Portfolio Manager: Career Path and Qualifications (2024)

What Does a Portfolio Manager Do?

Are you seeking a challenging and rewarding career in finance? Are you passionate about analyzing markets, creating investment strategies, and helping clients achieve their financial goals? If so, a career as a portfolio manager might be a good fit as you consider career options. However, you'll typically need to work your way up to portfolio manager through analyst and advisory roles first.

Portfolio managers are financial professionals who work for wealth management firms, pension funds, foundations, insurance companies, banks, and hedge funds. They manage investment portfolios on behalf of individual or institutional clients. Typically, this means creating and overseeing an investment strategy that chooses a portfolio of assets to meet a client's needs.

Key Takeaways

Portfolio managers work with a team of analysts and researchers to develop investment strategies for institutional and individual investors' portfolios.
Portfolio managers typically begin their careers as financial analysts.
Though not required, most portfolio managers hold master's degrees in finance, business administration, economics, or another quantitative field.
Working in portfolio management requires licensing by the Financial Industry Regulatory Authority (FINRA) and often professional certifications, such as chartered financial analyst (CFA).
Portfolio managers managing $25 million or more in assets must register with the U.S. Securities and Exchange Commission.

Portfolio managers aren't just number crunchers. They typically lead a team of analysts, make crucial investment decisions, and build client relationships. They must have a keen eye for market trends, a deep understanding of financial products, and the ability to make quick decisions in the face of sudden market changes. They also work closely with senior financial analysts from investment banks to identify the most promising investment prospects.

In addition to their analytical and strategic responsibilities, some portfolio managers, particularly those working in wealth management firms, meet directly with clients. These interactions involve discussing investment strategies, explaining investment decisions, and providing regular updates on portfolio performance.Below, we take you through what it takes to be in this demanding yet often impactful profession.

Types of Portfolio Managers

A portfolio manager has different responsibilities and pay depending on the fund or portfolio size, the investments managed, and how actively managed the fund needs to be.

Fund or portfolio size: This plays perhaps the most significant role in determining a portfolio manager's title and responsibilities. Managers overseeing assets for smaller, independent funds are typically referred to as fund managers. Meanwhile, those handling larger pools of capital for sizable money management institutions are known as portfolio managers. The individual responsible for managing assets is often called the chief investment officer for large business organizations or educational institutions with substantial endowments.
Investments held: Portfolio managers also specialize based on the kind of investments they oversee. These vehicles include mutual, exchange-traded, institutional, hedge, trust, and pension funds, as well as commodity and high-net-worth investment pools. Some managers focus exclusively on equity investments, while others specialize in fixed-income securities.
Style: Investing style is another crucial factor that distinguishes portfolio managers. In addition to focusing on equity or fixed-income investments, managers often develop expertise in specific investing approaches. These styles include hedging techniques, growth or value-oriented management, small or large-cap specialties, and domestic or international fund investing.

Portfolio Manager Career Path

Portfolio managers typically begin their careers as financial analysts who work on stocks, bonds, or other securities for a firm in the securities industry.

Junior Analyst

Junior analyst positions are typically open to bachelor's degree graduates. After several years of experience, many junior analysts return to school to obtain a master's degree in business administration (MBA) or other relevant graduate degrees before moving into senior analyst roles.

An appropriate master's degree may immediately qualify an applicant for a senior analyst position.

Senior Analyst

A senior financial analyst who works with investments usually produces reports and recommendations for particular securities under the direction of a portfolio manager.

Senior analysts often specialize in particular categories of securities. They spend most of their time conducting new research and analysis, updating research according to new developments, communicating with industry contacts, and presenting recommendations to management and clients. Senior analysts also supervise and direct the work of one or more junior analysts.

Portfolio Manager

With good work performance and demonstrated expertise, a senior financial analyst can become a portfolio manager. If the portfolio performs well, the manager may graduate to larger portfolios with more money under management.

A senior portfolio management position is usually the end of the career path, although some people move into leadership positions in their firms or start new firms.

Portfolio Manager Educational Qualifications

A bachelor's degree in a relevant field is a basic qualification for work as a portfolio manager. However, many employers require master's degrees, and most portfolio managers hold them, even if one isn't required.

A variety of undergraduate subjects, including quantitative business disciplines such as accounting, finance, and economics, are generally considered good preparation for entry-level positions in this profession.

Other relevant disciplines include statistics, mathematics, engineering, and physics, all of which focus on the development of quantitative and analytical skills.

$150,800

The average salary for a portfolio manager in May 2024, according to Salary.com. That said, Salary.com, like Glass Door and similar sites, uses proprietary data often informed by jobs advertised on their sites—which, for occupations like these where job ads aren't exactly posted online all over, means we should take the number with a grain of salt. In addition, portfolio managers make vastly different pay depending on whether they are managing small portfolios or entire mutual funds.

Other Portfolio Manager Qualifications

Most employers require portfolio managers to hold financial analyst certifications. The most prominent certification in the field and demand by employers is the chartered financial analyst (CFA) designation awarded by the CFA Institute.

This designation is open to any financial analyst with a bachelor's degree and four years of acceptable work experience. It's awarded to qualifying candidates who pass a series of three exams. Many employers also consider the certified financial planner (CFP) designation, awarded by the CFP Board of Standards, an optional qualification.

Given the assets they oversee, portfolio managers should hold appropriate licenses from the FINRA, the industry body for securities firms and brokers operating in the U.S. Taking qualifying exams generally requires sponsorship from an employer.

Managers must register with the SEC if the job involves assets exceeding $25 million in value.

Is Portfolio Management Right For Me?

When deciding if portfolio management is the right career path, you should assess key personal and professional factors. Key considerations include the following:

Interest and passion for financial markets: Portfolio managers must be deeply interested in financial markets and investment strategies. This role involves continuous learning and staying updated with market trends, economic indicators, and financial news.
Analytical and quantitative skills: Strong analytical skills are a necessity. Portfolio managers need to analyze large volumes of data, understand financial statements, and use quantitative models to make investment decisions.
Risk management: The ability to make informed decisions quickly is also essential. Portfolio managers often work under pressure and need to manage investment risks effectively. This involves understanding risk-return trade-offs and employing strategies to mitigate potential losses.
Interpersonal skills: Effective communication is needed in portfolio management. Managers must explain complex financial concepts to clients and colleagues, clearly present investment strategies, and build trust with stakeholders. Interpersonal skills are also important for networking and client management.

Ethical and professional standards: High ethical standards and professionalism are nonnegotiable in this field. Portfolio managers adhere to regulations and the ethical codes set by organizations like the CFA Institute to maintain client trust and industry integrity.
Experience and education: A background in finance, economics, or a related field is generally required. Many portfolio managers hold advanced degrees (like MBAs) and professional certifications (such as the CFA charter). Relevant work experience in finance or investment roles is also critical to developing the necessary skills and knowledge.
Work environment: It often involves long hours, high stress, and a fast-paced environment. The role can be rewarding but requires a significant commitment and passion for the field.
Career prospects: Portfolio management offers diverse career paths and prospects for advancement. Successful portfolio managers can progress to senior roles, start their own firms, or move into executive positions within financial institutions. The potential career growth and financial rewards can be substantial, but it requires dedication and continuous professional development.

Portfolio management could be a suitable career choice if you're very interested and can become deeply knowledgeable about financial markets, excel at analytical thinking, thrive under pressure, and are committed to ethical standards.

How Much Do Mutual Fund Managers Make?

The pay of mutual fund managers has long been a contentious issue. The Investment Company Act of 1940 essentially prohibits these managers from being paid for performance, lest they be driven to riskier bets with the funds of middle America. Yet attempts by the SEC to dictate more transparency have met resistance at every turn.

Nevertheless, as we have detailed, researchers combing through the U.S. Census data, tax returns, and other materials have given us the best estimate we have—an average of $2.04 million in 2024 dollars. Yet, that figure is pulled upward by the top end of the pay scale: the top 14% of mutual fund portfolio managers account for about two-thirds of mutual fund manager compensation. That means the median pay is likely to be far less.

What Should a Resume for a Portfolio Manager Include?

Like any good resume, it should include the skills and experience that can make applicants a good fit for the job. Essential qualifications to display might relate to experience with risk analysis, investment and statistical analysis software, financial systems and software, and financial preparation and forecasting. You'll want to include relevant information about your general investment knowledge, experience, and expertise in securities, such as equities, municipal, corporate, and government bonds and derivatives.

What's the CFA Institute?

The CFA Institute is a professional organization focused on ethical standards, education, and the professional development of individuals in the fields of investing and finance. It offers certification programs, including that for CFA, which is obtained by many portfolio managers and advisors.

The Bottom Line

A career as a portfolio manager requires a passion for financial markets, strong analytical and decision-making skills, excellent communication abilities, and adherence to high ethical standards.

With the right educational background, relevant work experience, and professional certifications such as the CFA charter, individuals can excel in this demanding yet rewarding field. The potential for career growth and financial success is significant for those dedicated to continuous learning and professional development.