Pros and Cons of a Career as a Portfolio Manager
A portfolio manager is a type of financial analyst who focuses on developing companies' investment portfolios. Read on to learn about the pros and cons of working as a portfolio manager.
|Pros of a Portfolio Manager Career|
|Faster-than-average job growth expected (16% for all financial analysts from 2012-2022)*|
|High earning potential (average salary of $92,250 for all financial analysts as of 2014)*|
|Can enter the profession with a bachelor's in a variety of majors (finance, accounting, economics, etc.)*|
|Opportunities for advancement to larger portfolio or fund management positions*|
|Cons of a Portfolio Manager Career|
|Keen competition despite employment growth (many people are attracted to this high-paying field)*|
|Requires years of financial analysis experience*|
|Long hours (nearly 33% work 50-70 hours per week)*|
|May require financial analysis licensure*|
|Stress involved with meeting strict deadlines and being responsible for vast amounts of money*|
Source: *U.S. Bureau of Labor Statistics.
Essential Career Information
As a portfolio manager, you'll monitor other people's or companies' investments. You'll analyze market trends and other data to determine which products, industries or other investments will be most beneficial for your client or company to invest in. You'll oversee a staff of other financial analysts and be the point of contact for companies and clients who have questions about investments. You'll also have to meet with investors in order to present your investment decisions and portfolio reports.
Salary Information and Job Outlook
As of May 2014 there were more than 262,610 individuals working as financial analysts (which include portfolio managers) in the nation, according to the U.S. Bureau of Labor Statistics (BLS). Most of these reported earnings between $48,170 and $154,680 annually, and the average salary was about $92,250; however, the location and industry that you choose to work in may affect your pay. For example, financial analysts working in securities and commodities exchanges had the highest average earnings at more than $124,400, while those who worked as insurance carriers reported an average salary of about $82,700. Additionally, New York was the highest-paying state for financial analysts, offering an average salary of about $119,230.
The BLS projected that jobs in this field would increase by 16% from 2012-2022, which is faster than average when compared to all occupations. This increase will be driven in part by the growing complexity of investment portfolios and the widening range of assets available for investment. Despite job growth, you may still experience keen competition for employment, because there are more people attracted to this high-paying job than there are jobs available.
What Are the Requirements?
The BLS reports that a portfolio manager usually must have at least a bachelor's degree. Finance, accounting and business are popular fields for this line of work, though you might also enter the profession with a degree in economics or statistics. In an accounting degree program, for example, you'll likely take classes in topics like financial and managerial accounting, cost accounting, financial information systems, business ethics and taxation. You may have an opportunity to complete an internship, and you may take elective courses like corporate finance and market analysis.
In addition to education, portfolio managers typically need previous experience in financial analysis. In fact, the BLS reports that these professionals often start out as financial analysts and, with experience, are promoted to portfolio management positions. Portfolio managers and other financial analysts may also need to hold one or more licenses from the Financial Industry Regulatory Authority, but you'll generally obtain such licensure after you've gotten a job.
Top Skills for Portfolio Managers
Mathematical proficiency is, of course, important for this career, but you'll also need to have strong analytical skills and be detail-oriented in order to process large amounts of financial data and find the best investment opportunities. Technical aptitude is essential for using financial and portfolio development software. You'll also need to be a good communicator, since you'll have to present your findings and investment options to clients.
What Are Employers Looking for?
When employers look for potential portfolio managers, they want someone with the education and experience necessary to be in charge of financial investments while overseeing a staff of accountants. Positions can require anywhere from 3-10 years of experience depending on the level of employment, and many employers want you to have experience directly related to the type of portfolios they deal with. A survey of portfolio manager job postings available in May 2012 shows what some employers are looking for:
- An international financial institution in Pennsylvania seeks a senior portfolio manager with a bachelor's degree in accounting or finance and at least eight years of experience in portfolio or fund accounting to fill a six month position.
- An Illinois bank seeks a portfolio manager with a bachelor's degree in finance or accounting and 7-10 years of experience to manage the portfolios of companies with $50-$500 million in annual sales. The applicant also needs a Certified Public Accountant credential, a Master of Business Administration degree or an equivalent amount of experience.
- A New Jersey bank seeks a portfolio manager to evaluate the credit quality of regional portfolios. This person will help underwrite new loans, monitor portfolio loan exposure and evaluate risk ratings. The ideal candidate will have a bachelor's degree, 3-10 years experience in a commercial lending setting and knowledge of banking regulations.
- An asset management corporation in Pennsylvania needs an entry-level account manager to work with senior portfolio managers to conduct research for investment opportunities as well as executing and processing trades using multiple platforms. The ideal candidate will have a bachelor's degree and three years experience in financial analysis, auditing or accounting.
How to Stand out from the Crowd
Earn a Master of Business Administration
Although the BLS notes that a bachelor's degree is the minimum educational requirement, it also states that many employers require a Master of Business Administration (MBA). As a student in an MBA program, you'll be able to choose from a variety of concentrations, including entrepreneurship, finance and marketing. These degree programs require 1-2 years of study past the bachelor's degree. You can expect to take courses in financial analysis, corporate finance, marketing strategies and operations management as well as electives specific to your concentration.
Earn Professional Certifications
Another way to get an edge in the field is to become certified. In fact, the BLS reports that employers often suggest that financial analysis professionals obtain certification to increase advancement opportunities. You might, for example, earn the Certified Public Accountant (CPA) credential. The American Institute of Certified Public Accountants (AICPA) administers the exam that leads to the CPA credential (www.aicpa.org). To earn this credential, you'll need to pass a test on topics like auditing and attestation, risk of material misstatements, internal controls and fraud identification.
Alternative Career Options
Personal Financial Advisor
If you want a career in finance, but would like to work directly with clients, consider a career as a personal financial advisor. These professionals give individuals advice about investments and tax issues and help clients create financial plans. As a personal financial advisor, you'd meet with clients in an office or in their homes to discuss their needs, then invest your clients' money according to their wishes and, later, provide reports about how those investments are doing. You may choose to specialize in topics like retirement or risk management.
The education requirements for this field are similar to those of portfolio managers - you'll need at least a bachelor's degree and, in some cases, licensure; however, salary potential and job outlook are higher. The BLS reports that personal financial advisors earned about $91,000 on average per year as of 2011, and job were expected to grow at a much faster than average rate of 32% from 2010-2020.
Another higher-paying option is a career as a financial manager. Financial managers work in banks and other organizations to direct investments, create financial reports and develop strategies for long-term fiscal goals. You'll need a bachelor's degree in finance, accounting or another applicable field as well as at least five years of experience, but the payoff is excellent earning potential; the BLS reports that financial managers earned an average salary of more than $120,000 as of 2011. Keep in mind that the job growth is average for this career - an expected nine percent from 2010-2020.