Investment management involves creating, monitoring and optimizing clients’ financial portfolios. The profession can be pretty lucrative: Top financial managers make more than 4.5 times the median annual pay for all professions, according to data from the U.S. Bureau of Labor Statistics. But is investment management a good career path? We spoke to industry professionals to learn the ins, outs, pros and cons. In this guide, we cover:
- What Is Investment Management?
- What Do Investment Management Jobs Pay?
- Pros and Cons of Investment Management Careers
- How to Become an Investment Manager
What Is Investment Management?
Investment management professionals manage financial portfolios and help clients achieve important financial goals. Clients include individuals or institutional investors, like corporations, insurance companies, pension funds or charities. Their financial portfolios include stocks, options, bonds, mutual funds, real estate, annuities and commodities.
Investment managers work closely with their clients to develop and execute a short-term and long-term investment strategy based on market conditions and investors’ risk tolerance and personal goals. In terms of day-to-day duties, investment managers might:
- Create investor profiles based on financial statement analysis, monetary objectives, risk appetite and other relevant information
- Propose suitable investments based on investor profiles
- Evaluate publicly-traded stocks or companies
- Recommend stocks to clients
- Optimize a multi-asset investor portfolio by executing timely stock trades, weighting assets and more
- Monitor client portfolios and calculate their Key Performance Indicators (KPIs)
- Update and field questions from clients regarding all of the above
Enroll in a free Forage job simulation and you’ll be eligible for insider tips on how to prepare for that final round of investment banking interviews.
What Do Investment Management Jobs Pay?
The median annual pay for financial managers was $131,710 per year in 2021, according to the U.S. Bureau of Labor Statistics. The top 10% of earners made a median annual pay of $208,000 — 4.5 times the median annual pay for all professions ($45,760).
Financial analysts — a typical entry-level position for aspiring investment managers — made a median wage of $81,410 in May 2021, nearly twice the median annual pay for all professions, the bureau found.
“Investment managers are very well paid, especially at the senior level,” says Shaun Martin, owner and CEO of Denver Home Buyer and an investment adviser based in Denver, Colorado. “In addition to a competitive salary, many investment managers also receive bonuses and other benefits, such as stock options.”
Pros and Cons of Investment Management Careers
We asked the experts to outline the pros and cons in this field to determine: Is investment management a good career path? Here’s what they said.
- High compensation and good benefits.
- Growing industry
- Satisfying work
The high-earning potential is a prominent perk of an investment management position.
“It’s also a career that lends itself easily to starting your own business, giving you a wide degree of independence and control over your time,” says Joseph Hogue, chartered financial analyst (CFA) and investment expert at My Stock Market Basics.
Beyond the handsome compensation and (potentially) flexible work hours, investment managers may find the work itself highly rewarding.
“Working with a variety of different families and companies keeps things interesting,” Tony Montini, Vice President, Registered Principal at FIG Capital, Inc., says. “You’re not doing the same thing every day. Seeing these people succeed over the years is fulfilling.”
Moreover, the industry itself is growing. The labor bureau projects employment in the financial management field will grow 17% from 2020 to 2030, with an average of 64,200 openings each year, primarily created by job transfers or retirements.
- High stress
- Barriers to entry
- Tricky work-life balance
But, while positions are expected to grow, getting one — or a client’s business — isn’t exactly a given.
“Investment management is a highly competitive field, and it can be very difficult to get started in the industry without a lot of education and experience,” Martin says.
Some people might find maintaining work-life balance difficult, given investment managers often need to field questions from clients on nights or weekends. They also need to monitor market conditions and economic trends closely.
“This job is all about making the right financial decisions based on the ever-changing economic climate,” Jason Porter, a senior investment manager at Scottish Heritage SG, says. “This need to be alert can make this job very exhausting unless you are interested in such matters. So, like most professions, you must only pick this if your temperament matches to the job description.”
Another potential stressor? Events beyond your control can affect your performance — or the performance of your clients’ portfolios at least.
“No one saw things like 9/11 or COVID-19 coming, but they severely affected the markets,” Montini says. “It’s hard to watch your friend’s portfolios decline when thing like that happen and you’re in charge.”
Fidelity Investment Management
Experience a job in investment management firsthand with this free job simulation from Fidelity.
Avg. Time: 5 hours
Skills you’ll build: Investment management, critical thinking, portfolio construction, industry research, PowerPoint, company analysis, market research
How to Become an Investment Manager
To get started in the industry, you’ll likely need a business, finance or economics degree.
“A bachelor’s degree is the minimum requirement for most entry-level positions, but many investment managers have master’s degrees or higher,” Martin says.
To gain experience, you’re likely to start with an entry-level finance job, such as underwriter, loan officer, research associate or financial analyst. (Learn if, in general, finance is a good career path.)
As you work your way into more senior and formal investment management positions, you’ll likely need to register with the Financial Industry Regulatory Authority (FINRA) or the Securities and Exchange Commission (SEC).
Regulatory licensing requirements vary by role, company size and location. Beyond that, you might want to pursue various designations to stand out in this competitive job market. These most commonly include the Chartered Financial Analyst (CFA), Certified Investment Management Analyst (CIMA) or Certified Financial Planner (CFP) designations.
Core Skills Required
- Communication skills
- Research skills
- Analytical thinking
- Time management skills
- Math skills
“You’ll need to be able to crunch the numbers, but computers are automating that part of the career,” Hogue says. As such, he considers communication skills the most critical for financial managers and advisers.
“You have to be in constant contact with clients and be able to articulate complicated strategies in simple terms,” Montini concurs. “You have to remind yourself that the people you’re working for hired you for your expertise because they don’t have the time or ambition to learn it themselves.”
Explore other career paths:
- Is Commercial Banking a Good Career Path?
- Is Technology a Good Career Path?
- Is Business Services a Good Career Path?
Image credit: bnenin / Depositphotos.com