How to Get Into Asset Management Career?
Asset management refers to investing pooled investment of investors into different assets like securities, stocks, bonds, real estate managed by manager who is compensated by fees or certain percentage of asset of investors or commissions as they do market analysis and create a portfolio of investment for their clients.
First, let’s explore the paths of asset management and then we will talk about qualifications, skills, experience required, compensation structure, and job opportunities.
Career Paths in Asset Management
If you are now aware of what Asset Management is, you may have a look at this in-depth article on What is Asset Management
In simple terms, the purpose of asset management is to use the money to make more money. But every asset management firm has a different objective. The idea is to know where you want to get your strong footing.
How to get into Asset Management? Here are three possible paths to break into asset management –
Working for a local bank or a small mutual fund:
If your idea is to get started quickly, you may consider this option. Though many aspirants don’t take this route; still you can work your way up toward a better future if you choose a small mutual fund or a local bank/trust to start with. Small mutual funds or firms don’t need you to get an expensive degree or be the top student. All you need to have is a graduate degree in economics or finance and a willingness to make your mark in the asset management field.
Working for a big mutual fund or Wall Street firm
Most of the aspirants who would like to go into asset management dream of working in a big mutual fund or a Wall Street firm and manage whopping funds of millions and billions of dollars. If that is what you want to pursue, you need to have a degree from a top-notch institute in finance or economics. However, if you feel that you have few years of experience in small firms and want to take it to the next level (e.g. portfolio manager), you can consider pursuing an MBA from a first-tier business institute or you can also pursue advanced certifications like Chartered Finance Analyst (CFA).
Starting your own private asset management firm:
It is a big deal. And you shouldn’t do it until you are thorough with the market and know quite a lot to run on your own. For starting your own, you need to go through the required securities examinations. Once you are through either you can start your own financial advisory firm or you can act as an assistant to someone who has already started one. The most important skill in this route is the ability to sell. More you are able to sell, more clients would trust you and more you would be able to exercise your skills and abilities to use the money to make more money for your clients.
Now, among the above three career paths, you can start anywhere (if you choose). But you need to be brutally honest with who you are, the skill sets you have and how much you want to pursue a career in asset management (at least 10 years down the line).
If you aim to pursue your degree from the top-notch institute, the second option will suit you best. Otherwise, you can start with the first option and work your way up to achieve a top position in a big mutual fund. And eventually, if you wish you to pursue a career in financial advisory, you can think of that as well.
Let’s talk about educational qualifications in detail to help you figure out how to get started.
Educational Qualifications for a career in asset management
How to get into Asset Management? Here’s what you should pursue to break into asset management –
- Get a degree in Finance: Gaining access to a great asset management career requires you to have two basic skills – the knowledge of accounting and financial management and the use of statistical models. Your daily job would be to look through the spread-sheets and dig in the earning reports. Without a degree in finance, it would be difficult for you to even scratch the surface. And if you have an opportunity, pursue a finance degree from a top-notch institute.
- Get your master’s degree in finance: It’s said that there’s no crowd along the extra mile. A master degree in finance will help you filter out the crowd who will immediately join an asset management firm after their graduate degree. In a master’s degree, you will be able to get access to a specialized set of knowledge (e.g. financial analysis). If you can pursue your master’s degree from a global institute which will give you a gift of global financial education.
- Go for internships in top-notch firms: Internships are on the job training for which you get paid. If you do two or three internships after your master’s degree, you will know how things work in asset management firms. And internships will not only help you learn the required skills to pursue a great asset management career, but it will also help you get recognized with the top-notch firms’ names once you search for a full-time opportunity.
- Go for management training programs: What separates the best from the rest is the learning curve. More you learn better would be your chances of success. If you want to have a grip over a particular skill, let’s say investments, you can do management training programs on the same and gain significant knowledge in how to apply the same into real life. This is applicable especially for graduate students, but after a master degree also, you can pursue MTPs.
- Enroll yourself for additional qualifications: Every additional qualification will help you multiply your earning potential by 2, 3, 5 and 10. Pursue any or all of the following –
- Chartered Financial Planner (CFP): CFP certification exam needs you to complete three years of professional experience (6000 hours) or two years of apprentice experience (4000 hours). By doing CFP, you will gain access to financial planning, estate planning, retirement planning, understanding of tax, stocks, bonds and many aspects of finance. And this is the best course you can do under 11 months.
- Chartered Financial Analyst (CFA): This is a no-non-sense investment course for anybody who would like to pursue a career in asset management. There are three levels which you need to clear to be able to get the certification.
- Chartered Investment Counsellor (CIC): If you have done your CFA, this is the course for you. CIC helps you learn everything about portfolio management. CIC needs to be recertified every year. CICs manage big accounts of mutual funds.
- Certified Investment Management Analyst (CIMA): If you have three years of experience in investment consulting, you can pursue CIMA Qualification. You need to complete 40 years of continuing education to recertify every year.
Skills required for Asset Management Career
How to get into Asset Management? There are two skills that you need to master if you want to get into asset management.
Before going into the skill, here’s a word of warning – you need to be really good on these skills if you want to go to the top position; because there is a lot of competition for the asset management career. As the level of skills will decide how much you will get compensated, skills are the holy grail of asset management career.
Quantitative & Analytical skill:
As we mentioned earlier, to master this skill, you need to be thorough with accounting and statistics. Your job would be to look through the spread-sheets, create financial models and decide quickly which investments will make more sense for your clients. As a lot of money is involved in this sort of transaction, the most accurate decisions often pay big commissions and at the same time, a slightly wrong decision would hurt your client’s pocket and your career as well. So, before you ever get a full-time job, make sure you are pretty good at this skill. You should know intuitively what will work and what won’t. Often this intuition only works when you have been sitting with something for a really long time.
Managerial & Organizational skill:
This skill will come later. Once you are very good at quantitative & analytical skills, you will get ahead in your career. And soon enough you need to manage a team and most sensitive investments. You need to organize the entire thing so well that even if something is lost, you would know where to find it.
If you master these two skills, another skill you will require at a minimum level and that is the communication & interpersonal skill. As you will deal with many clients, teams, managers, subordinates, peers, brokers, and traders, you will need to communicate with them effectively to generate the best output.
Experience & Compensation in Asset Management
The salary of asset management professionals is quite good. But if your aim is to earn more, then maybe you would be disappointed. You won’t be making whopping six figures in the beginning and rarely would you make much money per year. However, if you have many years of experience, you can cross the six-figure level.
The average income of the asset managers in the USA is $69,000 according to Payscale.com. If there is any bonus/profit included in your salary, you can expect anything around $14,000 – $24,000 per annum as bonus/profit.
The overall income of asset managers is ranging from $41,000 to $121,000 per annum.
Now, let’s have a look at how experience affects the salary of asset managers.
If you take into account the majority of asset managers, you will see that 31% have more than 20+ years of experience (i.e. in their late-career). Only 16% are entry-level employees. What’s stunning is even mid-career asset managers are lesser (only 25%) than the ones who have been in their early/the late 50s.
From the above chart, it’s clear how experience is proportionate with the compensation for asset managers.
- When you are just starting out (up to 5 years), your compensation wouldn’t be more than $60,000 per annum.
- With 5-10 years of experience, you would be able to earn around $78,000 to $80,000 per annum.
- Having 10-20 years of experience will help you earn around $83,000 per annum.
- And if you have more than 20 years of experience, you will earn around US $95,000 or more.
Jobs available for asset management profile
How to get into Asset Management? Let’s look at the job options available in the asset management field.
It will help you choose the right career for you –
- Fund Accountant: You can choose to work as a fund accountant. The most important task of a fund accountant is to find the net asset value of a mutual fund and what price customers pay. Having a bachelor’s degree in finance or accounting will help you get the job.
- Junior Research Analyst: It is an entry-level job in asset management territory. Your tasks would be to look through 10-Ks and update the financial models, do financial analyses, proofread power-point presentations and conduct primary research. A bachelor’s degree in finance/accounting/economics will get you the job.
- Economist: If you dream of becoming an economist in a top-notch asset management firm, there is good news. As an economist, you can work in both Buy-side and sell-side companies. Your tasks would be to forecast the market and general economy based on the models and analyses. A Ph.D. in economics will help you get into the economist’s role.
- Quantitative Analysts: If you love computer programming along with financial models, a position of the quantitative analyst may interest you. You need to have a Ph.D. in Science/Computer/Mathematics that will definitely help.
- Buy-side Research Analyst: Your job would be to work in a small team, perform credit analyses of particular securities and of the overall market. An MBA in Finance plus a CFA would be the ultimate combination if you want to become a fixed-income analyst.
- Sell-side Research Analyst: Your job would be to analyze equities in the market and sometimes gain the spotlight and media coverage. An MBA in Finance and a CFA will be the finest combination for this sort of job. Also, have a look at Buy Side vs Sell Side
- Portfolio Manager: As a portfolio manager, you would be able to dictate in stock picking analysis and people will listen to your advice and opinion. Your job would pick a portfolio of stocks and bonds to ensure the highest returns for the investors. MBA in Finance plus CFA would be the most lucrative combination for being a portfolio manager.
You can also choose to be a broker, a sales manager or customer service representatives in support roles. Since you want to enter into asset management, we have mentioned what job options you have.
Top 20 asset management firms in the world
How to get into Asset Management? Now which company you should choose to work in. Here’s a list of top 20 asset management firms in the world. We will start with number 20 and go upward. The rank is given on the basis of AUM (assets under management) –
- Rank # 20: Northern Trust Asset Management, USA (AUM – $875 billion)
- Rank # 19: Wells Fargo, USA (AUM – $890 billion)
- Rank # 18: HSBC Holdings, UK (AUM – $896 billion)
- Rank # 17: Wellington Management, USA (AUM – $927 billion)
- Rank # 16: Amundi, France (AUM – $985 billion)
- Rank # 15: Legal & General Group, UK (AUM – $1.1 trillion)
- Rank # 14: UBS, Switzerland (AUM – $1.1 trillion)
- Rank # 13: Prudential Financial, USA (AUM – $1.2 trillion)
- Rank # 12: BNP Paribas, France (AUM – $1.2 trillion)
- Rank # 11: Deutsche Bank, Germany (AUM – $1.2 trillion)
- Rank # 10: Goldman Sachs Group, USA (AUM – $1.3 trillion)
- Rank # 9: Capital Group, USA (AUM – $1.4 trillion)
- Rank # 8: AXA Group, France (AUM – $1.5 trillion)
- Rank # 7: Bank of New York Mellon, USA (AUM – $1.6 trillion)
- Rank # 6:P. Morgan Chase, USA (AUM – $1.7 trillion)
- Rank # 5: Allianz Group, Germany (AUM – $1.9 trillion)
- Rank # 4: Fidelity Investments, USA (AUM – $2 trillion)
- Rank # 3: State Street Global, USA (AUM – $2.2 trillion)
- Rank # 2: Vanguard Group, USA (AUM – $3.4 trillion)
- Rank # 1: BlackRock, USA (AUM – $4.6 trillion)
In the final analysis
Getting into asset management is NOT easy. Only two can get you into asset management – first the required skills and a burning desire to make it to the top.
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