Investment Management

Pursuing a career in investment management can be a great professional choice for you if you feel comfortable following the financial markets, the New York Times is your newspaper of choice, and you have often found yourself following the ups and downs of stock options on the internet. In addition, if you are analytical, creative, and can look into a scenario objectively, you have the key personality traits that an investment manager should have. By developing a career in investment management you are expected to think independently, and should be able to make your own decisions whilst taking calculated risks at the same time.

One of the most exciting and attractive characteristics of pursuing a career in investment management is that those that are a part of this sector know that what they do and the decisions they make have a substantial impact in the households of thousands of individual and institutional investors, making the whole industry even more challenging. Another aspect of this professional career is that it is significantly more stable as a profession than other opportunities in the financial market, such as investment banking for instance. Firms devoted to investment banking are paid a fixed fee for their services and it is a less cyclical industry.

The investment management industry is comparatively new as it started maturing in the 1970s when financiers realized that the current demographic trends would cause the retirement system to collapse, around the time of the creation of ERISA (the Employment Retirement Income Security Act). The ERISA encouraged employees to start playing an active role in their retirement savings by inspiring them to save for retirement in a private manner through 401k plans. As a result, a large number of individual investors started saving for the long term and a private pension fund market was established.

This led to the creation of professional groups that specialized in the management of individual and institutional assets: investment management firms. Shortly afterwards, those developing a career in investment management began to market mutual funds as a wise way of making a long term investment that did not imply much risk. Over the last decade, those interested in pursuing a career in investment management have had two main paths to opt for: traditional or alternative asset management.

The former are highly regulated entities that have to stick to strict regulations so that investors can rest assured that they are not taking unnecessary risks. The latter are not as highly regulated; as such, risks are also higher.

This is why it is important to have a significant net worth in order to invest in alternative assets. The investment management industry has not been immune to the latest global financial crisis but, nevertheless, it has been able to bounce back as a large number of individuals and institutions are seeking professional help to manage their assets and investments wisely. Working in an investment management company usually implies working in a less structured environment. The different positions that can be occupied do not follow a certain fixed set of responsibilities or job descriptions. Hierarchy levels here are also less fixed, which means that young talented individuals can soon receive a promotion to more challenging positions.

The three main positions that anyone interested in pursuing a career in investment management can fill are outlined as follows.

1. Portfolio managers decide where to invest the client’s money.
2. Research analysts analyze the market and write analytical reports that are studied by portfolio managers in order to make wise investment decisions. Research analysts usually make suggestions that can help portfolio managers, and investors.
3. Account and product managers manage the firm’s relationship with the clients.