How much does a portfolio manager make? (With skills)
By Indeed Editorial Team
Published 20 April 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Portfolio managers play a crucial role in implementing investment strategies for clients. They work with a wide range of clients, including families, institutions, corporate businesses and individuals. If you're a driven, proactive and analytical person that's looking to enter the finance industry, a job as a portfolio manager might be a good fit for you. In this article, we look at what a portfolio manager does, answer the question 'How much does a portfolio manager make?', look at the required skills for the role and how to become one.
What is a portfolio manager?
Before finding out the answer to 'How much does a portfolio manager make?', it's helpful to learn what a portfolio manager is. A portfolio manager is an individual that's responsible for investing the assets of a closed-end, exchange-traded or mutual fund, managing the day-to-day elements of portfolio trading and implementing an investment strategy for their clients. They're also known as wealth managers, asset managers or investment counsellors and can be either passive or active in their operations.
Portfolio managers typically manage investment portfolios on behalf of pensions, endowments, foundations and private clients. Unlike retail investment or mass-market managers, portfolio managers work for fewer clients and manage larger amounts of money, resulting in lower management fees.
How much does a portfolio manager make?
If you have an interest in a finance career, you may want to know the answer to 'How much does a portfolio manager make?'. The national average salary for a portfolio manager is £41,845 per year. But this may vary depending on your location, experience, employer and industry. If your portfolio performs well, you can earn more money by working on larger portfolios. Portfolio managers also tend to earn higher salaries in larger cities, particularly in London.
What does a portfolio manager do?
Portfolio managers have a wide range of responsibilities, including:
Managing investment allocations
The primary responsibility of a portfolio manager is to manage and create investment allocations for private clients. Some choose to work with families and individuals, while others work closely with corporate or institutional investors. To meet the investment objectives of a client, portfolio managers tend to follow a predetermined investment strategy outlined by an investment policy statement (IPS). Some portfolio managers create client investment packages, while others manage client transactions and expectations. To maintain a specific objective or investment strategy, portfolio managers sell and buy securities within an investor's account.
Understanding market trends
To construct successful portfolios that position client assets better, portfolio managers gain an in-depth, up-to-date understanding of market trends, conditions and the overall economic outlook. To do this, they read investment and finance publications to learn about relevant trade and investment news. Portfolio managers also meet with investment researchers and analysts from different organisations to develop a deeper understanding of the conditions of the market and the global and domestic developments that could affect future investments or account balances for clients.
Maintaining client relationships
Maintaining client relationships is one of the most important elements of a portfolio manager's job. Portfolio managers stay in frequent contact with their clients to discuss economic trends, updated investment research and market conditions. Part of a portfolio manager's fiduciary duty is to meet with their clients every year to ensure that their investment goals haven't changed and that the manager's portfolio allocations still align with the initial requests given by the client.
Portfolio managers periodically evaluate each predetermined investment package's performance and ensure that they meet the standards laid out by regulatory organisations. For example, portfolio managers make regular edits to a portfolio that no longer complies with allocation guidelines or initial investment objectives. Investment management is a highly regulated industry, so a key part of a portfolio manager's role is to ensure compliance with anti-fraud measures, anti-money laundering requirements, privacy laws and investor disclosures.
What skills does a portfolio manager need?
There are several skills that a successful portfolio manager requires, including:
To become a successful portfolio manager, it's essential for you to be able to recognise your own limits, as you're making predictions about the future. Typically, effective portfolio managers are confident and can exercise caution when required. A good portfolio manager can also recognise any mistakes they make, take responsibility for them and learn from them.
Understanding the financial market can be challenging and there's no way to accurately predict its trajectory, so it's essential to be proactive to prepare for the future. Part of being proactive is gathering a complete understanding of how the portfolio may act under a variety of changing conditions. Investigating the past performance of the investment and considering other fluctuating conditions in the market can lead to better decision-making for future circumstances.
One of the most significant components of a portfolio manager's job is to interpret analytics and data, as there are many plans and scenarios that need researching to develop a variety of outcomes. Having in-depth knowledge of the principles of analytics is essential for any portfolio manager, as this helps them to connect events, spot trajectories and predict their effect on the market as accurately as possible. This skill is key when portfolio managers don't have access to the full scope of information, as it can allow them to make strategic decisions based on past data and performance.
Self-confidence is a crucial skill to have in the finance industry and effective portfolio managers have the emotional strength to uphold their opinion, even if they're unpopular. Portfolio managers complete their work by using logic rather than emotions, so it's essential to have control over your emotions, especially when working in volatile markets. This can also offer your clients comfort during uncertain moments. Markets are constantly fluctuating, so it's important to remain calm and keep a clear head to prevent you from making poor, panic-driven investment decisions when tensions are high.
Knowledge of financial developments
A key skill for a portfolio manager to have is the ability to gain knowledge of current financial developments. This is because the data and information portfolio managers have access to is constantly changing. Staying up-to-date on financial developments is therefore very important, as it allows you to make better and more informed decisions.
Even under stressful and uncertain circumstances, it's key for all portfolio managers to keep their clients informed about their investments and to communicate with them regularly. While this involves relaying complicated information, explaining your recommendations and analysis in concise and understandable terms is important. Effective portfolio managers are proactive when it comes to communicating with clients and others in their organisation and can also justify all their decisions.
How to become a portfolio manager
While every path is different, there are some common steps that you can take to become a portfolio manager. These include:
1. Earn a degree
To become a portfolio manager, the first step is to earn a bachelor's degree in a relevant field. You may also find that some employers require master's degrees from applicants as well. There's a wide range of undergraduate subjects that you can study to pursue a career in this industry, such as economics, finance, accounting and other quantitative business disciplines.
Other related subjects that can help you develop the key analytical skills required for the role include physics, engineering, mathematics and statistics. A master's degree in finance, economics or business administration is also common among portfolio managers and most employers require applicants to hold financial analyst certifications as well.
2. Become a financial analyst
Most portfolio managers begin their career as financial analysts working on bonds, stocks and other elements of the securities industry. Graduates with bachelor's degrees can gain a junior analyst position and many of them choose to gain a master's degree in a related field to allow them to work as a senior analyst. Senior financial analysts present their recommendations to clients and management, communicate with industry contacts and update their advice after researching new developments. After demonstrating their expertise and commitment to the role, they're then in a good position to become a portfolio manager.
3. Look for opportunities in portfolio management
The final step is to look for opportunities in portfolio management. Firms may advertise internally or externally for portfolio management roles or you may also hear about opportunities through your professional network. It's also possible to work as a self-employed portfolio manager, though it can help to have prior experience first.
Salary figures reflect data listed on Indeed Salaries at the time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
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