number of questions relating to how you’d change or augment your answer for asset management roles.

This is a deceptively tricky question to answer because unlike wealth management – where there’s quite a bit of diversity between shops, but they all have the same core mission – asset management is an incredibly diverse area. Said differently, the core of every asset management role, unlike every wealth management role, isn’t necessarily the same.

For example, most junior roles at Morgan Stanley Investment Management or Goldman Sachs Asset Management will look quite similar. However, within a place like Vanguard or Fidelity there tends to be more siloed roles offered at more junior levels.

Therefore, in this post I’ll try to give you some broad talking points that’ll be generally applicable to most asset management roles. But make sure to carefully look at the job description you’ve applied to pre-interview to make sure these are applicable (for example, look at the job description to see if the role is asset class agnostic or if it’s focused primarily on alternatives).

Important Note: I’ve posted a recent and very lengthy Morgan Stanley Asset Manager Review that goes over some broad themes impacting asset management today. Depending on how familiar you are with the space, some of it may be a bit technical but the 70+ page doc will give you lots of great talking points for an interview.

Talking Point #1: Diverse Asset Class and Client Exposure

In most junior asset management roles you’ll get exposure to a wide swath of asset classes and the products or solutions (e.g., overlay, managed volatility, etc.) that are produced for clients. This is something you won’t get in many other roles in finance where you tend to either be more asset-class focused or you get exposure to just one or two kinds of products or solutions.

For example, in recent years providing access in different ways to alternative investments (i.e. private equity) has been one of the defining themes of asset management (this includes trying to provide direct access to funds for some types of clients).

Further, in many asset management roles (although we’re painting with a broad brush here) there will be a relatively wide swath of clients that are serviced. This stands in contrast to many wealth management roles that are more focused narrowly on either high net-worth individuals, endowments, etc.

Since in many asset management roles you won’t be immediately siloed, it gives you a few years to try to figure out where your interests truly are and the kinds of work you can see yourself doing in the years to come (because it’s quite typical, especially within the asset management arms of large banks, that you will need to silo yourself as you get more senior).

Talking Point #2: Possible Client Exposure

This is the primary talking point you should use in wealth management interviews since you really shouldn’t be too interested in the career, even at a junior level within a large private wealth management practice, if you can’t see yourself enjoying working directly with clients in the future.

In asset management, the amount of client exposure you’ll have, especially at a junior level, will be highly variable. Therefore, you should be mindful of this reality and not be too definitive when you use this talking point.

Instead, you should say that you’re really interested in asset management because you’re more directly tethered to your clients (even if you aren’t interacting with them directly as a junior). This can include thinking about asset management strategies that aren’t just about maximizing alpha but involve tailoring solutions that fit either individual clients or a broad set of potential clients based on their needs.

Here's an example of what we’re talking about here from the aforementioned Morgan Stanley Asset Manager Review...

Talking Point #3: Being in a Stellar Learning Environment

Unlike wealth management, where you have thousands of small shops, the world of asset management is significantly more concentrated. This is especially true when it comes to junior roles where they are extremely concentrated within Blackrock, Fidelity, GS Asset Management, etc.

In an asset management interview it’s always great to say that one of the primary reasons for your interest is being able to leverage being part of the firm and getting to learn from the collective experience and expertise of hundreds or thousands of other employees.

This is a similar talking point I’ve brought up in relation to joining the wealth management division of large investment banks (i.e. GS PWM, etc.) because the level of immediate exposure, along with training, you’ll get is simply hard to replicate. So even if you’re someone who finds being in large bureaucracies to be a bit stifling, it’s well worth considering applying.

Talking Point #4: Being Able to Join a Dynamic Environment

Industries tend to go in waves, and today there’s much talk about what the next iteration of wealth management and asset management will look like with the rapid technological advancements we’re currently seeing.

In Morgan Stanley’s view, we’re about to enter a new phase, that they’re calling Wealth Management 3.0, that’ll see wealth managers and asset managers work even more closely together to serve clients and provide them offerings that are both seamless and quite novel.

Here’s how Morgan Stanley describes Wealth Management 3.0...

And here’s how Morgan Stanley sees the need for asset management to evolve to better support both wealth managers and their direct clients...

Whenever there’s a large technological shift, there are those who become optimistic and those who become pessimistic. The pessimists worry about technology making some aspects of wealth management, and to a lesser degree asset management, redundant through the use of robo-advisors and the like.

However, the optimists look at technology as a way to provide clients with more innovative and bespoke solutions easily. This includes introducing clients to alternative asset classes and solutions that were previously less technically possible to offer to wide swaths of clients (in particular, those just at or below the HNW classification).

Additionally, optimists look at the technology we’re seeing be introduced as a way to more easily service an even greater number of clients by making client-interactions more seamless and less time-intensive.

In the end, you don’t need to come up with your own view on the future of wealth management or asset management. Instead, the best way to judge the prospects of both industries is to look at what large players are doing. And, if you do this, what you’ll find is that every large investment bank, almost without fail, is talking about how they’re rapidly trying to grow their wealth management and asset management practices (including by significantly growing their headcount).

Conclusion

It’s difficult to give an overly generalized answer to “why asset management” given the breadth of the industry (especially since some junior asset management roles will be more asset-specific).

However, the above are some good talking points to keep in mind and meld into your own answer. Most answering this question in an interview will give pretty generic answers (i.e. they’ll say they’re really interested in finance), so adding some more specificity goes a long way. Just make sure to carefully review the job description to see if there are any hints as to the role being less general so that you don’t misstep. (And make sure to carefully review classic wealth management interview questions and asset management interview questions).

In particular, bringing up talking point three and four are great ways to stand out and set yourself apart from the crowd. The third point is quite general, but one that will be received well by every interviewer. And point four shows that you’ve taken the time to read and think about the future of asset management.

Important Note: If you haven’t yet be sure to take a look at the Morgan Stanley Asset Manager Review that I’ve uploaded for you if you’re looking for more talking points or want to learn more about the themes defining the industry.