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Becoming a portfolio manager takes a lot of time and effort, but if you have the right skills, it can be a worthwhile venture. Portfolio managers often start out as financial analysts. With several years of experience—and professional certifications—they can work their way up.
Portfolio managers need the right blend of analytical and personal skills. They manage teams of analysts and work with clients to create financial goals and continually monitor their mix of assets. Portfolio managers must be resilient and strategic leaders—skills learned over years of professional development.
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What Do Portfolio Managers Do?
Portfolio managers supervise investment portfolios for their clients, usually businesses or wealthy individuals. These portfolios may include securities and other investment products. Portfolio managers might work for hedge funds, insurance companies, wealth management firms or other sectors of the securities industry.
Role and Responsibilities
Portfolio management is a senior position in the financial industry. These individuals often manage teams of analysts who perform research and provide recommendations to create and execute financial plans for clients.
Portfolio managers then make the buy-and-sell decisions, continually reviewing the investment mix to make sure it’s profitable.
Career Advancement
Typically, portfolio managers work their way up from early-career financial or investment analyst roles. These entry-level jobs allow new employees to get acquainted with the investment decision-making process over several years.
As professionals build their client base, prove their skills and earn certifications such as the Chartered Financial Analyst (CFA)® designation, they can work their way up to portfolio management.
For many, portfolio management is the final step in their career. However, portfolio managers can also reach senior leadership roles, such as head of portfolio management. They might also start their own firms. Since senior portfolio managers report to their chief investment officers, this role can also be a stepping stone to an executive position.
Skills for Portfolio Managers
Being a portfolio manager requires a combination of communication skills and investment expertise. These professionals oversee investment strategies, create financial forecasts, measure performance and mitigate risk. If a portfolio performs poorly, portfolio managers have to readjust—and be held accountable to their clients.
How Much Does a Portfolio Manager Make?
Portfolio management is a high-level career path, with a salary to match. The median wage for financial managers was $139,790 in May 2022, according to the U.S. Bureau of Labor Statistics (BLS). That’s significantly higher than the $46,310 median pay for all workers.
The top 10% of these workers earned more than $239,200, the BLS reports, while the lowest 10% earned under $79,050.
The CFA Institute conducts its own salary survey of charter holders. These portfolio managers report a median base salary of $126,000. That figure increases to $177,000 when considering all compensation, such as bonuses and long-term incentives.
Portfolio managers are in high demand, too. The BLS projects employment for financial managers to grow by 16% from 2022 to 2032. This rate is much higher than the projected 3% growth for all occupations during that time frame.
How To Become a Portfolio Manager
To become a portfolio manager, you need to work your way up within the financial industry. A bachelor’s degree qualifies you for an entry-level analyst position. After a few years of experience, you can earn certifications to prove you have the skills to be a portfolio manager.
Complete a Bachelor’s Degree
In almost all cases, the first step is to earn a degree—preferably in a related subject, such as a bachelor’s degree in accounting or a business administration bachelor’s. It isn’t necessary to get a master’s degree yet, but that can come in handy when you’re seeking a promotion down the line.
Gain Experience
While you’re in school, consider taking on a summer internship. This will help you get acquainted with the industry and make sure it’s the right fit.
After earning your bachelor’s degree, you are eligible to work as a junior financial analyst. Junior analysts are responsible for analyzing financial trends and providing investment recommendations. These professionals often work long hours, spending lots of time on research and documentation.
In time, early-career financial analysts may work their way up to senior analyst positions. These employees manage teams of junior analysts, compile their findings and provide recommendations directly to clients.
Earn Certification and Licensure
In most cases, senior analysts who aim to become portfolio managers must first earn certification. The CFA credential is one option. The Certified Financial Planner (CFP)® designation is another popular pursuit for portfolio managers. Many portfolio management professionals must earn licensure through the Financial Industry Regulatory Authority (FINRA).
Network through Professional Organizations
Anyone who earns the CFA or CFP certification can leverage those groups into new opportunities. Through continued education and networking, analysts can become portfolio managers.
Several professional organizations offer benefits, too. For example, the Portfolio Management Institute and the National Association of Active Investment Managers both provide professional development, conferences and networking opportunities.
Consider Graduate Education
Earning a master’s degree can be helpful when advancing to a senior analyst role, especially for portfolio managers. Some schools even offer a master of financial engineering program. Yale, for example, has a master’s degree in asset management.
Certifications for Portfolio Managers
Many portfolio management roles require candidates to hold certifications. The most common certification for these professionals is the CFA designation. CFP certification is popular among portfolio managers as well.
Moreover, depending on the types of assets they manage, many portfolio managers are required to obtain licensure through FINRA.
CFA Charter
Perhaps the most prominent certification for portfolio managers is the CFA credential offered by the CFA Institute. It takes years to earn this charter, which focuses on investment management. Candidates must pass three increasingly complex exams, which aren’t offered frequently. The first exam is offered three times per year. The second is offered twice, and the final exam is offered only once.
On average, successful students spend more than 300 hours studying for each level of the CFA exam. Even with a significant time investment, about half of students fail the exam. The 10-year average pass rates for each level range from 41% to 52%, according to the CFA Institute.
Besides the exam requirements, candidates need a bachelor’s degree and 4,000 hours of qualified work experience. They must also provide a few professional references and apply. Finally, charter holders should have an international passport and complete a Professional Conduct Statement form.
The CFA charter is costly, too. There’s a one-time fee to enter the program, plus exam fees for each level. In total, it costs between $3,050 and $3,950 to become a CFA charter holder. CFA Institute membership costs $299.
Certified Financial Planner
The CFP certification is offered by the CFP Board of Standards. Unlike the CFA charter, this certification focuses on managing individuals’ portfolios and financial planning. CFP professionals are bound to act as fiduciaries, meaning they act with their clients’ best interests in mind.
The CFP exam consists of two three-hour sessions, taken in one day. To sit for the test, candidates must complete coursework through a qualified CFP program. On average, that takes 12 to 18 months, the CFP Board says. Candidates must hold a bachelor’s degree as well, which can happen either before or after passing the exam.
The CFP certification requires 6,000 hours of professional experience or 4,000 hours of apprenticeship. The final step is to complete an ethics declaration and pass a background check.
The registration fee for the exam depends on when you register. There is an early rate of $825, a standard cost of $925 and a late-registration rate of $1,025. There is also an annual CFP certification fee of $455.
Securities License
Many securities professionals need to be licensed through FINRA, depending on the types of assets they work with. To receive FINRA licensure, project managers must pass two exams: general knowledge of the securities industry, and the Series 7 exam, which requires employer sponsorship. They can then be registered as a General Securities Representative.
In addition, any portfolio managers who manage more than $25 million need to register with the Securities and Exchange Commission.
Frequently Asked Questions About Portfolio Managers
What qualifications do you need to be a portfolio manager?
Portfolio managers need at least a bachelor’s degree, and sometimes they need a master’s degree. They should also complete several years of experience as an analyst in the finance industry. Usually, hiring managers look for professional certifications as well.
What skills do portfolio managers need?
Portfolio managers need strong skills in the financial industry, including asset management and risk management. They need communication skills to work with clients, set goals and analyze the portfolio to make sure it’s profitable. Strong math and computer skills are necessary, too.
Do you need an MBA to be a portfolio manager?
An MBA is not required to be a portfolio manager, but having a master’s degree does help. This degree doesn’t have to be in business administration; finance and economics are popular options for graduate study as well.
