Investment Manager Definition
An investment manager manages the investments of others using several strategies to generate a higher return for them and to grow their assets. They are sometimes also referred to as portfolio managers, asset managers, or wealth managers. In some cases, they may also be considered financial advisors, but they are typically less involved in the sales aspect.
- An investment manager is an individual or entity responsible for managing funds on behalf of individuals or organizations. They employ various strategies to generate a return on investment (ROI) for their clients.
- The roles of an investment manager include monitoring and analyzing the performance of the assets they oversee, making investment decisions, and executing trades in securities such as stocks and bonds.
- Investment managers work closely with their clients to understand their financial goals and objectives, ensuring that their investment strategy aligns with these goals.
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Job Description of an Investment Manager
- An investment manager’s job description revolves around managing others’ wealth and investments to help grow their money. Client’s range from individuals, businesses, government organizations, financial bodies, insurance firms, etc.
- The investment managers usually enter into an agreement with the investors before undertaking investment activities on behalf of the clients.
- Their primary role will involve ensuring the safety of investors’ funds, earning maximum returns, and giving them timely advice to keep up with the market trends.
- They will review different investment techniques, implementing strategies that will best serve the client. Typically this will consist of building an investment package or portfolio based on the client’s financial goals and risk toleranceRisk ToleranceRisk tolerance is the investors' potential and willingness to bear the uncertainties associated with their investment portfolios. It is influenced by multiple individual constraints like the investor's age, income, investment objective, responsibilities and financial condition.. They will make investments for the client in securities like
- And Real Estate
- This includes monitoring the daily fluctuations in asset value, determining when buying and selling are necessary. They will make recommendations to the client based on what they think is best for their financial success.
- An important role they play includes analyzing securities and making recommendations. In the process, they focus on making investments on the client’s behalf in the assets they believe to be the best investment as per their financial goals.
- Their role will also require the oversight of a team of financial analysts. Another responsibility could be similar to that of a financial planner. In this case, the manager will provide advice and answer questions about various financial topics, including:
- Cash flow
- Risk Management
- Estate Planning
There are several ways an individual can become an investment manager. Below is an example commonly found in the industry today.
They usually start by conducting security analysis with stocks and bonds as a junior analyst. The junior analyst can be an entry-level position that will usually require you to have at least a bachelor’s degree. During your time as a junior analyst, you will work under senior management analyzing securities to determine their financial position.
As a junior analyst, you will research and review different company financial reports to determine their financial performance. They will then sometimes work with a team creating spreadsheets and other illustrations to promote their findings.
Junior analysts will then make recommendations based on their findings and the data they have interpreted.
After years of developing your skillset and learning what it takes to succeed in the field, you may get promoted to senior analyst. Often candidates will decide to go back to school and further their education to advance their career.
As a senior analyst, you will be more focused on a specific industry or sector that you will spend most of your time analyzing. They will spend most of their time developing research reports and updating existing ones as new details emerge.
Senior analysts can also work with junior analysts to develop their skills and help guide them.
After several years of outperformance as a senior analyst, you may be promoted to this position. Here you will oversee the investments, buying and selling securities when the data your team gives you indicates it’s time to do so.
You will monitor the performance of investments, adjusting them based on your client’s wants and needs.
Senior Investment Manager
If you have a good track record as an investment manager, you could be promoted to this position. The duties and responsibilities will mostly be the same as previously, but you would be overseeing a more considerable amount of money.
Investment Manager Salary
The salary will be based on a few different factors; these include:
- And location
Research from salary.com shows the average salary for an investment manager is $132,029. The salary pay range will typically fall between $90,000 and $152,000 under normal circumstances. They will sometimes get paid based on a percentage of the assets they are managing or charge by the hour.
They can sometimes earn additional compensation when their portfolios are outperforming, depending on how the pay structure is set up. High-performers can make +170,000 in annual wages.
According to the U.S Bureau Of Labor Statistics, financial managers are in high demand, and jobs are expected to grow by 15 percent by 2029. This is much higher than the average job growth rate of 4 percent.
To become an investment manager, you will need to possess at least a bachelor’s degree in a related study such as finance, economics, business, or accounting. On top of that, many employers will look for applicants who have a master’s degree and especially a master’s in business administration (MBA).
To qualify, you must also have expert level knowledge of investment concepts and strategies like
- Risk Management
- Equity Analysis
- Asset AllocationAsset AllocationAsset Allocation is the process of investing your money in various asset classes such as debt, equity, mutual funds, and real estate, depending on your return expectations and risk tolerance. This makes it easier to achieve your long-term financial goals.
- Portfolio Strategy
- Data Analysis
Even though it isn’t required, candidates can also consider obtaining the Certified Government Financial Manager (CGFM) designation from the Association of Government Accountants (AGA). The working professionals in the investment management industry may also be required to register with the U.S Securities and Exchange Commission, to manage certain assets.
Or, if you have been working in the field for at least three years, you can become a Certified Financial Planner and attain the certification that way. Different employers may require additional certifications to work for their particular company.
In most cases, employers will require at least 3 – 5 years of experience in a relevant field like accounting, financial analysisFinancial AnalysisFinancial analysis is an analysis of finance-related projects/activities, company's financial statements (balance sheet, income statement, and notes to accounts) or financial ratios to evaluate the company's results, performance, and trends, which is useful for making significant decisions such as investment, project planning and financing activities., or security sales.
Frequently Asked Questions (FAQs)
Investment managers usually charge fees based on a percentage of the assets they manage, known as the asset management fee. This fee structure aligns their interests with the client’s performance. Additional fees, such as performance-based or transaction costs, may also be charged depending on the specific investment manager and strategy.
Investment managers employ risk management techniques to mitigate risks in investment portfolios. For example, they diversify holdings across different asset classes, regions, and industries to reduce exposure to any single investment. They also monitor and adjust portfolios regularly to respond to changing market conditions and manage risks effectively.
Investment managers continuously analyze market trends, economic data, and company-specific information. They utilize research tools, data analysis, and industry expertise to identify investment opportunities and stay informed about market developments. They also rely on a network of information sources, research reports, and financial news to stay updated.
This has been a guide to Investment Manager. Here we discuss who is an investment manager with their job description, career path, qualifications, and salary. You can learn more about from the following articles.