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
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
A business background is necessary to succeed in this field.
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.
Successful investment managers necessarily possess exceptional brilliance.
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.
Investment management is a glamorous industry.
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.