Simply put, an asset manager’s job is to make sure that the savings/assets/investments of clients grow, whether the clients are super-rich or are working-class people hoping to lead a dignified life after retirement.
Asset managers choose the investments that their clients could make—stocks, bonds, pension funds, retirement funds, hedge funds, institutional investments, retail investments, insurance, etc.—with the objective of increasing the invested wealth. They make their choice based on economic conditions and their clients’ objectives and appetite for risk.
Students and graduates considering financial careers think of investment banking as a first option. But what should make asset management equaling appealing is that asset/fund managers have the freedom to take investment decisions on their own.
Here, we try to find out how you can equip yourself for a job in asset management and build a rewarding career.
You need at least an undergraduate degree to get into asset management. But, as Investopedia points out, there may often be no such requirement across the board, though a degree is certainly an advantage. Even people who haven’t completed college manage to get a look-in, but rarely.
The big companies prefer candidates with MBA in Finance or CFA (Chartered Financial Analyst) as postgraduate programs help students gain knowledge of financial analysis. Just as good as advanced degrees are professional credentials offered by finance associations: for example, besides CFA, you can go for CFP (Certified Financial Planner); CIC (Chartered Investment Counselor); or CIMA (Certified Investment Management Analyst).
Knowledge of accounting and statistics is essential, and a degree from a university or a community or an accredited online college would stand you in good stead.
Quant/analytical skills (number-crunching and preparing financial models; the ability to analyze massive amounts of data) and managerial/organizational skills (quick decision-making; carrying a team along) are among the basic talents that you require. You need to be comfortable with the statistical software program SPSS and Microsoft Excel. You should be, or become, well-versed in financial modeling and statistical modeling.
The other skills needed are a passion for the financial market and investment services and sound judgment. A basic understanding of the market is expected from new recruits, so that in-house training can build on it.
The top companies also look for global skills, that is, the ability to work in different countries, which involves knowing a second language besides English. You could take language classes, and if possible, travel abroad to experience cultures.
Qualitative skills are also important. For example, if a popular perception is created that a stock is going down, a fund manager will have to get to the bottom of the story and get the facts. Have the fundamentals been affected so as to worsen risk permanently, or is quick redemption round the corner? For a stock that’s doing well, do the investment value and the risk-to-reward ratio remain unchanged?
Like other finance jobs, a good way of starting out is to gain a financial-planning or banking internship. If it is in a good company, an internship gives you some experience in managing portfolios and networking opportunities, besides looking good on the resume. Your professor or teachers can give you a tip or two about where to apply for an internship.
As a job aspirant, you would do well to understand the various roles and career paths in asset management. It would be smart to choose a role or a path matching your education and also your interests, but don’t be too choosy.
The two main types of roles in asset management are investment and distribution. In investment roles, graduates start work as analysts, evaluating companies and products and the future of these firms and products. They can come up with their own investment ideas for their field.
After five to seven years, with experience researching market patterns, companies, and products, they can become fund managers themselves. On inputs from analysts, fund managers or portfolio managers make investments based on their area of expertise, such as real estate and oil industries, and their focus, such as countries or other geographical locations.
Distribution roles involve marketing, sales, product development, client-servicing, and selling fund-management services to investor clients.
There are various other roles, such as financial advisor, fund accountant, economist, salesperson/marketer, trader, and tech specialist, besides back-office staff.
Middle-office jobs are also available in asset management just as in investment banking: for example, compliance, technology, and operations roles, besides performance evaluation and risk management.
Many MBAs join asset management companies as researchers or analysts. They may have to work for at least two years before they are considered for fund-manager positions. Keep in mind that some companies don’t consider MBAs vital for their success. An MBA may be preferred for a manager or marketing post, but a CFA is a better choice for a role as portfolio manager, says wetfeet.com.
A candidate has good chances if he/she has handled at least smaller portfolios at institutional asset-management firms or private banks that offer services to the super-rich. It all depends on your ability to grow your clients’ wealth. If you can show you have done that in some way, then you stand a chance.
Aspirant undergraduates should learn statistics and accounting to be able to handle financial modelling and number-crunching. They can seek analyst positions, though they will have to face stiff competition from MBAs. A good idea would be to join an asset management firm for a job in sales, marketing, operations, or trading, and then do an MBA or CFA.
Once you have formed a rough idea of what interests you and what jobs are likely to come your way, given your education, skills, and whatever experience you have, focus on firms that may offer you a position. Try to develop a data bank of contacts among finance professionals through networking and through LinkedIn.
If you are a fresh graduate, use the services of your college placement officer. Of course, there is also the social network. You could also attend campus recruitment fairs. Search firms may not be able to help you much if you are a fresher, points out a wikiHow article.
If you find an asset management job that you feel is not quite up your street, accept the job, nevertheless. Most companies won’t take you straight into asset management unless you can show you have done two years in a support role, such as researcher, analyst, or trader, points out a blog on www.schweser.com.
You could try to get a position matching your education/interests later. As an employee, the company already knows you, and you hold an advantage over external candidates. Remember that many beginner jobs have career paths that take you much higher up: for example, analysts become portfolio managers and traders.
Impress your boss with your initiative, ability to work hard, and willingness to help. If you are in client relations, for example, provide outstanding service. Be creative, and try to use new strategies for research and fresh ways to make investments, besides non-typical ways to promote your company, for example. While in a support role, consider every day at work as a series of interviews.
Meanwhile, get that CFA or MBA, so that you can start to climb the ladder in a couple of years. Some companies view both these qualifications in the same light. Some do not, and prefer the CFA. The CFA charter is a highly respected qualification in the finance industry, but it takes a lot of hard work and time to obtain.
New technologies quickly find their way into asset management, and you need to stay updated. Besides, read news about your industry and about companies.
A couple of warnings: although you can be assertive, never go out of the bounds of propriety; work can put you under intense pressure, and burnout is common, so take things in your stride; if you feel you’re being treated unfairly, don’t stay in the company, however highly reputed.
An opportunity for a job change or a career move may come some time, and you should evaluate it without fear. You may even be able to become an entrepreneur and open your own fund management company in the future.
Career tracks for MBAs include buy-side research analyst, sell-side research analyst, portfolio manager, financial advisor, institutional relationship manager, and private banker. A buy-side research analyst, who conducts financial research of companies as part of a team, can expect a salary of $150,000 and up to one million dollars in a Wall Street firm. A sell-side research analyst, who makes investment recommendations to clients, can hope for a similar remuneration.
A portfolio manager, a career milestone for analysts, who usually get there in four or five years, could earn millions of dollars. A financial advisor, a senior position that involves selling investment portfolios to clients and comes after eight to ten years of experience, receives incentive-based salaries besides commissions, which are a big part of the remuneration.
A relationship manager, a mediator between an asset management company and its client, is a middle-level job that offers $100,000 and $175,000, according to www.financewalk.com. A sales manager, who is in charge of increasing the client base in an operational geographical area, can hope to earn $150,000 to $500,000.
Among entry-level jobs are fund accountant (which may require only a basic degree in accounting), junior research analyst, economist, and quantitative analyst.
Although both asset management and investment banking are affected by global events and economic upheavals, crises affect asset management less, as was evident during the 2007-2009 financial crisis, when many financial institutions closed down their investment banking units.
One reason may be that mergers and acquisitions, bread and butter for banks, are affected during an economic downturn, leading to loss of investment bank jobs, says a blog on the benefits of working for asset management, on www.financialinstitute.com. In contrast, asset management is not so much affected, as it depends not just on infusion of cash but also on managing the money that’s already in the system.
The job outlook for asset managers is said to be bright, as experts predict asset management to become the single largest segment of financial services.
Salaries, which were one of the main attractions of investment banking, have shrunk since the financial crisis, and asset management is now keeping pace, with fund managers now drawing as much as 90 percent of banker salaries.