The Steps To Take To Become a Portfolio Manager

The Steps To Take To Become a Portfolio Manager

Portfolio management is a much-coveted role in the financial services sector. Many who start out in the finance industry aspire to eventually become a portfolio manager. For those with a knack for investments, it is a lucrative, challenging and rewarding career. Here’s what a portfolio manager does and how to become one.  

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What Does a Portfolio Manager do?

Portfolio managers, also called wealth managers or asset managers, are responsible for managing the investment portfolios of an individual or corporation. Portfolio managers oversee every aspect of their client’s investment portfolio, including the day-to-day trading of securities as well as planning a long-term investment strategy.

As a portfolio manager, you’ll assess a client’s financial situation, determine their risk profile, monitor the financial markets, identify economic trends, and use all of this information to make the best investment decisions for your clients. As you’ll be working with other people’s money, it’s a job that comes with a lot of responsibility and requires a high level of integrity.

How Much Do Portfolio Managers Earn?

Portfolio management is a career that pays well but demands its pound in flesh. Hours can be long or erratic, especially if you’re working with clients or markets abroad that are in a different time zone. Markets are also volatile and when they unexpectedly take a dive, stress levels can skyrocket. 

Your hard work will be handsomely rewarded, though. According to Glassdoor, the average salary for a portfolio manager in the United States is $102,950. Add extra compensation like bonuses and commissions and you can find yourself earning well above that. 

5 Steps To Becoming a Portfolio Manager

If you’ve decided that this is a career you’d like to pursue, here are the steps you’ll need to follow to become a portfolio manager. 

Step 1: Complete a finance degree

The first step towards becoming a portfolio manager is to get the right education. A bachelor’s degree in finance is best but studying accounting, economics or business administration can also help get your foot in the door. As you advance in your career, you should consider upgrading to a master’s degree. Most portfolio managers hold a master’s in business administration (MBA) or finance. 

Step 2: Do an internship

Once you’ve completed your studies, consider doing a finance internship. If you want to specialize in investments, find an internship at a bank’s investment division, a financial services company, or an insurance company. You’ll be able to cut your financial teeth while gaining valuable experience in how the investment game is played. Listing an internship on your resume also makes you a more attractive candidate when applying for a full-time position. 

Step 3: Secure a job in the finance industry 

Portfolio managers typically work for wealth management firms, pension funds, insurance companies, investment banks, hedge funds, and other financial institutions that handle equities and securities.

It’s rare for someone to step into the role of portfolio manager straight out of university. Most start as a financial analyst before advancing to the role of portfolio manager. So, ideally, you want to land a job as a financial analyst or research analyst as a stepping stone towards your goal. 

Most portfolio managers oversee financial and research analysts and will recommend a talented member of their team for promotion should another portfolio management position become available within the company. 

Step 4: Acquire the necessary licenses and certifications

Working in the financial services industry is regulated and once you become a portfolio manager, you’ll have to obtain the necessary licenses and certifications. 

One of the first certifications to acquire is the Chartered Financial Analyst certificate. You will qualify for this once you have your BA degree, at least four years of experience working as a financial analyst, and pass the three mandatory exams.

When you advance to the role of a portfolio manager, you will be required to apply for the appropriate license from the Financial Industry Regulatory Authority (FINRA). This body regulates all securities and brokerage firms operating in the U.S. Depending on the type of assets you manage, you will need to pass the relevant exam. As employers usually take responsibility for sponsoring these exams, this is a license you will only need to acquire when you land your first portfolio management job.  

Step 5:  Register with the securities agency

Portfolio managers often manage high net worth investment portfolios that encompass multiple funds and assets that run into the millions. Should your job involve asset management with a value of over $25 million, you will be required to register with the U.S. Securities and Exchange Commission (SEC). The SEC is an independent federal government agency that regulates securities trade in order to protect investors and maintain fair trade.

A successful career in portfolio management requires the right education, a nose for investments and ambition. Just like investing, it also requires patience. After completing your degree, it may be several more years before an opportunity to move into this role opens up. If you’re willing to work towards it, you’ll be rewarded with a lucrative and fulfilling career.