So you are determined to work in finance, but still you are not that sure about where to go, whether you go on investment banking, trading and sales. While the prestige of having money is amazing, the countless stress and hours is nothing short of a bizarre.
You don’t get our point right? What we mean is that working 16 hours in total each day? Are you serious? We are sure that by just waking up on your 11 AM class is already hard for you to do. If you cannot take hours, and if you can’t even take the stress as to Sales and Trading and most markets roles are out. Well, it is not for you.
And if you see that you have no other options for you to choose aside from just working in cesspools at the back of the office, then for sure that is not true, enough with the puzzling intro and say hello to private banking.
Private Banking, so far this is the best finance job that you can work with. For sure this job could potentially give you a decent amount of money by just talking business and even schmoozing clients, but still you are allowed to have life semblance, so this is private banking and be it.
The only downturn that we see is that, breaking things together than you just normally think, unless you have a circle of wealth friends or family that you can worth with your internship. So if not, just keep reading this and you will learn three of the most common methods for you to break in on private banking.
So the question again is “private banking, what is it?”
In our past topics we clearly describe private banking. A brief summary was laid in connection with wealth management. Since you are here, we don’t want you to go to it and leave this amazing content that will help you understand more about private banking.
Private banking is just a specialized service in bank. The mentioned specialized service is generally offered to clients tagged as wealthy. These clients who are tagged as wealthy for sure will have a different needs as to what normal people does and or course your private bank knows it and will cater those special needs by simply offering with a personalized banking service of their choice.
These specialized services include management in discretionary portfolio, trust planning, estate planning, and advice in investment and even structuring wealth to secure future to the fullest.
So therefore the asset manager is there, it will work as the one who will manage the money of the institution, but in private banking or wealth management, the funds are managed individually. These individuals who are qualified to receive the special treatment by bank are those who have considerably high amount of asset in the bank.
They are High-Net-Worth clients.
Private bankers help them to invest the money they have. But usually, banks have certain requirement to individual before they become illegible to received the special treatment, but considering the minimum amount, it usually around $2 million, with average of $5 million.
As private banker, the usual judgment of clients was based on many factors, but most of the time they don’t matter if the asset was on AUM (assets under management). The asset under management is linked directly to the overall fees that are being charge, and so with the salary that is directly relative to both.
So for you to stick along the job in the long haul, personnel’s in the private bank section service its customers well without any problems while getting in new client each year.
The Winding and Long Road in Private Banking
So you are now in the situation in which you are in much anticipation for you on how to get a high net worth client for them to trust their asset on you in form of investment, the best smart move that you should do as a start is to strategically step back and carefully analyze the said industry.
Not just trading or investment banking, your connection and strong ability for you to schmooze something plays a significant role in succeeding career in private banking. Take note even though junior levels have at least had a good relationship with the manager side, and as for professionalism in investment it is different.
There is anomaly in finance when we talk about private banking, the sense that even a rookie banker in private sector with strong network can even rise easily and earn much compared to someone that has experience in the said field.
We have heard countless stories about rookie private bankers that just came out fresh from school pulling ridiculous salaries by just managing parent’s wealth (I’m sure you get our point here).
For the record, private banks have a propensity to aggressively ‘woo” people or the descendants of those clients that known to be in the Ultra high net worth category with hopes that solidifying relationship between bank and UHNW clients that has worth at least $10 million.
But if you‘re not that lucky to be born in the family of Ultra high net worth family, what do you think are the possible odds of getting a private banker job and how you could make things happen? So, if you are just starting out from scratch with zero clientele, we are sure that you can enter the industry as private banker.
For the record, number private banking groups bring in the ‘rookies’ or shall we say fresh graduates that will work as management associates to prepare them on the job, but considering the traditional routes of becoming a professional private banker are not that glamorous.
Well, we have here our three common methods for you to break the barrier when you plan to enter private banking career. Take note: you need to focus on the relationship or the management roles not on the investment on professional roles.
Route #01: You need to Move up all the way through Private Wealth Management ladder
First thing to consider, if you can’t bring clients that are considered high net worth in money, they the best thing for you to do is to start from bottom. In the wealth management world this is called as:
This is also known as consumer banking or mass market, this is considerably easier for you to get in, a job segment connected to private wealth management. And to tell you frankly, the starting pay for this kind of career as startup is bit lower but the attrition rates of it is high. Bank has this belief to hire more and more employees that will generate wealth from them, knowing that most of them will leave the institution and let the bank handles the accord.
As your breaking point, you need to consider personal banking as your connection towards getting good negotiations in the long haul. This is because the service is retail to the client towards their banking account.
In Asia for instance, a personal banker is usually stationed at every branches of the bank so when a potential retail client opens his intention to invest money, they will then be referred to a personal banker that will give them guidance or advice on the right way to do it.
This points out that anyone can be considered a client in retail, but this time the banking deal is smaller than the actual product that is offered to these clients in the retail and of course they are not that sophisticated to consider.
For those individual out there so determined to on a private banker career, you first way entry of it is personal banking, so you will be getting your experience on the transactions while learning the ways for you to properly advice clients on that the things that they will do on the money that they have.
If you can put in hours and yet not burning yourself spending countless hours each day telling your clients for them to put their money on municipal bonds, well for sure it might build a decent development of your portfolio for you to move to the next ladder of your career and this is privilege banking.
This time, this is the catch all or the intersection of private banking and personal banking. The people who are qualified on this type of segment vary on bank to bank. But take note, bank usually set qualification for this. A client is required with a minimum of $300,000 to $2 million fund in account.
With client passing the requirement, privilege bankers then offers the client with products that are available to the private banking clients. So as the truth to be told, aside from giving access to more exclusive funds and the private equity funds, the privilege bankers and the private bankers in the same manner has similar jobs.
While a client is being move to privilege banking, this mean that they are considerably privilege, in some situations bankers rather stay as long as the clients remains on the service.
While the overlapping of clients might happen in some segments, experienced banker on privilege sector have sizable portfolio on its clients and fair number of clients might not quality for the private banking account service.
So rather than by just starting to scratch, the privilege banker can simply choose to stay put on the assigned segment and continue to increase customer’s goal. When you ironically move client to private banking, it may result to income loss if only few clients qualify for the said tier.
But if your client chooses to take the opportunity, then they have the option to move to private banking
This is now the Holy Grail for you to achieve private wealth management. This time you are now dealing with big ‘kahunas’ (people with high net worth potentials), with larger accounts and this time you are now slowly climbing the rungs, this time we are sure that you will be earning decent paycheck while enjoying a cushy lifestyle (meaning at the level of the seniors).
It is not uncommon for private bankers to have time playing golf with clients for them to seal a certain deal or whatever it takes, and knock off the day around 4:00 to 5:00 am in the morning on the next day.
If you have built strong relationship with your client with solid growth in AUM, your bank does not care anymore to what you do with the time you have, this is like how MDs in the investment banking are judge 100% on fees being generated.
To think, the entire process is almost equivalent to those professionals on the poker, you are now starting a bankroll in small steps, playing small stakes in the table while you are honing the craft. So as you go along with it and get even better, you will then move up to the next ladder or the middle stakes tables and if you are that talented or hard working, then eventually you will grow the bankroll to size wherein you can start playing the leagues on the bigger net worth department.
Route #02: Start as assistant in Private Banker’s
As we said we have three methods, but this can be a less trodden method for you to become a private banker, you can do it so by simple starting as assistant of a private banker.
As to the job description, the assistant of the private banker is tasked to fulfill all administrative needs of private banker or small team private bankers.
For sure, you will be dealing with these settlements, the documentations and to make it sure that bankers don’t have conflicts with the schedules.
You will get a chance to speak directly with the clients, but there not much chance for a meaningful interaction. Your chances of making switch from an assistant to a banker will be unlikely, and it is obviously difficult to move from back office to front.
But don’t lose hope, as what we said. I have personally seen some of my friends who have this kind of transition. Meaning this type of transition will be possible to every people out there who have the right courage and knowledge.
In fact you have two effective ways for you to do it.
The team of bankers or private bankers that you are working will throw a bone by simply giving you some small selection of clients that they have outgrown. So from there, it will be a sink or swim.
For sure, your private banker neither leaves the company nor retires, so therefore when that happens, the bank department will be reorganized and restructure the personnel’s and your boss might decide to throw the bone at you. well, this depends on who they like you and your performance record, meaning you have chances of getting substantial portfolio of clients for you to get go.
But unfortunately, situations like this are low. You don’t have to develop much investment skills as private banker assistant, because you can’t offer that much outside or you need to be a really nice person in your environment.
The point here is to live your life by mantra, but remember you can just rely on your dream job as it could not happen in the long haul.
Route #03: Move from One Finance Area to Another or Start as Intern and continue evolving
If the first two methods don’t work with you, you can simply start at personal wealth management internship, so this is an option for you to be hired full time and for sure the rates vary and you become involved in a junior role and as you go along with the personal wealth management you will move on the next ladder to personal then to privileged then up to the holy grail the private banking category.
In some scenarios, situation varies depending on bank and the region where it is located, and it is also possible for you to move from different area to another, like investment banking.
Seeing a senior level banker doing thing like this is rare, because the difference based on skill set is very much in gap. But sometimes associates and even analyst is impossible move from one another if bank is seen to fire and hiring another.
You have the right to move from one bank to another, you can move to another private banking this is due to the good relationship you have built with the manger or the person who is in charge on the investment that you have. This also means that your track record and experience matter a lot.
The process in the interview is to be “fuzzier” and tackles on your main motive why you want to private banking career than technical questions. Of course, the downside that we see is that you will be moving into junior role without any client list wherein someone move up to the hierarchy in which most private banking have that they can bring along with them when they move away.
So you want a banking career?
Wish you best of luck, for the record banks are reputably fussy when it comes to hiring. Let us assume that you are one of those who are considered lucky who have given an opportunity for a life changing interview, what will you expect? So we decided to include this as bonus point for you to complete your private banking career a success.
We have here 70 of the most comprehensive banking interview questions known.
Some questions that we have are under the entry level and others are like encountered for middle ranking roles. But, the greater specificity and seniority, the eccentric the questions it will be, and for sure greater effort will be made by the interviewer for them to confidently establish a genuine value from you to the future role that they will be entrusting on you in the future.
For those who are under the junior category, expect a quiz on finance and interest. For general roles, expect question about ethics, cultural and your main reason about entering the job.
The ‘why questions’ of banking
Generally, banking sector needs hard work. Meaning, if you are under the entry level, your recruiters will ensure that you know things and you can handle them with confidence, so when you are answering question on “why banking”, you need to answer it within your heart and based from what you have learned and also it should be specific and original.
You need to avoid generic says and inquisitions. Doing this might help banker for them to refer on the things spoken (in the sense that they have work record on the firm that you have worked in the past).
You need to carefully talk about the passion you have in the industry. You can explain how rewarding working in a banking sector than just expressing your interest in the strategic planning and financial modeling. You can even suggest entrepreneurialism experience that you have on your past dealings with clients and other related cases like this.
Showing your interviewer how committed you are on the career, shall we say the impression of being “super committed” is a plus.
1. Why is that? I can sense that you are an entrepreneurial type of person, but you are willing to work in the banking sector?
2. Banking career? What attracts you most with this job?
3. What lifestyle are you expecting with your banking job?
4. Why choose banking not consulting?
5. Do you really know what you are doing now?
6. What will be your plan if you are not assigned in finance section?
7. Do you have knowledge background on banking lifestyle investment? Do you know the potential problems that could happen on it?
The ‘why choose this bank’ questions
You don’t just regurgitate so easy for you to find verified information on public data. On the first hand, you must do your assignment carefully, meaning you need to make sure everything and do an in depth study on the information about the firm that you are going to work with in the future.
Sadly, most people don’t bother doing their assignments. They don’t usually do research. Well, doing it increases your success rate being chosen as the one, this will help create a difference on you to the other applicant applying for the position.
Always remember that all your answer in the entire question thrown at you should be specific, you need to device an answer that will make the bank stand out. For instance, you are aiming to work in a bank that has strong connection in Asian market.
8. Do you have any information or if any what is the most important deal that was completed by our bank in the past 12 months?
9. Do you know our current price in stock?
10. Do you have any idea about our bank’s biggest threat in the regulatory at this very moment?
11. What do you think are the possible weaknesses and strengths on this division?
12. How would you differentiate our firm from others?
13. Who do you think is our major competitor? What are the possible opportunities and risk that we may face?
14. Tell me all the things that you know about the business model of our bank.
15. In which area of business do you think we are strongest?
15. Which area of our business is strongest?
16. Do you know our CEO? Who is it?
The ‘why this job’ type of questions
To a certain extent on your focus to the main reason why you choose the career, in this part you need to carefully focus on the positive things that you can carry on. Think about the things you have done in your previous jobs that will suit you in the future job that you want. Make sure to share detailed information for you to respond it aptly.
17. Do you know the requirement of the position that you are applying with? How do you think it will match on you with those requirements?
18. Why should we hire you in the first place? (This is the most common question that you should not miss).
19. What do you personally think this career entails?
Remember that brainteaser type of questions are commonly focused on attitude and method, it offers information for them to prepare potential candidate in the investment banking jobs. Naturally, bank owners want to know your personal thought and the knowledge you possess in your attempt to solve a certain solution. For sure, there is no hard answer for its questions.
20. Do you know how many pigs are living in China?
21. If a snail climbs 10 ft pole. It climbs 3 ft every day and it sleeps during night. While the snail is sleeping, it sites down one foot. When do you think it will reach top?
In this question, you might think that the snail climbs on an average of 2 ft. a day and I possibility of reaching the top of 10 ft. pole on the fifth day. The answer is wrong, it is on the morning of the fifth day, the snail then starts climbing out at the 8 ft. mark after it slides down from nine ft. mark at night. Therefore, it will reach top of pole 2/3 of the way on fifth day then stops, since there is no more else.
22. You have 8 blue socks and eleven black socks in your drawer. It is clearly stated that they are identical on color. You must then select your sock in dark. How many socks at minimum will you take out on the drawer before you can get the matching pair?
The smartest answer is three. 2 socks might be different, but for sure the third sock should always match the first or the second sock.
The market knowledge type questions
The knowledge in current market cannot be prescriptive, the definition changes every time. So you need to make sure that you know the recent key metrics in the market and have your strong points on the market trends and selection of the investment ideas.
23. What is Dow Jones average?
24. What do you think is the base rate in the Bank of England/ the rate of its fund this morning?
25. Explain the main difference between market makings and prop trading?
26. Would you invest in Apple stock and if you don’t want to invest, why?
27. We would like to hear your personal opinions on Greek Crisis or what is going on in England?
28. Where do you think the treasury yields go?
29. Would you willing to invest in US real estate? Why?
30. Do you think our interest rate will go up or go down in the next 2 years? Why?
31. What has market doing? Why? What possible effect it might do in the next 12 months?
32. Share something about stocks that you follow and tell me why, should buy those stocks.
33. Do you know what yield curve is now?
34. What are the factors in driving M&A sector? How do you clearly see them in the next 12 months?
35. What is the standing on the current market?
36. The Greek default, how would you hedge them?
37. Where can we see you on the next two years?
Before anything else when you step in a financial interview, you must carefully know and be familiarize with the CV you have. Make it a point that you have enough knowledge for you to answer questions in detailed about any aspect like the school you graduated, the past experiences as intern, and the previous role that you have.
If you don’t know the S.T.A.R. methods research it now. The method is to fame your responses to the question about the past experiences you have. For sure, examples on those situations will be needed, you be asked to perform certain tasked, and the actions that you achieved.
38. Tell us you’re the deal that you did in the last 6 months.
39. Tells us something on your Resume or CV without you looking at it.
40. Why leave the last position you have?
41. What failures you have made in the past job that you have and how did you learn from those experience?
42. Share to us your best accomplishment in your past career.
The banking questions “technical investment”
If you are interviewing a junior category job, you knowledge on technical terms is significantly necessary. This idea is reechoed by other interviewer in finance, in preparation for young and aspiring professionals. Your bank wants to know the very basic, so even though you have not worked in the finance in the past.
43. Beta definition – it tells you the possible price of a security as it moves in relative portions in the market.
44. CAPM definition – the CAPM stands for “Capital Asset Pricing Model”, this is a special model designed in finding an expected return on the investment made and therefore appropriate rate of discount for company’s cash operations.
45. Do you know what dilution and accretion is?
When we talk about accretion, t his is about asset growth in form of expansion or addition. Accretion process occurs through company development internally or by mergers and new acquisitions. On the other hand, a dilution is in contrast to it. The process of reduction of the earnings based from share of stock that normally occurs when new shares are being issued or stock changes are converted into securities.
46. Are companies having the same EV if both of them are them are trading the same P/E.
47. Tell me something about DCF.
DCF simple means that it proposes the value of the productive asset that is equal to the present amount of cash flows. You will have to talk about the relative valuation, in the sense that you give them value on the peer based measures and the ratio of earning.
48. What are the possible pros and cons and the different methods of valuations?
Basically, there are 3 DCF methods, public comparables (comparing traded companies publicly) versus transaction comparables (similar to previous transactions that have been made on the trading).
Each of them as its major advantages: DCF enables the maximum worth of a company, not the assigned market value into it. The transaction comparables takes the synergies that are expected to flow during the deal.
49. How these three financial statements correlate with each other?
50. Working capital, how would you describe it?
A working capital is the allotted amount or the company’s liquid asset on hand. It is also the current asset and less the liabilities and cash.
51. Can you give us information on t he major items of Cash Flow statement?
52. Do you know DDM? Tell us something about it.
DDM stands for dividend discount model or the valuing of the company.
53. Which do you think is higher, the overall cost or the equity or the overall cost of company’s debt, why?
Your equity cost should always be higher than your cost of debt. This is because debt holders will have less risk than holders of equity not getting their funds back and therefore willing to cater lower returns in the future
Debt is normally secured against the asset of the company and therefore will have a less risk for creditor, in which they can seize those company assets if something bad happens in the future. For instance, the company declares bankrupt, the debt holders will received a proceeds on liquidation of equity holders.
And also debt holders will receive interest on the investment they have made in all scenarios (whereas an equity holders only paid by the dividends if company getting profit). Remember that debt tax is deductable.
54. Why does company prefer choosing finance equity than finance to debt?
Many companies are choosing equity financing because they are less risky as to consider (no paying bank). This means that you will have more liquid cash. Therefore you won’t channel profits in loan repayments. Remember that equity investors have longer view in its terms. And the company will have credibility. You can even tap existing investors to help develop more the business.
Banks are realizing carefully about excellence is not just making huge amount of money. Therefore, you should expect questions relating to values and you should come with examples about tackling ethical dilemmas.
55. Have you worked in bad team in the past? What steps have you done to make things better?
56. What was the most ethical decision you have made?
57. Can you share example of person that has integrity, why?
58. Can you give us example if a person has credibility, why?
59. Can you describe the type of leadership style you have?
60. What will you do if situations that you don’t have to work just to get money? How do you think that relate to the job that you are applying now?
61. Was there a time you bend rules just to get a certain job done? When was that and why?
62. Have you in a situation in which you had made a mistake then admit it?
63. What type of people that you can work the easiest, why?
64. How you personally handle stress?
65. What makes you unique or special towards other? Give us one word that will describe you as the best.
66. How do you think your colloquies will describe you?
67. Can you share to us the last book that you read.
68. What was the most risky action you have done in the past?
69. If you have $1 million how will you spend it besides doing investment?
70. You plan in the next five years?
Table of Contents
- 1 So the question again is “private banking, what is it?”
- 2 The Winding and Long Road in Private Banking
- 3 Privilege Banking
- 4 Private Banking
- 5 Bonus
- 5.1 So you want a banking career?
- 5.2 We have here 70 of the most comprehensive banking interview questions known.
- 5.3 The ‘why questions’ of banking
- 5.4 The ‘why choose this bank’ questions
- 5.5 13. Who do you think is our major competitor? What are the possible opportunities and risk that we may face?
- 5.6 The ‘brainteasers’ questions
- 5.7 The market knowledge type questions
- 5.8 Question on related to “past experiences”
- 5.9 The banking questions “technical investment”
- 5.10 The culture related questions