Portfolio managers 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. A portfolio manager is typically responsible for all aspects of an investment portfolio. This can include everything from creating and managing an overall investment strategy that matches client needs to carrying out that strategy by selecting an appropriate mix of securities and 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 investment decisions and strategy formation. A portfolio manager also communicates with analysts from investment banks and other sell-side firms to identify products that may be good fits for a particular portfolio. Some portfolio managers, often 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 performances.
It is common for a portfolio manager to begin 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. Although a master's degree is not usually required for further career advancement, it is very common. After several years of experience, many junior analysts return to school to obtain master's in business administration (MBA) degrees or other relevant master's 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 on investments typically produces reports and recommendations on 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. With good performance in this role, a portfolio manager may graduate to larger portfolios with more money under management. This 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.
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 absolutely required. According to survey data collected by the U.S. Bureau of Labor Statistics (BLS) in 2014, 65% of portfolio managers in the United States held at least a master's degree.
A variety of undergraduate subjects are generally considered good preparation for entry-level positions in this field, 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 focus area is very common among portfolio managers. A master of science degree in the area of finance is also a worthy option.
Most employers require portfolio managers to hold financial analyst certifications. The most prominent certification in the field and the most 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, as an optional qualification.
Portfolio managers must also hold an appropriate license from the Financial Industry Regulatory Authority (FINRA), the oversight body for securities firms and brokers operating in the U.S. The licensing process generally requires sponsorship from the firm employing the license applicant. Typically, a financial analyst working in the securities industry obtains a license at the outset of her career.