Wealth Manager

Most common questions and answers used to hire for jobs in Wealth Management. We’ve compiled a list of the most common and frequently asked Questions in Wealth Manager interview. If you want to ace your job interview, then checkout these Interview Questions.

Q.1 As a wealth manager what will be your action if the client wants to do something ill-advised?
As a wealth manager, I will make the client aware of the possible consequences by expressing my opinion and will ensure that the client has discussed this with their family, dependents, etc. further, if the client is insistent then, take requisite sign offs and have a exit strategy to minimize the losses.
Q.2 What is the essential quality that a wealth manager should have?
The main quality a successful wealth manager should have is the ability to maximize returns as per the risk profile of the client and also protect the capital. As the main function of wealth manager is wealth maximization but also protect the capital, this is the quality that every wealth manager should have.
Q.3 What functions are performed by a wealth manager?
A wealth manager performs a multitude of functions which usually includes: development of client-centric investment portfolio, identify opportunities as per the investment plan for clients, manage asset portfolios, developing and implementing client investment strategy, supporting financial advisors and developing and maintaining customized asset allocation strategies for clients.
Q.4 Are there any pre-requisite to be a wealth manager?
Yes, there are pre-requisites to be a wealth manager as for the wealth manager goes without saying that should have good knowledge finance, banking and mathematics as well as must be ethical, trustworthy for managing vast amounts of money.
Q.5 List the roles in wealth management
Wealth management is a wide domain and has multiple roles on offer which primarily either are front end which markets products or deals with customer and back end which actually manages the wealth. The front end usually includes client the role of acquisition manager who finds new clients and is also called as sales role and the Business Development role for managing relationship with clients for up sell/cross sell.
Q.6 What will be the future value of Rs. 10,000 in five years from now, at an interest rate of 8%?
The future value also called as FV, is the value of an asset at a specified future date while assuming other factors to be constant and also assumes a constant rate of growth. The formula used is FV = PV (1 + r)n Hence, the future value of Rs. 10,000 in five years at an interest rate of 8% is: 14,693.28
Q.7 An investor wants to have Rs. 1 million when she retires in 20 years. If she can earn a 10% annual return, compounded annually, on her investments, what would be the lump-sum amount she would need to invest today?
Calculating retirement amounts depends upon the rate of growth of the investment and also assumes that the rate is constant. The future value formula is usually used. The lump-sum amount as per the problem, to invest today is Rs. 1,48,644
Q.8 What is EAR, if stated interest rate of 9%, compounded monthly?
The term EAR expands to Effective Annual Interest Rate and it refers to the interest rate which has adjustments for compounding for a specific time period. It is the net rate f interest an investor will earn. It is calculated as - EAR = (1 + i/n)n-1 and for the above problem it is 9.38%
Q.9 List the factors influencing the performance of a wealth manager
There are many factors which affect the performance of a wealth manager as access to data is needed by the wealth manager to take a quick call on the investment regarding its safety and growth. The major factors influencing the performance of a wealth manager are: market know-how and obtaining timely and accurate information for a financial entity or product.
Q.10 Describe risk tolerance
Risk tolerance is an essential aspect of wealth management for a client and wealth manager considers it as critical. Risk tolerance affects the financial product to invest in. Risk tolerance refers to the investor's tolerance for volatility or suffering a loss.
Q.11 Explain risk capacity
Risk capacity influences the investment options available to the wealth manager for a client's portfolio. Risk capacity refers to the level of financial capacity a client can withstand market loss.
Q.12 Illustrate longevity risk
Longevity risk is a type of risk being faced by clients which has to be addressed by the wealth manager while managing their wealth. Longevity risk is faced when the client has excess capital as there is increase in life expectancy of the pensioner thus needing a higher pay out.
Q.13 List some investment risk management strategies available to a wealth manager
A wealth manager need to address and manage risks in an investment so that the investment is safe and is available in time of need. The safety is dependent upon the risk management strategies applied by the wealth manager and the financial product type. Risk management strategies usually applied are hedging, diversification and insurance
Q.14 How you manage the client’s data related to wealth management?
Client’s data has the utmost priority for securing it as it is sensitive in nature and financial or personal details is of the client needs strict data security and data privacy measures. We use reliable service with role based access to data so that data access is provided to employees as per the role of the employee. There are data monitors who constantly monitor and audit data changes and authorizations. We conform to Europe’s GDPR and other data security and privacy standards.
Q.15 What has been your experience with automation in wealth management?
Automation has emerged as the new technology which has revolutionized wealth management. I have used RPA or robotic process automation to automate many redundant processes and made my staff more productive and quick to respond.
Q.16 What are current wealth management products you dealt with?
I am having experience with various wealth management products which included mutual funds with access to more than 300+ mutual fund schemes from 21 AMCs, portfolio management services (PMS), Alternate Investment Funds (AIF), real estate funds, unit-linked products (ULIPs) insurance product, keyman insurance and property loans.
Q.17 What do you think of most important role of a wealth manager?
As a wealth manager my focus is to provide the wealth management services needed by client at any stage of their financial goal journey so as to fulfil the customer requirement for maximum returns along with security and risk management. Adopting technologies which are more efficient and effective for the organization. Reducing costs with maximum returns without losing on security or risk management is the primary motto.
Q.18 How do you see yourself in next five year in wealth management?
I foresee a bright future as I will gain more skills and knowledge in the domain off wealth management by using new technologies and fulfilling the needs of more clients, as needed by my organization.
Q.19 What is the impact of wealth management on the goals of an individual?
Wealth management is has a high impact on an individual as the impact is both short term and long term. Wealth manager maximizes returns for the client on a continual basis hence; client gets short term benefits if investing in equity or short term investments. The long term impact is addition of efficiency and the compounding effect on the investment which develops a corpus for needs to be addressed later in life like retirement, child marriage, etc.
Q.20 How you manage subordinates in your wealth management team?
Supervising subordinates in the wealth management team that I manage, is important to me and I focus on managing subordinate as per their role in the wealth management team and their skill level. I try to have a motivating environment in the team which makes the team work as a single unit in providing wealth management services to the client.
Q.21 How do you maintain discipline in your wealth management team?
Maintaining discipline in the wealth management team or any team is an important aspect for a productive environment in the team. I maintain discipline by making every team member aware of the applicable HR rules and regulatory laws for it. Any disciplinary action if needed, are taken in private so that the employee can correct himself which will dissuade any hostile work environment development.
Q.22 How do you assign goals to your wealth management team?
I assign goals my wealth management team on an ongoing basis and involve analysing multiple factors like skill level, availability, etc. Before assignment goals are also finalized as per the SMART approach for goals definition and development.
Q.23 Why you are suitable as wealth manager?
As a wealth manager, I am having extensive experience in various wealth management products with requisite skills including: communication, problem solving and coping under pressure which is of importance for wealth management role along with integrity, ethical behaviour.
Q.24 Do you feel satisfied with your role as wealth manager?
Yes, I feel satisfied as wealth manager when I am able to provide my services to clients which resulted in meeting the requirements of the client whether short term or long term. The trust and responsibility for managing a client’s wealth in an effective manner gives me satisfaction.
Q.25 How you keep yourself updated of new trends in wealth management technologies and products?
Many new financial products are launched like we see emergence of AIF, REIT, etc as well as technologies to automate like RPA, AI, etc I keep myself updated by attending industry seminars and conferences by market leaders as available online or offline.
Q.26 What is your greatest work-related accomplishment in wealth management?
My greatest work-related accomplishment in wealth management has been the automation of client weekly report on their portfolio by using RPA within the time and budget constraints.
Q.27 What are your strengths as a wealth manager?
As a wealth manager I am having extensive experience on the new wealth management technologies and financial products. I also have the requisite managerial skills for wealth management.
Q.28 How you manage conflict in your wealth management team?
Managing conflict is the essential part of my job. Conflicts arise due to disagreements amongst the team members and which I manage by focusing on the reason for conflict. I also use conflict management technique like collaborating, forcing, accommodating or compromising as per the situation demand.
Q.29 What will you do for under performance by your subordinates in your wealth management team?
Under performance by my team member is addressed by me quickly s on a daily and weekly basis I review my team. I analyze the reason for under performance and as subordinates are not well experienced hence; their feedback is also considered to arrive at correct resolution of underperformance.
Q.30 How do you prioritize wealth management related tasks?
Wealth management involves multiple tasks on a daily basis. Tasks priority is arrived at on the basis of various factors like: the tasks relevance, urgency, cost involved and resource availability.
Q.31 How you delegate tasks to subordinates in your wealth management team?
Wealth management involves managing multiple tasks daily and, which are to be completed so that there is no deviation in performance. Task delegation to subordinates is done as per their skill level, availability and past performance.
Q.32 How do you organize information and paper work involved in wealth management?
Wealth management involves lots of information in paper mode like receipts, forms etc. We mostly use electronic data to minimize paper work. Prioritization and proper document organization, helps organize information related to wealth management.
Q.33 How you manage your time for wealth management?
Wealth management involves lots of tasks to be completed in a specific time frame. Hence time management is crucial and I apply it by using to do lists, being aware of time wasters and optimizing my work environment.
Q.34 Did you fail to achieve goals as wealth manager?
Yes, there was an instance when I failed to achieve the defined goals as wealth manager. I had planned for adding a new technology to automating a client’s form submission for a fund and for which requisite equipments procured and training imparted. But, due to COVID-19 pandemic, lockdown was enforced which stalled the planned roll out. After lockdown was lifted, we implemented the automation and achieved quicker and accurate submission of client’s forms.
Q.35 Why do you want to work as wealth manager at this company?
Working as wealth manager at this company offers me more many avenues of growth and will boost my wealth manager skills as the number of clients and financial products which your company has access to. Also considering my education, skills and experience I see myself, more suitable for the post.
Q.36 Why do you want the wealth manager job?
I want the wealth manager job as I am passionate about maximizing returns on investments and by using new technologies to automate the process for minimizing cost though maintaining the performance level with requisite security and risk management.
Q.37 What will be the formula to calculate for money requirement in 10 years if, Rs.10lakh is required in 10 years and inflation is expected to be 10%
The FV formula is used according to which the formula for the above is as: Rs. 10lakh X (1+10%)10
Q.38 Explain RESIDEX
Residex is index or benchmark which is given and calculated by NHB or the National Housing Bank. The calculation is done by a committee having members from Government, lenders and property market players. It is used for tracking housing price across India
Q.39 Name a growth asset
Equity and Real Estate, both are growth assets which grow the investment but over a long term of period instead of instant returns. They have high risks and higher return potential.
Q.40 Deduction under Indian income tax law’s Section 80C is available for
Individuals tax payer and HUF or Hindu Undivided Family can avail the deduction under Section 80C.
Q.41 Calculate the value of a debenture which yields 9% p.a. payable semi-annually and will mature in 1 year at Rs.1lakh
The present and future value formula is used. The value of a debenture is Rs. 101119.41.
Q.42 What is FCFF?
FCFF expands to Free cash flow to firm and it may also refer as unlevered cash flow. FCFF is the cash remaining after depreciation, taxes and other investment costs are paid. It is the cash flow amount for all the fund holders.
Q.43 Define WACC
WACC expands to the weighted average cost of capital and refers to a computation of the cost incurred by a company for the capital with each capital category is proportionately weighted. WACC includes all sources of capital like stocks (common or preferred), bonds, and long-term debt.
Q.44 Why to use P/E ratio?
The P/E ratio is an indicator that the amount that investors will pay against per unit of company's earnings.
Q.45 Explain the importance of P/E ratio for investment
The P/E ratio is very important for the investors as it indicates if the company's shares are underpriced or overpriced
Q.46 What is indicated by a high P/E ratio?
A high P/E ratio indicates that the shares of the company are overpriced
Q.47 A company has EPS of Rs. 20 with share price as Rs. 600/-, compute the P/E ratio for the company
The P/E ratio for the company is 30
Q.48 Will an increase in EPS is any how linked with increase in net income
No, an increase in EPS does not links with increase in net income
Q.49 What will lead to increase in the wealth of shareholders?
The wealth of shareholders wealth will only increase in relation to any increase in market value of the company whose shares they hold.
Q.50 What method will you use to value an unlisted company?
An unlisted company can be valued by using the net asset method
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