How to Become a Portfolio Manager

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A portfolio manager writes notes on hardcopy charts and graphs.

 

Portfolio management is a popular career for finance and business graduates. To succeed, candidates need a keen interest in financial markets and asset classes and to understand how investing money works. With the right combination of experience and education, graduates can pursue a career as a portfolio manager.

In as little as two to four years, prospective portfolio managers can obtain the background they need to start working or advancing in the field.

For those professionals who want to discover how to become a portfolio manager, the first step is to understand what the role entails.

What portfolio managers do

A portfolio manager handles the financial assets within a portfolio—a group of financial assets that belong to one entity, such as a pension fund or hedge fund. Portfolio managers typically manage the finances of other businesses rather than individual investors and focus on financial analysis rather than sales. They can have different titles like investment manager, wealth manager, asset manager, fixed income portfolio manager, or financial advisor, each of which performs many of the same duties. They may also work for investment banks, insurance companies, mutual funds, or management firms.

The primary concern of any portfolio manager is meeting the client’s financial goals and wealth management objectives as outlined in the investment policy statement, according to Investopedia. An IPS might be uniform throughout the portfolio manager’s institution or is unique to each client’s portfolio. To stay aligned with the IPS over time, portfolio managers must constantly monitor the market for risks, opportunities, or insight, and then buy, sell, make asset management and investment decisions, or reorganize portfolio assets accordingly.

Portfolio management requires advanced thinking about financial markets and how to respond to market fluctuations appropriately. As such, it’s essential that fund managers are prepared with the right financial analyst skills and training.

What it takes to become a portfolio manager

At a minimum, portfolio managers generally need a bachelor’s degree in finance or a related field such as business administration or economics, according to the U.S. Bureau of Labor Statistics. Master’s degrees in finance are now more common requirements among those hiring portfolio managers. Courses or knowledge in accounting, math, and computer science are also becoming essential as the profession gains complexity and nuance.

Fund managers may also need a few professional certifications if they expect to earn positions with top employers. The chartered financial analyst designation is one of the most common portfolio manager credentials and is administered by the CFA Institute. Hiring managers may expect a CFA designation and see it as a sign of expertise in the field of finance. Another designation, the chartered portfolio manager, is specific to portfolio managers. As the Financial Industry Regulatory Authority, or FINRA, noted, candidates seeking a CPM designation from the Global Academy of Finance and Management need a minimum of three years experience actively managing portfolios.

 

How long it takes to become a portfolio manager

Depending on when the candidate is able to gain the experience, education, and certifications required, becoming a portfolio manager may take at least two to four years within the financial industry. Candidates who are already working in finance as an analyst or in a related position may have an edge on earning a promotion or transitioning into a portfolio manager position.

Candidates who lack experience as financial analysts may need more time before they can qualify for portfolio manager roles. Typically, associate analysts and research analysts later gain promotions to portfolio management jobs. As such, portfolio management is not a job that recent graduates typically get. Candidates interested in this career will need to commit to working towards it over time.

 

Qualifications and skills companies look for when hiring a portfolio manager

Prospective portfolio managers must take several important qualification steps. First, having a master’s degree—in finance, economics, business, or a related major—can improve your chances. It’s also essential for candidates to get the right certifications and experience. For candidates seeking top portfolio management jobs, it’s important to go to the right school, have the right background, and have a strong understanding of financial markets and financial institutions.

Portfolio managers need to know how to construct a new portfolio of investments and create benchmarks to measure equity and performance over time. How diversification impacts risk, how to conduct a risk-return analysis, and how transaction costs impact portfolio income are also key to understanding portfolio management. Specialized investment products such as real estate portfolios introduce their own unique factors.

During a typical day, portfolio managers may interact with a variety of different professionals and work on projects related to managing portfolios. These project portfolio management professionals work with teams of analysts and researchers to gather data on securities relevant to the funds they manage, from stocks and bonds to real estate. For most portfolio managers, the workday begins early and often ends late, roughly in line with the opening and closing times of the markets they monitor. Prospective portfolio managers must be prepared to spend much of their workday gathering data, calculating risk tolerance, watching the markets, and working closely with colleagues in their capacity as project managers.

It’s helpful for candidates to enjoy working with people and possess the requisite interpersonal skills, at least to a certain extent, because portfolio managers often manage teams of analysts and interact with others in their work at brokerage firms.

Professional and career paths that lead people to become portfolio managers

For many prospective portfolio managers, the financial analyst career is the first step after undergraduate study or before reaching portfolio management positions. In this role, candidates work closely with portfolio managers and learn more about the finance industry and what is expected in portfolio management.

Education can help candidates make the career transition into portfolio management from another field or from careers as financial analysts. It may also set candidates apart and demonstrate that they are competitive for the role.

As analysts, they get the opportunity to grow their research skills and their understanding of how to pick solid investments, calculate risk and manage assets. While working for portfolio managers, they learn analytical skills and gain additional qualifications they can use on the job later when they become portfolio managers.

After at least a few years as an analyst, the prospective portfolio manager may be ready for promotion into a portfolio investment manager role.

 

Professional growth opportunities available for portfolio managers

From there, portfolio managers can grow their careers by seeking larger, more significant portfolio management jobs with higher pay. Generally speaking, portfolio management is a top career for experienced and highly qualified candidates. To keep growing their careers, portfolio managers can pursue more work managing pension funds, hedge funds, and other assets.

Ultimately, a portfolio manager makes the final call for any change in the fund’s asset allocation and helps set general investment management strategies. Also, the media may solicit portfolio managers to speak on current events in the wider business world. However, these events tend to focus on promoting the manager’s firm or asset specialty and never involve dispensing specific financial advice to a wider audience of investors.

 

How an Online Master of Science in Finance can advance your career

Becoming a portfolio manager requires a strong background in finance. The right graduate degree can provide the background and asset management skills portfolio managers need to excel at their jobs, providing an incentive to earn a master’s degree.

The online Master of Science in Finance program at Northeastern University’s D’Amore-McKim School of Business can help candidates prepare for a career in portfolio management by learning the skills today’s top investors, advisors and business leaders need to thrive. To learn more, contact an enrollment advisor.

 

Recommended Reading

A Discussion on Risk and Return

Financial Controller: Learn More About This Career

For-profit or Nonprofit Financial Leadership?

Online Master of Science in Finance – Master the Financial Side of Business

 

Sources

What a Portfolio Manager Does and Makes by Investopedia

What Does a Portfolio Manager Do? by Kaplan, INC.

Financial Analysts by the Bureau of Labor Statistics