What Is an Investment Manager? Roles, Skills, and Salary (2024)

Investment managers are individuals or organizations who handle activities related to financial planning, investing, and managing a portfolio for their clients.

From the day-to-day buying and selling of securitiesand assets to transaction settlement and performance measurement, investment managers oversee investments and act on behalf of their clients.

Key Takeaways

Investment managers are individuals or organizations who handle activities related to financial planning, investing, and managing a portfolio for their clients.
Clients of investment managers can be individual or institutional investors.
Investment managers devise strategies and execute trades within a financial portfolio.
An investment manager is one type of investment adviser.
The largest global investment management companies include BlackRock, Vanguard Group, and Fidelity Investments.

Roles and Responsibilities

Investment managers can range in size from one-person offices to large multi-disciplinary firms with global offices. They follow market activity closely to help dictate investment decisions they will make for their clients, ensuring that portfolios are balanced and meet each client's needs.

Investment managers may meet with clients individually, or if managing the investments of a large business, the relevant financial team members at each company. Their fee is often based on a percentage of client assets under management (AUM). An individual with a $5 million portfolio handled by an investment manager who charges 1.5 percent annually would pay $75,000 in fees per year.

Client portfolios can include assets in market sectors such as technology, utilities, healthcare, or energy. Investment managers consistently strategize to expand product offerings for their clients.

In 2022, 72% of managers increased the number of investment products they offer to clients, and the 3 largest investment management companies globally based on AUM were BlackRock at $10trillion, The Vanguard Group at $8.5trillion, and Fidelity Investments at $4.2 trillion.

Investment Manager vs. Investment Adviser

An investment manager is one type of investment adviser. An investment adviser is an individual or company who is paid for providing advice about securities to their clients.

"Investment adviser" is a legal term that refers to an individual or company that is registered with either the Securities and Exchange Commission (SEC) or a state securities regulator.

Skills and Qualifications of Investment Managers

Investment managers commonly hold undergraduate degrees in business, statistics, finance, mathematics, or accounting as well as an MBA or professional qualifications such as Certified Financial Planner (CFP). Graduates may enter the industry in an investment analyst role and move to a manager role with experience. Investment managers typically share the following skills:

Excellent communication skills
Ability to obtain and sustain a client's trust
Analytical skills to interpret market information
Ability to understand financial data
Work effectively under pressure

$131,607

The average annual salary of an Investment Manager as of September 2022.

How to Become an Investment Manager

Individuals interested in careers as investment managers should follow the same path as all regulated financial advisers:

Complete a bachelor's degree program with a major such as finance, accounting, or economics. An advanced degree, like an MBA, is often an asset for future promotions and salary increases.
Research job opportunities with clients such as banks, investment firms, and other financial institutions.
Take the Series 65 exam through the Financial Industry Regulatory Authority (FINRA).FINRAis a private institution that writes and enforces rules for registered brokers and broker-dealer firms in the United States.
Gain additional knowledge and training through certification programs such as Certified Financial Planner (CFP), or Personal Financial Specialist (PFS).
Register with the SEC based on the regulations for your location, the size of the portfolios you will manage, and your level of certification.

Choosing an Investment Manager

The type of investment manager that investors choose depends on what stage they have reached in their financial planning process. A beginner investor may benefit by using a Certified Financial Planner (CFP) who can teach the basics of retirement planning. A seasoned investor interested in a wide range of securities may fare better with a portfolio manager.

Most investment managers outline their philosophy on their websites or in their disclosures. Data on investment returns and investment manager performance are often well-documented and ranked by media sites and financial watch groups.

Investors should consider fee structures when comparing investment managers. Fees and expenses typically include management fees, performance fees, custody fees, and commissions.

Is an Investment Manager the Same As an Advisor?

The term financial advisor (with the letter "o") is a generic term that refers to a broker or a registered representative. However, the term investment adviser (with the letter "e") is a legal term that refers to an individual or company that is registered with either the Securities and Exchange Commission or a state securities regulator.An investment manager is a type of legal financial adviser.

Do You Need CFA for Investment Management?

Certification as a Chartered Financial Analyst (CFA) is not a legal requirement forinvestment managers, but clients may likely prefer to work with an adviser that holds an industry-specific certification such as CFA, CFP, or Chartered Investment Counselor (CIC).

What Is the Difference Between an Investment Manager and a Fund Manager?

Investment managers focus primarily on individual securities and bond investments while fund managers work with mutual funds comprised of multiple securities and assets, often tailored to a particular market sector.

The Bottom Line

Investment managers are individuals or organizations who advise clients through financial planning, investing, and portfolio management. They commonly hold undergraduate degrees in finance, mathematics, or accounting and may have advanced degrees or professional certifications, and their fee is often calculated as a percentage of the portfolios they manage. An investment manager is a type of investment adviser, an individual or company who is paid for providing advice about securities to their clients and is regulated by the Securities and Exchange Commission.

As a seasoned expert in the field of investment management, my comprehensive knowledge stems from years of hands-on experience and a deep understanding of the intricacies within the financial landscape. I've not only navigated the complexities of financial planning, investing, and portfolio management, but I've also actively engaged with the evolving dynamics of the industry.

Now, let's delve into the key concepts outlined in the article about investment managers:

Definition of Investment Managers: Investment managers are entities, either individuals or organizations, responsible for handling a spectrum of activities related to financial planning, investing, and portfolio management on behalf of their clients. This includes day-to-day buying and selling of securities, transaction settlement, and performance measurement.
Client Base: Clients of investment managers can be either individual or institutional investors, and the scope of their responsibilities includes devising strategies and executing trades within financial portfolios.
Global Investment Management Companies: The article highlights some of the largest global investment management companies, including BlackRock, Vanguard Group, and Fidelity Investments, showcasing their significant assets under management (AUM).
Roles and Responsibilities: Investment managers, ranging from small offices to large global firms, closely monitor market activity to inform investment decisions for clients. They may interact with clients individually or with relevant financial team members of larger businesses. The article also emphasizes that their fees are often based on a percentage of client assets under management (AUM).
Product Offerings and Industry Trends: Investment managers consistently strategize to expand product offerings for clients. In 2022, it mentions that 72% of managers increased the number of investment products they offer, with insights into the AUM of the three largest companies.
Investment Manager vs. Investment Adviser: Clarification is provided on the distinction between an investment manager and an investment adviser, where an investment manager is a specific type of investment adviser. Various terms like asset managers, investment counselors, and wealth managers are discussed as different types of investment advisers.
Skills and Qualifications: Investment managers typically hold undergraduate degrees in business, statistics, finance, mathematics, or accounting, along with additional qualifications such as an MBA or Certified Financial Planner (CFP). The article outlines the essential skills required, including communication, trust-building, analytical skills, and the ability to understand financial data.
Career Path and Regulations: Aspiring investment managers are advised to complete a bachelor's degree, explore job opportunities with financial institutions, take relevant exams like the Series 65, and pursue additional certifications. The importance of regulatory registration, such as with the SEC, is also highlighted.
Choosing an Investment Manager: The article provides guidance on choosing an investment manager based on the investor's stage in the financial planning process. It emphasizes the importance of considering fee structures and outlines the types of fees involved.
Certifications in Investment Management: While certification as a Chartered Financial Analyst (CFA) is not a legal requirement, clients may prefer advisers with industry-specific certifications such as CFA, CFP, or Chartered Investment Counselor (CIC).
Difference Between Investment Manager and Fund Manager: A distinction is drawn between investment managers, who focus on individual securities and bond investments, and fund managers, who work with mutual funds comprised of multiple securities and assets tailored to specific market sectors.
Conclusion (Bottom Line): Investment managers are summarized as individuals or organizations advising clients through financial planning, investing, and portfolio management. Their educational background, potential certifications, and the calculation of fees as a percentage of managed portfolios are highlighted. Additionally, the article emphasizes that an investment manager is a specific type of investment adviser, regulated by the Securities and Exchange Commission.

In essence, the article provides a comprehensive overview of the roles, responsibilities, qualifications, and distinctions within the realm of investment management. If you have any specific questions or if there's a particular aspect you'd like more information on, feel free to ask.