As a bright and ambitious young finance professional, you have many possible career paths ahead of you. It is equally probable that most of your classmates and contemporaries are marching off into careers on Wall Street as investment bankers, stockbrokers, and floor traders. The motivation for pursuing these careers is not difficult to ascertain: big money is made on Wall Street, with investment banking often seen as the natural destination for a sharp, motivated finance major who wants to get rich as quickly as possible after graduation.
You can make a lot of money as an investment banker or as a stockbroker, but these careers are not without their downsides. Investment bankers often find 16-hour days the norm, particularly during their first few years on the job. Some investment banks feature rooms with bunks, so employees have a place to crash on those nights they work until midnight or later and still have to be at their desks when the markets open the next morning. Long days also plague stockbrokers and floor traders.
Though the markets remain open from 9:30 a.m. to 4 p.m. (Eastern Time), additional research, meetings and strategy sessions can double the amount of time a trader spends at work. Monumental stress is another factor to consider before embarking on a Wall Street career. To get an idea, visit the New York Stock Exchange (NYSE) trading floor or watch video footage of it. The commotion and cacophony become your daily life when you work there.
Fortunately, you can make a lot of money as a finance professional while you keep reasonable hours and a daily work routine that does not send your blood pressure into the stratosphere. Private bankers earn huge incomes managing the finances of high-net-worth individuals (HNWI). An HNWI typically boasts a net worth of $2 million or greater; the average portfolio of a private banking client hovers around $5 million.
Huge Income Potential
Young professionals rarely flock to investment banking because it is rewarding work, it has great hours, or it offers a reasonable work/life balance. The work is high-stress, the hours are brutal, and there is no distinction between work and life – you live for your job when you are an investment banker. This career is popular for one reason alone: the income potential.
However, private banking offers equally strong income potential. Your salary varies based on your total assets under management (AUM), which is the aggregate value of your clients' portfolios. Private bankers from wealthy families have entered the business and drawn huge salaries almost right away from merely managing their parents' money. If you are not so connected, you might find the road to lavish wealth longer and more challenging to navigate, but a few big clients are all it takes to begin earning a paycheck that rivals that of your counterparts in the field of investment banking.
A day in the life of a typical Wall Street worker does not provide for much time for relaxation or decompression. An investment banker, stockbroker, or floor trader has to stay on his toes, often from before the sun comes up until well after it sets. This constant stress can wear on a person quickly; hypertension, alcoholism, and drug abuse pervade Wall Street. The trade-off for enduring this stress, of course, is an income that places you in the upper percentiles of Americans.
Private banking offers the same high income as a stockbroker or investment banker, but it comes with much less stress. Rather than spending a typical workday in a cramped cubicle poring over market figures, or wedged into a sweaty, crowded trading floor while you shout out "buy" and "sell" orders, as a private banker you are more likely to be found courting a prospective client on the golf course or reviewing an existing client's portfolio at a country club or five-star restaurant. At the 5 p.m. bell, the private bankers can head for home, while the investment bankers settle in for several more hours of work.
Not only are a private banker's working hours less stressful than those of a stockbroker or investment banker, but they are also almost invariably much fewer in number. Calling it a day at 5 p.m. is more than a once-in-a-while treat for private bankers. You can look forward to a regular 40-hour workweek in private banking. Rather than obsessing over the nuances of the market the way investment bankers and stockbrokers are forced to do, a private banker's career centers more around relationship management. Workers in these other positions take care of a lot of minutiae on behalf of private bankers and their clients.
This leaves you, the private banker, with your workday free to woo potential clients and treat your HNWI clientele to rounds of golf, happy hours and helicopter tours of Palm Beach. Most importantly, you can punch out in time to catch your son's junior varsity basketball game.
As a private banker, your interactions with other humans are more meaningful than frenetic phone conversations or shouting back and forth over a cacophony of voices on a trading floor. Meetings with clients can be quite fun. HNWIs usually want you to meet them on their turf – and, quite often, their turf bears more resemblance to a playground than a stuffy business environment. The golf course, rather than the boardroom, is much more likely to serve as your venue for building rapport and discussing investing strategies with your clients.
Meeting with your HNWI clients in their natural habitats enables you to get to know them as people, not just as units on a sales board. If you are a true relationship builder, this means something to you. With the work/life balance private banking offers, your personal relationships outside of work have a better environment to thrive. You get to see your family on a regular basis, and you'll even have time to go out with your friends. (For related reading, see "Which Are the Top 10 Private Banks?")