A portfolio manager typically holds one of the most lucrative and accomplished positions in the financial services industry. As this implies, it’s a challenging career route requiring high-level qualifications, but it also offers substantial rewards such as a good salary, decent benefits, plenty of responsibility and interesting work. It takes skill and lots of stamina, but if you’re up to the challenge, here’s how you could become a portfolio manager.
A portfolio manager makes investment decisions for financial assets (e.g. equities, bonds, commodities, property) within a portfolio. You usually work on behalf of businesses rather than individuals, such as:
Depending on the kind of organisation you work for, you may be called a portfolio manager, fund manager, asset manager or chief investment officer.
When making investment decisions, portfolio managers are aiming to meet the financial goals outlined in the investment policy statement. To do this, you’ll look for opportunities, observe investment trends, keep up to date with current events and make market predictions. Your ultimate responsibility is to keep the performance of the portfolio as close as possible to its target – neither falling short nor exceeding it. This is because overperformance generally means that too much risk is being taken, and it’s your responsibility to stay within the risk parameters that your investors expect.
Portfolio managers work closely with researchers and analysts to gather information, but you ultimately make the decision about what assets you select, and when to buy or sell. Data plays a big part, but experience and even intuition also have important roles.
The average salary for portfolio managers in the UK is just over £60,000, but there’s often a heavy commission on top. With career progression, you can expect to earn upwards of £100,000 a year, plus a bonus as high as 100% to 200% of your salary.
On the flip side, it can be a high-risk career. If there is a financial crash, or your make poor decisions resulting in heavy losses to your portfolio, you could find yourself back in the job market very quickly.
Portfolio managers must have a passion for analysing financial markets. This is the expertise you bring to the table. You will partially gain this knowledge via your degree, but much of it will come from daily hands-on experience over the months and years. You’ll also need some innate skills and aptitudes to flourish in this role, such as:
You’ll generally need a master’s as well as an undergraduate degree to become a portfolio manager, and it helps if they’re in related subjects like business, economics or finance.
Becoming a portfolio manager starts with doing your degree. After you’ve got your master’s degree, you can look for internships or roles in financial firms like banks, insurance firms and those managing pension funds, and then work your way up. Working as a financial analyst can give you good insight into the financial markets, researching assets, selecting investments, and managing risk – essentially training you for the role of portfolio manager.
You’ll need to factor in at least four years of study for your master’s degree, and then add some years for experience on top. It can take a few years in another role to gain enough understanding and insight into financial markets before you’re ready to become a portfolio manager. It may help to speak to your employer about your ambition, so that they can guide you through the steps you need to take at the firm to develop professionally.
Your main costs will be tuition fees for your degree. Universities in the UK charge up to £9,250 a year for undergraduate degrees and a similar amount for master’s degrees. You’ll also need to factor in living costs, but you can take out student loans from the government to cover both tuition fees and your maintenance.
Portfolio managers tend to work on behalf of organisations, so you wouldn’t usually become self-employed unless you set up a boutique firm. People who go down this route usually have lots of experience and a network of helpful contacts having worked as a portfolio manager for a large provider for a number of years. But if you make a big name for yourself, then eventually your clients may follow you wherever you decide to go.
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