Investment management can be a demanding profession but one that may offer lucrative rewards. Financial managers earned a median annual salary of $139,790 in 2022, according to the Bureau of Labor Statistics. Is investment management a good career path for beginners in the financial services industry? It could be for advisors who have the experience and skills necessary to succeed.
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What Is an Investment Manager and What Do They Do?
Investment management involves working with clients to construct and maintain investment portfolios that are designed to align with their needs, goals and risk tolerance. While a financial planner or advisor may take a broader view of a client’s situation when dispensing advice, investment managers focus on investment decisions.
In terms of what that looks like in action, investment managers may perform any or all of the following tasks:
- Meeting with clients to discuss their goals and begin to formulate an investment strategy based on those goals.
- Determining the appropriate asset allocation for the client’s portfolio, based on their overall investment strategy.
- Evaluating individual investments, including specific companies or stocks, and analyzing market trends.
- Developing financial models using portfolio visualizer tools to help clients assess potential outcomes.
- Executing trades of assets within the portfolio, which may include buying stocks, mutual funds, bonds and other securities.
- Monitoring the performance of client portfolios using established metrics and adjusting portfolios as needed to ensure they align with the client’s goals.
Investment managers can work with individual or institutional investors. They may run their own investment management firm or be employed by a larger advisory firm.
Is Investment Manager a Good Career Path for Beginners?
Investment management could be a suitable career path for someone who’s already got some time and experience working in the financial services industry. It’s less common for this type of job to be offered to a beginner in the industry.
A typical career path for an investment manager usually involves the following:
- Starting with a financial advisory firm in an entry-level role after graduating from college
- Working your way up the company ladder, moving into more senior roles while gaining experience
- Obtaining the necessary licensing and credentials to offer investment advice
- Securing additional professional credentials or designations
Someone who’s just earned their bachelor’s degree is likely going to have a challenging time landing an investment management position. Why? Because it’s a job that requires hands-on experience working with clients and offering investment advice, which can take years to amass.
Pros and Cons of a Career in Investment Management
If you’ve been in the financial services industry for some time already, you likely know what’s good (and perhaps, not-so-good) about it. Here are some of the main advantages and disadvantages of shifting into investment management as you continue your career.
Pros:
- Specializing in investment management can offer significant earning potential, particularly if you’re niching down to work exclusively with higher net worth clients.
- It’s an opportunity to do work that you’re truly passionate about while working with clients that fit your ideal client profile.
- Demand for financial advisors and wealth managers, with the job outlook expected to increase 16% through 2032, according to the BLS.
- Starting your own investment management firm could allow for greater flexibility in choosing what type of clients to work with and setting your daily schedule.
Cons:
- Investment management can be highly demanding, which could make it difficult to maintain a good work-life balance.
- Transitioning into investment management isn’t always a smooth process and it may take some time to find the right opportunity.
- Starting an investment management firm can be costly and time-consuming, and it may take some time to begin to see results and grow your client base.
What Kind of Jobs Can Investment Managers Get?
There are a variety of jobs that fall under the investment management umbrella. The career path you choose to pursue may ultimately depend on your experience and the type of clients you’d most like to serve. Here are some examples of investment management job titles you may consider:
- Portfolio manager
- Wealth advisor
- Investment banker
- Hedge fund manager
- Financial analyst
- Financial manager
- Risk manager
- Private equity associate
If you’re actively searching for investment management roles, you’ll likely run into these terms. If you’re opting to strike out on your own as an investment manager, you may choose to stick with that title or choose a more specialized one, depending on the exact nature of the services you plan to offer.
How to Become an Investment Manager
Assuming that you’ve earned a bachelor’s degree and are working in the financial services field in some capacity, you’re already ahead. You might pursue an advanced degree, such as an MBA, but that’s not necessarily a requirement to advance your career in investment management.
You will, however, need to ensure that you have the proper licensing and credentials. That can include the following:
- Series 65 license
- Series 7 license
- Series 63 or 66 licenses
The Series 65 exam is required to work as an investment advisor representative (IAR). Obtaining a Series 65 license is necessary for you to be able to offer investment advice to clients. You must also take and pass the Series 7 exam if you want to sell packaged investment products or buy and sell securities.
Once you pass these exams, you’re eligible to register with the Securities and Exchange Commission. You’ll need to complete Form ADV and pay the required registration fees. Depending on the size of your firm, you may choose to register with your state regulatory agency instead.
You’ll need to obtain a Series 63 license if your state requires it, even if you already have a Series 65 license. The Series 66 license meets the requirements for both. However, you’ll need to have a Series 7 license to sit for the Series 66 exam.
In addition to these licenses, you may also opt to obtain professional designations. For instance, you might choose a chartered financial analyst (CFA) designation if you plan to offer investment management services in an analyst capacity. Professional financial designations have their own exams and requirements you’ll need to meet.
Frequently Asked Questions (FAQs)
Do Investment Managers Make a Lot of Money?
Investment management is a career path that pays well, with the median salary in the six-figure range. How much you earn as an investment manager can depend on numerous factors, such as your experience, the types of clients you work with, and whether you work for a wealth management firm or yourself in a business that you own.
What Degree Is Best for Investment Managers?
Investment managers may benefit from earning degrees in fields that are related to financial services. That can include accounting and finance, but a business degree may also be valuable for those seeking to launch their own investment management firms.
Is It Hard to Be an Investment Manager?
Investment management can be a stressful and demanding career path, which may require working long hours and spending a significant part of your day studying the markets. You’ll need to possess solid time management skills, strong attention to detail, effective communication skills and a geniune passion for the work you’re doing.
Bottom Line
Is investment manager a good career path? It depends on where you’re starting from. For someone who’s gained some experience working in financial services, shifting gears to focus on investment management could be an excellent chance to further their professional goals. However, it’s important to consider the skills, experience and licensing that are required, as well as what the job involves day-to-day to decide if it might be right for you.
Tips for Growing Your Advisory Business
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- If you’re pursuing a professional designation, consider what’s required to prepare for the exam as well as what you’ll need to do after you pass. For example, if you’re hoping to become a certified financial planner, you’ll have to complete the CFP exam and meet continuing education requirements thereafter. Continuing education credits can be earned online or offline, using a mix of free and paid options.
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