What Does a Portfolio Manager Do?
Portfolio managers are financial professionals who work for wealth management firms, pension funds, foundations, insurance companies, banks, hedge funds and other organizations in the securities industry.
They oversee the daily management of investment portfolios on behalf of individual or institutional clients. Typically, that can mean creating and managing an overall investment strategy that matches client needs, implementing that strategy by selecting an appropriate mix of securities and other investment products, and managing that mix on a continual basis.
A portfolio manager usually oversees a team of senior financial analysts who produce analytical reports and recommendations to inform strategy formation and investment decisions.
A portfolio manager also communicates with analysts from investment banks and other sell-side firms to identify products that may be a good fit for a particular portfolio.
Some portfolio managers, including those who work in wealth management firms, may also be required to meet and communicate with individual clients to discuss investment strategy, explain investment decisions, and provide updates on portfolio performance.
- Portfolio managers work with a team of analysts and researchers to develop investment strategies for institutional or individual investors' portfolios.
- Portfolio managers typically begin their careers as financial analysts.
- Though not required, most portfolio managers hold master's degrees in finance, business administration, economics or another numbers-oriented field.
- Working in portfolio management requires licensing by FINRA and often professional certifications like that of Chartered Financial Analyst.
- Portfolio managers managing $25 million or more in assets are required to register with the SEC.
Portfolio Manager Career Path
It is common for a portfolio manager to begin his or her career as a financial analyst working on stocks, bonds or other securities for a firm in the securities industry.
Junior analyst positions are typically open to bachelor's degree graduates. After several years of experience, many junior analysts return to school to obtain a master's degree in business administration (MBA) or other relevant graduate degrees before moving into senior analyst roles.
An appropriate master's degree may immediately qualify a new applicant for a senior analyst position.
A senior financial analyst who works with investments typically produces reports and recommendations for particular securities under the direction of a portfolio manager.
Senior analysts often specialize in particular categories of securities, spending most of their time conducting new research and analysis, updating research according to new developments, communicating with industry contacts and presenting recommendations to management and clients. Senior analysts also supervise and direct the work of one or more junior analysts.
With good work performance and demonstrated expertise, a senior financial analyst can become a portfolio manager. If the portfolio performs well, the manager may graduate to larger portfolios with more money under management.
A senior portfolio management position is usually the end of the career path, although some people move into leadership positions in their firms or strike out on their own to start new firms.
Portfolio Manager Educational Qualifications
A bachelor's degree in a relevant field is a basic qualification for work as a portfolio manager. However, many employers require master's degrees, and most portfolio managers hold them, even if they are not required to do so.
A variety of undergraduate subjects are generally considered good preparation for entry-level positions in this profession, including quantitative business disciplines such as accounting, finance, and economics.
Other relevant disciplines include statistics, mathematics, engineering, and physics, all of which focus heavily on the development of quantitative and analytical skills.
At the master's level, an MBA in finance or another relevant field such as business administration or economics is the norm among portfolio managers. A master of science degree in the area of finance is also a worthy option.
The average salary for a portfolio manager in 2022, according to Salary.com.
Other Portfolio Manager Qualifications
Most employers require portfolio managers to hold financial analyst certifications. The most prominent certification in the field and in demand by employers is the Chartered Financial Analyst (CFA) designation awarded by the CFA Institute.
This designation is open to any financial analyst who has a bachelor's degree and four years of acceptable work experience. It is awarded to qualifying candidates who pass a series of three exams. Many employers also name the Certified Financial Planner (CFP) designation, awarded by the CFP Board of Standards, as an optional qualification.
Depending on the sort of assets that they work with, portfolio managers must also hold appropriate licenses from the Financial Industry Regulatory Authority (FINRA), the oversight body for securities firms and brokers operating in the U.S. Taking the qualifying exams generally requires sponsorship from one's employer.
If the job involves asset management exceeding $25 million, managers will be required to register with the Securities and Exchange Commission (SEC).
What's the Job of a Portfolio Manager?
Portfolio managers manage (select, buy, sell) securities for individuals or institutions. They can manage the assets for an institution that's a client of the company they work for. Or they might manage the assets of mutual funds owned by their own company. For example, Warren Buffett is considered one of the portfolio managers for the securities held by his company, Berkshire Hathaway.
What Should a Resume for a Portfolio Manager Include?
Like any good resume, it should include the skills and experience that can make applicants a good fit for the job. According to the employment website Indeed, key qualifications to display might relate to experience with risk analysis, investment and statistical analysis software, financial systems and software, and financial preparation and forecasting. You'd probably want to include relevant information concerning your general investment knowledge, experience, and any expertise in particular securities, such as equities, municipal, corporate, and government bonds, and derivatives.
What's the CFA Institute?
The CFA Institute is a worldwide professional organization focused on ethical standards, education, and the professional development of individuals in the fields of investing and finance. It offers certification programs, including that for Chartered Financial Analyst (CFA), which is obtained by many portfolio managers.