Technical and Soft Skills for Wealth Managers

Technical Skills

Private wealth management resembles both an art and a science. That is, a wealth manager needs to have the professional aptitude to understand the client's financial goals, objectives, and constraints, as well as the financial acumen to recommend appropriate investments and portfolio management solutions. In short, wealth managers need both technical skills and non-technical (“soft”) skills to succeed in their advisory roles.

Technical skills represent the specialized knowledge and expertise necessary to provide investment advice to private clients. Examples of technical skills include the following:

Capital markets proficiency: Private wealth managers need a broad understanding of capital markets and asset classes, as opposed to a specialist viewpoint.

Portfolio construction ability: This refers to the ability to construct portfolios that are appropriate for each client's financial situation. Specifical knowledge of assets classes and modern portfolio theory are important.

Financial planning knowledge: It is often the case that wealth managers lack specialized knowledge regarding estate law, taxation, or insurance. These knowledge areas are important for wealth managers because they can add meaningful value to a client and can interact more effectively with the other professionals who serve the client.

Quantitative skills: Given the need for investment analysis and portfolio construction, quantitative skills are critical for private wealth managers.

Technology skills: Technology is used to manage client portfolios and improve efficiency in delivering advice and services. This software includes:

• Portfolio optimization software.
• Simulation modeling tools.
• Portfolio management software.
• Portfolio accounting and performance reporting packages.
• Customer relationship management (CRM) software.

Language fluency: Language and communication can be important for multi-national managers.

Soft Skills

Soft skills typically involve interpersonal relationships, that is, the ability to effectively interact with others. While soft skills are more qualitative and subjective than technical skills, they are critical nonetheless in the practice of private wealth management. Soft skills include the following:

Communication skills: Since wealth managers interact extensively with clients, strong communication skills are essential. Communication skills should include effective spoken, written, and presentation abilities.

Social skills: Empathy and the ability to relate to others are critical skills for wealth managers, especially when delivering bad news to clients, especially poor investment performance.

Education and coaching skills: Education and coaching can be tailored to the level of sophistication of their clients by effective wealth managers.

Business development and sales skills: Managers often play a leadership role in their firms' or practices' new business development.

Question

Wealth managers need an in-depth understanding of estate tax law:

1. True.
2. False.

Solution

The correct answer is B.

Wealth managers are typically not experts in specialized financial planning fields such as estate law, taxation, and insurance. Wealth managers need a working knowledge of these related fields that can add meaningful value for a client and can more effectively interact with the other professionals who serve that client.

Portfolio Construction: Learning Module 4: Overview of Private Wealth Management; Los 4(f) Describe technical and soft skills needed in advising private clients