The institutional side is dominated by transactions. Personal relationships are secondary to product performance. On the private side, the relationship with the client is paramount. The manager must become a trusted advisor for the individual or family through a rapport built over time. While performance is always an important factor, an individual client is less likely than an institutional client to pull his business after one or two bad quarters.
People do business with people they like.
Taxes are a key factor when dealing with private clients, especially capital gains, gift, and estate taxes. A manager's role is often defined by his effectiveness in dealing with a wealthy family's gatekeepers, i.e., high-ranking employees in a family business, accountants, attorneys, and other advisors. There is a lot of interest in the field right now, because it is one area of the investment business that is growing rapidly. Portfolio managers who want to work in private asset management should make sure that they possess the necessary people skills. But because there was a lot of activity in their accounts over the year, many clients faced very unpleasant tax repercussions.