When the economy was booming, conventional wisdom held that paying an asset manager to invest your money was ridiculous, since index funds that replicated the Dow or the S&P 500 consistently beat most U.S. active funds. Now that indices aren't doing as well, active funds are garnering more respect from investors, and the industry as a whole is thriving.
Investment managers fall into one of three basic categories: hedge funds and proprietary trading desks, mutual funds like Fidelity Investments, Janus, T. Rowe Price, Capital Group of Companies and Asset Managers, and "other" - which includes insurance companies such as The Guardian Life Insurance Company of America and New York Life, municipal governments, universities, foundations, etc. Unfortunately for newly-minted MBAs, breaking in to investment management can be problematic, since the industry places a high premium on age and experience. Most b-school graduates will probably find that the quickest route into this world will be through large mutual fund companies that offer a complete (or nearly complete) roster of services and products. In addition, many investment managers begin their careers on the sell-side.
Life as an Investment Manager:
Investment management is a low-risk, high-reward industry - investment managers are generally paid a percentage of the entire amount they handle, whether or not they make or lose money for the client. Accordingly, b-school graduates can expect to receive slightly less than their sell-side counterparts, somewhere between $125,000 to $200,000 in salary and bonuses to start. Compensation for more experienced investment managers, such as portfolio managers, varies greatly but tends to fall somewhere between $200,000 and $500,000. However, unlike their sell-side counterparts, asset managers typically enjoy great work hours (an average of about 60 hours/week) and a fair amount of stability.
It is important to note that if you're seeking a young, vibrant atmosphere - hanging out with other recent grads, making a lot of friends - this is not the job for you. Investment managers are generally older and have their own families, so at quitting time, they tend to head home. However, the industry's penchant for older, more experienced employees will not prevent advancement. One of the great things about asset management is that success is measured objectively - if you make money, you move up. Finally, the greatest perk associated with investment management is that, as a buyer, sellers will constantly shower you with gifts and other enticements.
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Myth A business background is necessary to succeed in this field. |
Employment Authority While it is true that most people in the investment management industry have a background in business, you would be hard-pressed to find a general theme among the most successful investment managers (aside from an interest in all things financial). In fact, a surprising number of asset management firms look for people with a liberal arts background. The ability to write clearly and thoughtfully and verbally express ideas to client and potential clients are essential skills to this job.
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Myth Successful investment managers necessarily possess exceptional brilliance. |
Employment Authority A lack of exceptional brilliance will by no means prevent anyone from making the big bucks. Warren Buffett is a smart guy but he's not a rocket scientist. According to most investment managers, the keys to success are hard work and common sense.
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Myth Investment management is a glamorous industry. |
Employment Authority It's not all high profiles and magazine covers. There's a lot of grunt work in the trenches. Most investment managers start out as research analysts. That means recent graduates will be spending the bulk of their time behind a desk crunching numbers and writing reports. However, as you move up the ladder, fame and fortune are certainly possible - if you're good.
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