Financial portfolios for clients are created, maintained, and optimized as part of investment management. The industry may be lucrative and according to data from the U.S. Bureau of Labor Statistics, top financial managers earn more than 4.5 times the median annual salary for all occupations.
But is a job in investment management a wise choice?
Investment management might interest you if you’re considering a career in finance and like interacting with many people. If you have the required skills, you will discover that it is rewarding and satisfying in terms of benefits and bonuses.
But what path should you pursue in terms of your profession if you want to be an investor? The world of investing, like many other professional fields, can lead you down a number of quite diverse paths depending on the decisions you make.
- 1 What Is Investment Management?
- 2 How much Do Investment Management Specialists Earn?
- 3 Advantages and Disadvantages of Investment Management Careers
- 4 How to Become an Investment Manager
- 5 How Many Jobs Are Available in Investment Management
- 6 Is a job in investment management a good career path?
What Is Investment Management?
Financial portfolios are managed by investment management specialists, who also assist clients in meeting significant financial objectives. Clients can be private citizens or institutional investors like businesses, pension funds, insurance companies, or charities. Stocks, options, bonds, mutual funds, real estate, annuities, and commodities are all included in their financial holdings.
Based on market conditions, investor risk tolerance, and personal objectives, investment managers collaborate closely with their clients to develop and implement short and long-term investment strategies.
Responsibilities of investment managers include:
- Create investor profiles using information such as financial statement analysis, financial goals, risk tolerance, and other pertinent factors.
- On the basis of investor profiles, suggest appropriate investments.
- Analyze publicly listed firms or stocks
- advising consumers to buy stocks
- A multi-asset investor’s portfolio can be made more effective by timely stock trades, asset weighting, and other measures.
- Keep track of customer portfolios and determine KPIs for them (KPIs)
- Updates and responses to client inquiries regarding all of the aforementioned
How much Do Investment Management Specialists Earn?
According to the U.S. Bureau of Labor Statistics, the median annual salary for financial managers was $131,710 in 2021. The median annual income for the top 10% of earners was $208,000, which is 4.5 times the yearly median income across all occupations ($45,760).
The median annual income for financial analysts, a typical entry-level post for future investment managers, was $81,410 in May 2021, according to the agency. This is over twice the median annual pay for all occupations.
Shaun Martin, the founder and chief executive officer of Denver Home Buyer and a financial advisor based in Denver, Colorado, claims that investment managers are compensated very well, especially at the senior level. Many investment managers also receive bonuses and other benefits, such as stock options, in addition to their competitive salaries.
Advantages and Disadvantages of Investment Management Careers
To answer the question, “Is investment management a decent career path?” Here’s the list of the benefits and drawbacks of this industry:
- High compensation and good benefits.
- Growing industry
- Satisfying work
An important benefit of working in investment management is the great earning potential.
According to Joseph Hogue, chartered financial analyst (CFA) and investing specialist at My Stock Market Basics, “It’s also a vocation that lends itself readily to beginning your own firm, allowing you a wide degree of independence and control over your time.”
In addition to the generous pay and (perhaps) flexible work schedules, investment managers might find the work itself to be quite satisfying.
Working with various families and businesses keeps things fresh, according to Tony Montini, vice president and registered principal at FIG Capital, Inc. “You don’t perform the same activity every day. It’s rewarding to watch these people succeed over time.
Additionally, the industry itself is expanding. According to the labor bureau, employment in the financial management sector will increase by 17% between 2020 and 2030, with an average of 64,200 openings annually, mostly brought on by job transfers or retirements.
- High stress
- Barriers to entry
- Tricky work-life balance
Although more roles are anticipated, it’s not always easy to land one or a client’s company.
Martin asserts that because the area of investment management is so competitive, it might be challenging for someone without extensive training and experience to break into it.
Given that investment managers frequently have to respond to client inquiries on the weekends or after hours, some people can find it challenging to maintain a healthy work-life balance. They must also pay special attention to market conditions and economic trends.
According to Jason Porter, a senior investment manager with Scottish Heritage SG, “my work is all about making the proper financial decisions based on the ever-changing economic circumstances.” “Unless you are interested in such subjects, this job can be very exhausting due to the necessity to be awake. Therefore, like with most careers, you should only choose this if your temperament suits the requirements of the position.
Events beyond your control may have an impact on your performance, or at least the performance of the portfolios of your customers.
For instance, no one anticipated events like 9/11 or COVID-19, but they significantly impacted the markets, according to Montini. It’s difficult to watch your friends’ portfolios collapse when you’re in charge and things like that happen.
How to Become an Investment Manager
You’ll probably need a degree in business, finance, or economics to start out in the field.
The majority of entry-level roles demand at least a bachelor’s degree, but Martin notes that many investment managers hold master’s degrees or above.
You’ll likely begin with an entry-level finance position, such as an underwriter, loan officer, research associate, or financial analyst, to obtain experience.
You’ll likely need to register with the Financial Industry Regulatory Authority (FINRA) or the Securities and Exchange Commission as you advance into more senior and official investment management positions (SEC).
Regulatory permits like the Series 7 General Securities License or the Series 6 Limited Investment Securities License are necessary for some [positions], according to Hogue.
Regulation licensing needs differ by position, business size, and region. In addition, if you want to stand out in this cutthroat employment market, you might wish to pursue a variety of specializations. The Chartered Financial Analyst (CFA), Certified Investment Management Analyst (CIMA), and Certified Financial Planner (CFP) designations are the most typical examples of these.
Core Skills Required
- Communication skills
- Research skills
- Analytical thinking
- Time management skills
- Math skills
The ability to crunch statistics is necessary, but computers are automating that aspect of the job, according to Hogue. As a result, he believes that for financial managers and counselors, communication skills are particularly important.
As an investment management expert, you’ll have to be in frequent contact with clients and be able to explain difficult ideas in simple terms. You need to constantly remind yourself that your employers hired you because of your knowledge rather than their lack of desire or time to learn it.
How Many Jobs Are Available in Investment Management
Next, we’ll take a closer look at some of the best financial career options, beginning with investment managers.
1. Investing Managers
Investment managers serve as advisors to their clients by assisting them in making wise financial decisions. They accomplish this by performing risk analysis, monitoring the data, and paying close attention to the market.
Even if the job of an investment manager in real life is not as thrilling as what you see in movies, it is stressful and competitive. You must be enthusiastic about the financial industry and possess strong interpersonal abilities.
You also need to be skilled in data analysis and goal-oriented. Possessing a problem-solving mindset and a logical method of thinking is advantageous.
2. Stock Brokers
Your responsibility as a stockbroker is to carry out customer orders in the market. The majority of the time, you manage the transactions given to you while working with a brokerage firm. Since the majority of stockbrokers are paid on commission (the median stockbroker income in 2020 was $60,644), your abilities and diligence can easily pay off in this situation.
But to even consider becoming a stockbroker, you must first obtain a Series 7 license, which is not a simple task. If you succeed, you’ll get a taste of what it’s like to be a stockbroker.
The work is challenging, competitive, and demanding, and beginners (at least) must put in a lot more time and effort than the standard 40-hour workweek.
For marketing events and seminars, you might have to arrive at work well before the market opens and stay late into the evening.
You must develop a strong clientele to advance in this role, which may require making cold calls to potential clients and companies. Therefore, having strong interpersonal and sales skills is definitely advantageous.
3. Hedge Funds Managers
You perform identical responsibilities to investment bankers as a hedge fund manager. Only the types of portfolios you manage are different. Investors that pool their money into hedge funds and make bets with a higher level of risk and profit are probably your target market.
It is your responsibility to safeguard the interests of the investors by keeping an eye on the market and acting if anything jeopardizes the stability of the hedge fund. The work schedule is just as frantic, and the job is just as stressful as the others we described.
Hedge fund managers make an average income of $54,967 per year, but if they can attract the proper investors and manage their operations well, they can earn upwards of $200,000 per year.
However, because the level of risk is larger, you must handle pressure well and possess excellent analytical abilities. Additionally, you must possess excellent persuasion abilities, be a skilled negotiator, and have a solid understanding of how investing bias might affect your choices.
Is a job in investment management a good career path?
Certainly yes! You might be able to join reputable financial firms like HSBC, JP Morgan Chase, or Vanguard if you follow the appropriate developmental path by acquiring the quality skills needed to excel in the role. There is plenty of room to start your own firm and rewrite the regulations to reflect your worldview.
Your tastes and future goals will determine what happens. Whatever you choose, remember that a position in finance demands a specific set of abilities. Be sure you have those abilities.
Otherwise, you risk becoming resentful of the market, which is unfair given the abundance of exciting options available.
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