How to get a job in asset management

• Large asset management firms manage money for pension funds and other investors around the world.
• The role most people aspire to is that of “portfolio manager”, where you manage a pool of funds yourself on behalf of clients.
• You don’t necessarily need to be highly mathematical for these roles – unless you work for a “quant fund“.

What do asset management jobs in banking and finance involve?

Large asset management firms are the backbone of the financial services industry. Part of the “buy-side,” they manage huge sums of money on behalf of their clients, which include large pension funds, sovereign wealth funds and retail investors. Asset management firms aim to increase the value of clients’ investments over time, and they receive a fee for their services.

Unlike hedge funds, which “hedge” investments and try to make money even when markets fall, asset management firms typically “go long” – they invest in products in the hope that their prices will rise. For this reason, they are also known as “long-only investors.” They can also be called “institutional asset managers” – they manage money for institutions.

The scale of the asset management industry is huge. PwC estimates that, from around $85tn in Assets Under Management (AUM) in 2016, the asset management industry will be managing around $145tn in 2025. Although the USA and EU were historically the industry’s most important markets, PwC predicts that the fastest growth worldwide over the next few years will be in Latin America and the Asia-Pacific region.

If you work in asset management, you’ll be helping to manage these enormous pools of money and helping today’s working population save for the future. Increasingly, you’ll also be helping to invest to mitigate climate change and build a better world: environmental, social and governance (ESG) issues are increasingly important when funds decide where to invest.

The experience you have will depend on the kind of fund you work for. Broadly speaking, there are two basic kinds of funds.

Passive: Also called “index trackers”, passive funds mirror the performance of large financial indices like the S&P 500 or the FTSE 100. The money going into an index tracker is put into stocks or bonds in the same proportion as the in the relevant index. The advantage for investors is that the fees are low, the risks of human error are minimal and turnover in the portfolio is also lower. As well as passive mutual funds run by huge institutional investors like Vanguard, exchange-traded funds (ETFs) are a good example of passive investment. They track an index, or a ‘basket’ of assets, but are also a tradable security, so their value goes up and down like a stock on a stock exchange.

Active: This is where human skill and experience comes into the fund management industry. A team of portfolio managers, analysts and researchers use their expertise and a plethora of research, quantitative analysis, forecasts and judgement to decide on what assets to invest in with the aim of beating the market.

A fund is judged on how far above or below it is on a particular index – in equity markets this could be, say, the Dow Jones Industrial average, but funds also compete in bond markets and a host of other asset classes. It can be hard to beat the index, but this is the measure of a good portfolio manager.

Active vs passive management is only one great divide in the fund management industry. Another is top-down versus bottom-up investment. Top-down investors are concerned with a big picture view of a particular sector, asset class or geography first, before delving into the finer financial details. Bottom-up investors are more interested in the financials of a particular company than broad macro themes. This assumes that gems can be found even in industries that are generally not doing well.

Many funds today use quantitative methods to analyze markets and determine where to invest their money, and therefore rely less on humans to make decisions. These are the so-called “quant funds”. 

Career paths in asset management

When people think of asset management, they think of portfolio managers. Portfolio managers, or “fund managers”, are the top dogs of the asset management world. They run funds on behalf of their clients based on a range of investment experience and expertise. However, you won’t be a portfolio manager from the outset. This is the pinnacle of an investment career – you’ll need to work your way up.

These are the jobs you can do in the asset management industry:

Investment jobs: This is where you find the portfolio managers who run the investment strategies. They tend to specialize in one asset class, whether that’s equities, fixed income, or property, and manage the day-to-day investment decisions across the funds they look after. In big fund management firms, there are dozens of money managers with various areas of expertise including multi-asset funds, which decide on which ‘blend’ of financial investments to include in a portfolio.

However, portfolio managers don’t work in isolation. Supporting them are teams of research analysts, whose role is all about generating investment ideas for portfolio management teams to act upon. Research analysts spend their days poring through company reports and industry insights in order to gain in-depth knowledge about particular sectors or asset classes, which will give the portfolio management team an edge over the competition.

Distribution: While investment teams deal with the money management side of the business, distribution teams are all about bringing client money into the fund.

Sales, or business development professionals, deal with large institutional investors, find out what their investment needs are and try to recommend the products of their employer. Sales professionals also spend a lot of time developing and maintaining relationships with clients in an attempt to increase loyalty. One of the biggest challenges any fund manager faces is maintaining assets under management, particularly if performance dips.

Traders in asset management firms execute the trades required to maintain the portfolio as required by the portfolio managers. Working as a trader in asset management is about market timing and breaking large trades into manageable chunks. Algorithms are increasingly being used to do this instead of human beings.

Product development/management roles ensure that a fund manager is present in all the markets and asset classes it should be, has the right funds available to investors in the right markets and that there are no obvious gaps. Product developers also work with the risk and compliance teams to ensure any new products will keep regulators happy, that a fund’s pricing structure is correct and that a firm isn’t falling behind competitors in any areas.

Marketing professionals make sure that the right messages about the products reach potential and existing clients. Marketing professionals today spend less time wining and dining clients and more ensuring that the fund manager is well represented online and on social media.

Business operations: Fund managers employ risk and compliance professionals, investment operations professionals performing back-office functions, as well as IT, HR, and accounting positions.

If you’re a graduate starting out in fund management and you’re on the portfolio management track, you’ll start out as an analyst.

Analysts in fund management learn the trade. They study the financial results of companies, consume huge amounts of information and news on the companies and sectors they cover, and – when they’re good enough – make investment recommendations.

Some people choose to remain as analysts throughout their careers. Others move across to become junior portfolio managers, and eventually work their way up to a portfolio management position.

Which education and qualifications will you need for a career in asset management?

Asset management roles are pretty broad, and firms take a range of graduates.  For front-office roles at major firms such as BlackRock and State Street, our analysis shows that most graduates studied finance and economics, although there was a wider variety of qualifications than in investment banking front-office roles. In support functions, there’s a lot of overlap with investment banking roles, such as compliance analysts coming from legal backgrounds.

If the CFA exams and CFA Charter are critical anywhere, it’s in asset management roles. The Financial Modeling & Valuation Analyst (FMVA) could also be highly valued in an asset management career, especially during the interview process. There’s also the Institute of Asset Management’s IAM Certificate, which we’ve also seen in our research, even though it isn’t as popular as the FMVA.

“It’s important for graduates to understand it’s not all about numbers,” said Margaret Franklin, CFA, president and CEO of CFA Institute. “Many investors and employees today want a three-dimensional view of their investments, one of risk, return, and impact.”

Something that has changed significantly over the last few years is the role of ESG in finance. Although banks don’t appear as interested in the space as they used to be, it’s still a big deal for asset managers, especially in Europe. For that reason, it might be worth looking into CFA Institute’s ESG Certification on the continent. CFA Institute also offers the Investment Management Certificate (IMC) in the UK, which is a CFA Level I-tier certificate for asset management.

Although asset management firms don’t recruit on the scale of investment banks, there are still summer associate programs, which means that an MBA can also be valuable. It also means that an MBA can enter the sell-side and “lateral” into asset management with some investment banking or research experience.

Which skills do you need for a career in asset management?

Alex Torrens, American head of Walter Scott & Partners, an equity portfolio management firm, says: “With a team-based approach, it is critical that the team functions effectively, and that demands diversity. For that reason, we don’t rule anyone in, or out, based on the subject studied or the university. Instead, we look for people who are inquisitive and curious in nature, and who have a strong interest in how businesses work.”

Torrens says asset managers value cognitive diversity. “Our job is to seek to invest in some of the best companies around the world, companies that will lead their markets over the next 10 or 20 years. In analyzing companies and making those decisions, it doesn’t matter what subject you studied at university, but you do need to have a passion for finding and understanding those companies.”

Good people skills are important. For example, if you work in a distribution role, you need to be able to build relationships with investors. Communication skills are needed too: portfolio managers need to be able to understand a client’s needs, and to explain their investment decisions.

“Employers today are looking for a broader range of skills from their staff in order to deliver for their clients,” says Franklin. “While technical skills will always a play a role in an employee’s ability to perform a financial role, the growth of soft skills and T-shaped skills – such as the ability to make connections and foster lateral thinking – will be increasingly important.”

Asset managers must also be aware of a whole range of factors that drive growth and performance, particularly big trends such as ESG factors. “Employees also must be educated and prepared to respond to client’s investing objectives. This includes considerations like ESG analysis to underline the impact of their investments,” Franklin adds.

Salaries and bonuses in asset management

Asset management jobs can be very well paid. In the eFinancialCareers salary and bonus report this year, we found that asset managers in their 20’s can easily earn over $200k per year, with compensation peaking in a professional’s career in their late 50’s, when they make nearly $500k on average.

Although asset managers worked on average more than those working in hedge funds or private equity, they earned significantly more in salary than the latter, and were on par with professionals in investment banks (all roles). Asset managers also reported the highest increases in bonus in 2023 (the bonus round that paid in early 2024) across all sectors we analyzed in the industry.

With additional material from Zeno Toulon.

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