A Portfolio Manager also known as Investment Counselor or Wealth Manager works for firms or individual clients.
A Portfolio Manager works on the basis of a written agreement usually known as Investment Policy Statement (IPS) which takes care of the clients’ financial needs. The Portfolio Manager uses his or her own discretion in selecting a proper mix of investments for the client to gain the maximum returns from the selected investments.
How to become Portfolio Manager
In order to work as a Portfolio Manager professional a candidate has to take care of the following steps:
- The Candidates must have a bachelor’s degree in accounting, economics, business, statistics or finance. These subjects prepare them for a Master of Business Administration (MBA) program which is almost a necessity for working as a Portfolio Manager.
- A candidate may earn a master degree in subjects such as business, risk management, finance or accounting. A master’s degree in the related field is always an added advantage in this highly competitive environment.
- Portfolio Managers initially start as financial analysts which help them develop the skills and acumen for the job.
- Before being hired as a Portfolio Manager the candidate must have his licensure from the Financial Industry Regulatory Authority (FINRA).
- Portfolio Investment managers must be registered with the state’s securities agencies such as the U.S. Securities and Exchange Commission (SEC).
Candidates may acquire a Chartered Financial Analyst (CFA) degree from the CFA Institute as this degree has been given preference by many employing firms.
Portfolio Manager Career: Pros and Cons
The pros and cons of working as a Portfolio Manager are as follows:
- Portfolio Managers have an expected job growth rate of 16% from the year 2012 to 2022.
- As of 2014 Portfolio Managers have an average annual salary of $92,250 which is higher than most of the other jobs in the financial sector.
- These professionals can start working with a bachelor’s in a variety of majors such as finance, accounting, economics etc.
- A few of them gradually upgrade themselves to a larger portfolio or fund management positions.
- There is intense competition in this field.
- Long hours of work ranging from 50 to 70 hours per week.
- Experience as a financial analyst for a few years prior to the job of a Portfolio Manager.
- Some of them also may require financial analysis licensure.
- Being responsible for a large sum of money and meeting strict deadlines.
Responsibilities and Duties
The first and foremost duty of a Portfolio Manager is to get the best available investment plans for the client which promises guaranteed returns in the future.
Additionally he is synonymous with the following roles and responsibilities:
- In times of crisis an individual must have the sufficient funds to overcome his financial difficulties. Money invested in the right stocks or bonds comes in handy at those times. The role of a Portfolio Manager is most essential in such a stage as he is responsible for deciding the best investment plan for the individual as per his income, age and the individual’s ability to take risks.
- Spreading awareness about the different and new investment tools available in the market to the individual.
- As different individuals have different financial needs it is not viable to give them the same financial solutions. The Portfolio Managers customize various investment tools to suit the needs and requirements of their client.
- He must keep himself updated with the latest developments in the financial market. He is responsible for suggesting the client with the plans which have the maximum returns with the minimum risk involved.
- The unsteady and volatile financial market calls for a Portfolio Manager who must be a thorough professional and a good decision maker.
- The Portfolio Manager must have a good rapport with his clients and should have a personal communication with his client on a regular basis.
- The Portfolio Manager must give a detailed explanation to his client regarding the costs involved, maturity period, benefits and the risks involved in a particular financial plan before the investment process.
On an average a Portfolio Managers annual salary ranges from $60,524 to $115,410 in the U.S. economy. Additionally, yearly bonus in between 8.5 percent to 30 percent and commissions ranging from 7 percent to 13 percent are usually earned from the clients’ investment. A percentage of profit sharing from the clients’ fund is usually earned which ranges in between 5 and 13 percent.
Altogether, a total annual income of $72,723 to $180,713 is generally earned by a Portfolio Manager.
Path and Outlook
The career path for a Portfolio Manager is very exciting and it is definitely a long term career choice which provides a great deal of growth opportunities. The profession requires continuous learning and keeping oneself abreast with the latest developments in the financial sector. The Portfolio Managers may initially start as an Investment Analyst, Associate Portfolio Manager, Investment Advisor or Research Analysts which helps them in gaining knowledge in the investment management sector.
An academic background with a concentration in economics, mathematics, physics or other sciences is a must in order to qualify for the position of a Portfolio manager.
The Portfolio Manager eventually work as a Senior Portfolio Manager or a as a Director in a firm which are both high paying jobs.