Portfolio managers often have lucrative, challenging and diverse careers. They are not only responsible for institutional investment oversight, but are also frequently able to establish personal relationships with corporate clients.
So if you’re interested in a portfolio management career path, let’s take a look at what the role entails, how to get into the sector, what rewards and progression opportunities you can expect.
- What does a portfolio manager do?
- Why become a portfolio manager?
- Portfolio management hierarchy & progressing within the role
- Portfolio manager salary
- How to become a portfolio manager
- Which qualifications can help with a career in portfolio & asset management?
- Portfolio management career outlook
- Portfolio management exit options & opportunities
- Is portfolio management a good career choice for you?
What does a portfolio manager do?
The diverse nature of this field is arguably one of its most attractive qualities. The typical day in the life of a portfolio manager will therefore involve a number of activities and responsibilities, such as:
- Consulting with clients
- Analyze how the latest financial news may impact investment portfolio
- Regular meetings with other asset allocation teams (economists, strategists, traders and portfolio managers) for market updates.
- Directing analysts and teams
- Proactively tracking asset values
- Identifying new investment opportunities
- Executing trades when appropriate.
There are a range of responsibilities involved with being a portfolio manager that can require a fairly broad set of skills. Many CFA candidates already working in this sector therefore choose to earn a CFA charter to bolster their knowledge in key areas to help them progress, rather than to exit to another financial role.
Portfolio managers are required to act in the best interests of their clients at all times. It’s essential for those, particularly in more senior positions, to be able to build trust and confidence with the client base. Managing a team of analysts in order to produce accurate and valuable reports to help guide the decision making process is also key to success.
Why become a portfolio manager?
There are several reasons why you might consider a portfolio management career . Not only does this sector offer a significant amount of professional diversity, but its hands-on nature is excellent for those who enjoy challenges. Other reasons include:
- Varied nature of work which involves analysis, client meetings, assessing market sentiment, valuations, prediction and ultimately see how your prediction performed.
- The ability to earn substantial commissions.
- This role has always been in high demand with great transferable skills.
- Investment managers can choose to work with a wide array of assets.
- Portfolio managers are held to extremely high ethical standards; crucial for transparency and client trust.
Portfolio management can be a highly rewarding career, particularly for those who gain the experience and demonstrate the talent to progress. And with prospects for future growth in the industry looking positive, there’s undoubtedly a certain level of security in following this path.
Portfolio management hierarchy & progressing within the role
For those without existing experience of working in a related role, becoming a successful portfolio manager involves several steps. This is not typically an entry level position, and it’s usually the case that anyone wanting to secure a role as a portfolio manager will first need to cut their teeth as an analyst.
One of the most common routes into portfolio management is to begin as a junior financial analyst. There are a range of analyst positions throughout the financial sector, including those involved in stocks, bonds and other asset classes.
This role involves gathering and analysing data, undertaking financial modelling, and other analytical tasks to help colleagues and managers make decisions. Junior analysts usually require an undergraduate degree, and there can be a lot of competition to land roles at the best firms. These jobs typically open up a range of career paths in addition to portfolio management, and experience can be transferable into other entry level roles in sectors like investment banking.
With experience gained as a junior analyst, the next step commonly taken towards portfolio management is to move into a senior position. It’s often the case that a masters level degree (such as the CFA Program), MBA or similar will be required to be awarded a senior analyst role, however experience and performance also counts.
A senior analyst will typically oversee one or more junior analysts, and will often specialize in a certain type of security or investment. This role includes carrying out research and analysis of investment opportunities, and communicating data and recommendations to clients and portfolio managers.
With time served as an analyst, the position of a portfolio manager is the next step for those with sufficient expertise. Initially a manager may handle smaller portfolios, which can increase in scale based on experience and performance.
As you would expect, those with higher value portfolios under management would usually receive higher levels of compensation. A portfolio manager would typically have a number of senior analysts reporting to them on various investment types, in order to be able to make decisions and provide the most suitable recommendations to clients depending on their goals.
Senior portfolio manager
Portfolio managers who perform well and have sufficient demonstrable experience may move on to a more senior role. It can be difficult to land a job as a senior portfolio manager, however for those who make it this far the rewards can be worth the effort.
Senior managers are typically responsible for multiple high value portfolios, often worth billions of dollars. In this role, a senior portfolio manager will be responsible for identifying and advising clients on the best opportunities, leading new projects and managing a team of analysts in order to make decisions.
Portfolio manager salary
What can you expect to earn as a portfolio manager?
The exact figures about how much a portfolio manager earns vary in accordance with a range of factors including location, firms, specific job titles, reputation, area of specialization, and level of experience. However, in the spirit of being helpful, here are some general observations:
Expected portfolio manager salaries in London, UK
|Position||Years of Experience||Base Salary||Bonus||Total Compensation|
|Junior Analyst||1||£30k – £40k||£10k – £20k||£40k – £60k|
|Senior Analyst||3||£40k – £60k||£10k – £30k||£50k – £90k|
|Portfolio Manager||5||£60k – £130k||£60k – £130k||£120k – £260k|
|Senior Portfolio Manager||10||£80k – £200k||£50k – £200k||£130k – £400k|
Recent data highlights that the average salary for a London-based portfolio manager is £73,586 per year. Note that this does not include an additional £28,281 in cash bonus payments on average.
These figures will naturally differ in accordance with location and geographic regions. According to US Bureau of Labor Statistics, a portfolio manager in the securities industry earns an average of $124,020, with New York’s portfolio managers recording the highest average salary of $131,690.
That said, the bonus component does play a bigger role for portfolio managers as they progress, as it is dependent on fund performances.
How to become a portfolio manager
The role of portfolio manager isn’t usually an entry level position and so it is first necessary to gain experience as an analyst in order to climb the ladder.
An undergraduate degree in a relevant field would be expected, with a masters level qualification or similar being highly advantageous to move into higher level positions. There are likewise several personality traits which serve to define a successful portfolio manager including.
- A willingness to work under pressure.
- The ability to proactively communicate with others.
- Excellent organizational skills.
- A working knowledge of the win-loss ratio.
- Appreciating both qualitative and quantitative analyses.
As well as typical routes taken to become a portfolio manager, this is also a role that’s attractive to those looking to change financial careers. In many cases the skills, knowledge and experience gained from other roles are highly transferable into asset or portfolio management.
Some of the most popular routes include switching from areas such as risk management, wealth management and investment research. Experience in investment banking and corporate finance can also be attractive to employers.
Depending on the type and level of experience, an individual might be able to switch directly into a portfolio management or more senior position without needing to first work as an analyst.
Which qualifications can help with a career in portfolio & asset management?
As well as an undergraduate degree, a postgraduate level qualification would also be highly beneficial for anyone wanting to progress in portfolio management.
An MBA is often valued by employers and can help towards increased career earnings, however can be costly to obtain. For those interested in portfolio management as a career, the question of whether an MBA is worth it should be carefully considered.
There are also a range of professional qualifications that are highly valued by recruiters. These can provide individuals with a competitive edge, as well as equipping them with the skills and knowledge to excel in the sector.
Chartered Financial Analyst (CFA)
Chartered Financial Analysts (CFAs) are highly valued by top firms and those within the professional community, and this is perhaps the most relevant professional qualification for a portfolio manager to add to their resume.
Whether you’ve achieved CFA charterholder status or are working towards it, there are plenty of reasons those interested in portfolio management might value this qualification. A CFA charter equips charterholders with knowledge and skills that are extremely relevant to asset or portfolio management, enabling them to perform better in the role. CFA charterholders also have many more opportunities due to the breadth of knowledge that they possess. There are more than 175,000 charterholders globally, and majority of these professionals work in portfolio management.
Financial Risk Manager (FRM)
Obtaining the Financial Risk Manager (FRM) qualification is another option when considering qualifications for portfolio management, which currently has more than 71,000+ certified FRMs globally.
Risk assessments represent one of the core tenets of portfolio management, and a portfolio manager with risk management expertise will represent a valuable addition to any firm, especially with a more globalized market.
Chartered Alternative Investment Analyst (CAIA)
The Chartered Alternative Investment Analyst (CAIA) is yet another certification option for professionals working in portfolio management. There are currently more than 12,000 CAIA charterholders globally. There are also some exemptions for CAIA exams for CFA charterholders, which makes this a great option for those who have already passed the CFA level 3.
Those who obtain a CAIA charter has the added advantage of alternative investment expertise, which is important when searching to diversify additional sources of investment returns through private investments.
Environmental, Social & Governance (ESG) certifications
Environmental, social and governance (ESG) is an increasingly important area within portfolio and asset management.
As a growing number of clients are embracing sustainable investment strategies, they are looking for alternative means to secure growth without negatively impacting the environment. Furthermore, many fund managers are being forced to modify their strategies in order to adopt a greater sense of transparency in terms of compliance.
In-depth knowledge of ESG intricacies will therefore represent an invaluable trait within the competitive world of portfolio management. To put this opportunity into perspective, it is estimated that 88% of all publicly traded companies have implemented ESG objectives into their overall investment framework. In other words, it pays to remain one step ahead of the curve.
Portfolio management career outlook
In the global asset management sector as a whole, the total asset under management grew to $103 trillion in 2021. With factors such as big data and improvements in technology playing a bigger role than ever, the number of financial analyst jobs, which includes portfolio management positions, is expected to grow over the next decade.
With growth expected to continue within the sector over the coming years, the outlook is generally positive for individuals interested in an investment management career.
There are a few ways in which the industry may develop going forwards, such as:
- The need to secure long-term capital wealth.
- Sustainable growth.
- An increased focus upon regulatory and compliance issues.
- A better understanding of mergers and acquisitions.
- The need for prospects who possess industry-recognized qualifications as competition increases.
Opportunities to deliver improved customer experience, as well as to increase efficiency are likely to help drive an asset manager’s success in the coming years with declining profitability expected. It’s also expected that ESG investing will be a significant growth area in this field.
There is also increased competition for portfolio manager jobs. Companies (both large and small) appreciate how the marketplace is changing and why specialization alongside knowledge is tantamount to success, hence obtaining relevant qualifications can be a key differentiator when it comes to job search.
Portfolio management exit options & opportunities
Portfolio management is a desirable career, and it’s often the case that those working in other areas of finance exit into this sector. However, what if you are currently looking to change your career for “greener pastures”?
When we consider that 66% of CFA candidates are hoping to change some aspect of their careers (job function, employer or industry), it’s worth looking at what the options are for individuals working in portfolio management.
One of the most notable advantages of portfolio management involves its broad scope. There are many different paths to choose based upon your experience, passion and personal desires. We are not only referring to seeking employment elsewhere. It is also possible to enjoy a greater degree of upward mobility within an existing firm by further honing your skill sets.
Current survey indicates that the most popular target career changes for portfolio managers is into areas such as wealth management, investment banking, private equity and investment research, where there are clear overlaps in skills and experience.
Is portfolio management a good career choice for you?
Do you have a passion for finance and have you been hoping to become more involved within the investment management sector? Perhaps you enjoy the nature of ever changing markets combined with analysis, or you are simply attracted to a generous salary.
These are some of the reasons why a career in portfolio management could represent an excellent choice. Other benefits associated with such a position include:
- New investment strategies are always being developed.
- Engaging work with new challenges and changing markets.
- Portfolio managers are able to develop personal relationships with their clients.
- The learning process never truly ends.
- The demand for these professionals has never been higher.
To maintain a balanced perspective, it is also important to mention a handful of potential drawbacks including:
- Portfolio management can be stressful, due to deadlines, performance tracking and the size of responsibility.
- The return on investments is never truly guaranteed, and losses can ultimately reduce pay.
- Competition for the best jobs can be intense, and it’s difficult to reach the very top.
However, the fact that you have read this article signifies that you are open to what the future may have in store. If you are looking for a career change or just starting your career, portfolio management could be an excellent choice.
We hope the guide above shed some light on a portfolio management career. Do you think this career path suits you? Let us know in the comments below!
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