Table of Contents
- What Is an Investment Manager?
- Key Takeaways
- Roles and Responsibilities
- Investment Manager vs. Investment Adviser
- Skills and Qualifications
- Choosing an Investment Manager
- Is an Investment Manager the Same as an Advisor?
- Do You Need a CFA for Investment Management?
- What Is the Difference Between an Investment Manager and a Fund Manager?
- The Bottom Line
What Is an Investment Manager?
As an investment manager, I handle activities related to financial planning, investing, and managing a portfolio for my clients. From the day-to-day buying and selling of securities and assets to transaction settlement and performance measurement, I oversee investments and act on behalf of my clients.
Key Takeaways
You need to know that investment managers like me handle your financial planning, investing, and portfolio management activities. We help individuals or institutional investors, devise strategies, and execute trades within a financial portfolio. Major investment management companies include BlackRock, Vanguard Group, and Fidelity.
Roles and Responsibilities
Investment managers can operate as one-person offices or large firms with global offices. I follow market activity closely to dictate investment decisions for clients. I may meet with you individually or with your financial team at a company. Your portfolios can include assets in sectors such as technology, utilities, healthcare, or energy. I consistently strategize to expand your holdings, and my fee is often based on a percentage of your assets under management (AUM). For example, if you have a $5 million portfolio and I charge 1.5 percent annually, you pay $75,000 in fees.
In 2022, 72% of managers increased the number of investment products for clients, and the largest investment management companies globally based on AUM were BlackRock with $10 trillion, The Vanguard Group with $8.5 trillion, and Fidelity Investments with $4.2 trillion.
Investment Manager vs. Investment Adviser
An investment manager is one type of investment adviser, which is an individual or company paid to provide advice about securities to clients. Asset managers, investment counselors, investment managers, portfolio managers, and wealth managers are all investment advisers. While we all provide tailored investment advice, investment advisers can manage investment portfolios, offer financial planning services, provide licensed brokerage services to buy or sell stocks, or a combination of these.
Remember, 'investment adviser' is a legal term for an individual or company registered with the Securities and Exchange Commission (SEC) or a state securities regulator.
Skills and Qualifications
Investment managers commonly hold undergraduate degrees in business, statistics, finance, mathematics, or accounting, and perhaps an MBA or professional certifications such as Certified Financial Planner (CFP). Graduates may enter the industry as an investment analyst and move to a manager role with experience. We typically share skills like excellent communication, the ability to obtain and sustain a client's trust, analytical skills to interpret market information, the ability to understand financial data, and working effectively under pressure.
The average annual salary of an investment manager as of June 2024 is $142,143.
How to Become an Investment Manager
- Complete a bachelor's degree program in finance, accounting, or economics. An advanced degree, like an MBA, is often an asset for future promotions and salary increases.
- Research job opportunities with banks, investment firms, and other financial institutions.
- Take the Series 65 exam through the Financial Industry Regulatory Authority (FINRA). FINRA is a private institution that writes and enforces rules for registered brokers and broker-dealer firms in the United States.
- Gain additional knowledge and training through certification programs such as Certified Financial Planner (CFP), or Personal Financial Specialist (PFS).
- Register with the SEC based on the regulations for your location, the size of the portfolios you will manage, and your level of certification.
Choosing an Investment Manager
The type of investment manager you choose depends on what stage you have reached in your financial planning process. If you're a beginner investor, you may benefit by using a Certified Financial Planner (CFP) who can teach the basics of retirement planning. If you're a seasoned investor interested in a wide range of securities, you may fare better with a portfolio manager.
Most investment managers outline their philosophy on their websites or in their disclosures. Data on investment returns and investment manager performance are often well-documented and ranked by media sites and financial watch groups. You should consider fee structures when comparing investment managers. Fees and expenses typically include management fees, performance fees, custody fees, and commissions.
Is an Investment Manager the Same as an Advisor?
The term financial advisor (with the letter 'o') is a generic term that refers to a broker or a registered representative. However, the term investment adviser (with the letter 'e') is a legal term that refers to an individual or company that is registered with either the Securities and Exchange Commission or a state securities regulator. An investment manager is a type of legal financial adviser.
Do You Need a CFA for Investment Management?
Certification as a Chartered Financial Analyst (CFA) is not a legal requirement for investment managers, however, clients may prefer to work with an adviser who holds an industry-specific certification such as CFA, CFP, or Chartered Investment Counselor (CIC).
What Is the Difference Between an Investment Manager and a Fund Manager?
Investment managers focus primarily on individual securities and bond investments while fund managers work with mutual funds comprised of multiple securities and assets, often tailored to a particular market sector.
The Bottom Line
Investment managers are individuals or members of organizations that advise clients through financial planning, investing, and portfolio management. We commonly hold undergraduate degrees in finance, mathematics, or accounting and may have professional certifications. An investment manager is a type of investment adviser and is regulated by the Securities and Exchange Commission.
Other articles for you
A bag holder is an investor who clings to a failing investment hoping for a rebound, often resulting in total loss.
Wage expenses are variable costs for hourly employee payments, distinct from salaries, and handled differently in accounting.
Housing bonds are municipal debt securities used by governments to fund affordable housing, offering tax benefits to investors and low-cost mortgages to qualified buyers.
This article explains what large-cap stocks are, their characteristics, and how to invest in them.
A trust is a legal entity that holds and manages assets for beneficiaries, offering protection, tax benefits, and inheritance control.
Volatility measures the degree of variation in the returns of a security or market index, indicating risk through price fluctuations.
A ledger balance is the end-of-day total in a bank account after posting all completed transactions, distinct from the real-time available balance.
An encumbrance is a third-party claim on a property that limits its use, transfer, or value.
Rule 10b-18 is an SEC safe harbor rule that reduces liability for companies repurchasing their own stock if they meet specific conditions on manner, timing, price, and volume.
An amalgamation is the process where two or more companies combine to form a entirely new entity, distinct from acquisitions.