Breaking Into Investment Management: Strategies For Success

Investment management is a broad and competitive field with a variety of entry points. The most common routes into the industry include internships, graduate schemes, and postgraduate study.

If you're an undergraduate, it's important to start early – ideally in your first year – by applying for Insight Days, summer internships, and graduate schemes. A degree in a subject like finance, economics, or business is advantageous, but not essential. A strong GPA and relevant work experience will also boost your application.

For those who have already graduated, a Master's in Finance or an MBA can be a good way to break into the industry, especially from a non-target university. Again, it's important to gain relevant work experience through internships or other entry-level roles.

In terms of skills, investment management requires a mix of analytical and interpersonal abilities. You'll need to be comfortable with numbers and have strong research, communication, and relationship-building skills.

Finally, it's worth noting that the investment management industry is facing challenges due to evolving technologies, changing client expectations, and increased competition from robo-advisors and passively managed vehicles. However, it remains a dynamic and lucrative field for those with the right qualifications and experience.

Investment management career paths

Investment management is a broad field with many different career paths. Here are some of the most common ones:

Investment Management for a Mutual Fund or Wall Street Firm

If you want to work for a prestigious Wall Street firm or a large mutual fund company, you'll need impressive credentials. A degree in finance or economics from a top-tier institution is a good start, and further qualifications such as a Master's in Business Administration (MBA) with a concentration in finance can also help. These firms are highly selective and only hire the most promising graduates.

Investment Management for a Local Bank or Lower-Tier Fund

If you're not interested in working for a large firm, you may be able to find a job as an analyst at a local bank or lower-tier fund. You may not need an expensive degree for these roles, and it can be a good way to get your foot in the door and learn the industry. With hard work and further qualifications, you could eventually advance to a portfolio manager position.

Setting Up as a Financial Advisor

If you're willing to study and pass the required securities examinations, you can work as a financial advisor. This path requires strong sales and networking skills to bring in new clients, but it offers the freedom to work for yourself or for an established advisory firm.

Corporate Banking

Corporate banks tend to be bigger than investment banks and focus on the debt side of the financial picture. As a corporate banker, you'll work directly with global corporate clients, allocating credit and meeting their financial needs. The career path typically starts with an analyst role, which involves analyzing the financials of companies and assessing risk. With experience, you can move into more strategic and client-facing positions.

Investment Banking

Investment banking involves providing a range of financial services to the global business community, such as issuing stocks, raising capital, trading securities, and facilitating mergers and acquisitions (M&A). The typical career path starts with a junior analyst role, which involves long hours working with numbers, spreadsheets, and valuation models. After a few years, analysts often go on to business school before returning as associates, where they take on more client-facing responsibilities. With further advancement, investment bankers can reach the level of managing director, making deals with top-level clients.

Sales and Trading

Sales and trading can take place within investment banks, commercial banks, brokerages, or independent trading floors. Sales professionals sell financial instruments to clients, while traders are the market makers who buy and sell securities to maximize value. This career path can be very lucrative, but it requires a tough, aggressive mindset and the ability to handle high-pressure situations.

Investment management vs investment banking

Investment management and investment banking are two of the most sought-after careers for business and finance graduates, promising high-profile careers with great perks and bonuses. However, the two roles are very different.

Investment Management

Also known as asset management or fund management, investment managers help their clients manage their money efficiently by performing financial analysis, equity research, and portfolio allocation. Clients can include individuals, educational institutions, insurance companies, and pension funds.

Investment managers are responsible for running their clients' money. This involves generating investment ideas, constructing portfolios, and ongoing portfolio management. They help clients reach their investment goals, and this can include managing the money of individual investors as well as institutional investors.

Investment Banking

Investment bankers, on the other hand, are deal-makers. They work as high-level consultants and analysts for large companies, helping them with capital-raising strategies. They help their clients raise capital from the market.

Investment banks serve their clients by offering support, advice, and facilitation across major deals, including IPOs, M&A, debt financing, and broker execution.

Education and Skills

Both careers require strong academic credentials, with candidates expected to demonstrate strong numerical capabilities and financial literacy, as well as communication skills. A bachelor's degree is considered a prerequisite, and many candidates go on to pursue postgraduate degrees such as a Master's in Finance or an MBA.

Workload and Lifestyle

The workload and lifestyle differ significantly between the two roles. Investment bankers often work extremely long hours, with a culture of working 60-80 hours a week, including weekends. This can take a toll on personal life and well-being.

In contrast, asset managers typically work more reasonable hours, with a range of 40-60 hours per week, and rarely work on weekends.

Salary

Both careers offer competitive salaries, but investment bankers tend to earn higher wages. Entry-level investment bankers can expect a salary of around $90,000, while entry-level investment managers earn around $70,000. With experience, both careers can offer salaries in excess of $150,000.

Both investment management and investment banking offer attractive career prospects, but it is important to understand the differences between the two roles before making an informed career choice.

Investment management qualifications

There are several qualifications available for those looking to enter the investment management industry. The most popular is the Investment Management Certificate (IMC), which is a widely recognised entry-level qualification. The IMC is granted by CFA UK and covers key areas such as accounting, regulation, ethics and investment practice. It is designed to prepare individuals for entry-level jobs in the investment industry and is often quoted as a prerequisite for posts in investment management companies. The IMC is split into two units: Investment Environment and Investment Practice. The former covers topics such as the regulatory environment, markets, taxation and client objectives, while the latter covers financial instruments, portfolio management, accounting, economics and statistics.

Another option is the Chartered Institute for Securities and Investments (CISI) Level 4 Investment Management certification. This qualification is suitable for those with little experience or no relevant qualifications in the field. It provides an advanced understanding of the areas and functions of investment management and can be completed in roughly 284 hours, including the multiple-choice exams. CISI also offers a higher-level Diploma in Capital Markets, which can lead to higher-level jobs in professions like fixed income analysis, fund management, investor relations and portfolio management.

For those new to asset management, the Institute of Asset Management (IAM) certification is an introductory qualification that covers the fundamental principles of asset management. There are no entry requirements for this certification, but IAM also offers an advanced diploma for those with previous experience in asset management.

In addition to these certifications, relevant degrees such as business, management, statistics, finance, mathematics, accounting or economics can be beneficial for those seeking a career in investment management.

Investment management firms

The typical career path in an investment management firm starts with a role as an investment analyst or research analyst. In this role, fresh graduates work on evaluating a specific segment of the market and making recommendations to fund managers. Over time, analysts gain more responsibility and progress towards roles with full accountability for managing investment portfolios or funds.

There are different types of investment management firms, including large firms that manage assets worth trillions of dollars, boutique firms that offer a more personalised experience, and specialist firms that provide expertise in specific areas such as private equity or art investments.

Starting an investment management firm requires careful consideration of regulatory and compliance requirements, as well as significant upfront costs. It is essential to have a solid understanding of the industry and the ability to hire talented professionals who can deliver successful investment strategies.

The success of an investment management firm relies on its ability to generate lucrative returns for its clients. However, the revenues of these firms are directly linked to market performance, which can pose challenges during downturns or periods of poor fund performance.

Some of the largest investment management firms include BlackRock, Vanguard Group, Fidelity Investments, State Street Global, and J.P. Morgan Chase.

Investment management career progression

The world of investment management is an exciting and challenging field that offers a wide range of career opportunities. Here is a step-by-step guide to help you navigate your career progression in this industry:

Step 1: Understanding the Industry and Roles

Before embarking on your journey, it is crucial to understand the investment management industry and the various roles within it. Investment management involves managing financial assets, such as stocks, bonds, and other securities, on behalf of clients. It encompasses a range of activities, including research, financial modelling, analytical report preparation, and providing recommendations to buy or sell investments.

Step 2: Education and Entry Requirements

To enter the field of investment management, a bachelor's degree in a relevant field is typically required. Suitable undergraduate degrees include business disciplines such as finance, accounting, or economics, as well as other quantitative fields like statistics, mathematics, physics, or engineering. A strong academic record, preferably from a well-regarded university, can enhance your employability.

Step 3: Entry-Level Positions

The most common entry-level position in investment management is that of an investment analyst or a financial analyst. These roles involve conducting research, creating financial models, and generating reports and recommendations for buying or selling investments. Junior analysts often start by collecting data, updating spreadsheets, and learning the ropes under the guidance of senior analysts.

Step 4: Gaining Experience and Building Skills

As a junior analyst, you will gain valuable experience and develop essential skills. You will learn how to analyse financial data, create financial models, and stay abreast of market trends. Strong analytical skills, a solid grasp of mathematics and statistics, and the ability to work under pressure are key attributes for success in this field.

Step 5: Advanced Degrees and Certifications

While a bachelor's degree is sufficient for entry-level positions, advancing in the field often requires further education and certifications. Many senior analysts and investment managers hold master's degrees in business administration (MBA) or finance. Additionally, certifications such as the Chartered Financial Analyst (CFA) designation are highly valued by employers and can open doors to more senior positions.

Step 6: Senior Analyst Roles

After gaining a few years of experience as a junior analyst, you may be promoted to a senior analyst position. Senior analysts typically focus on specific categories of securities, developing expertise in that area. They are responsible for conducting in-depth research, planning and executing new research projects, communicating with industry contacts, and presenting their findings to management, clients, or sales agents. Senior analysts also oversee the work of junior analysts.

Step 7: Transition to Portfolio Management

With exceptional performance and demonstrated expertise, senior analysts can aspire to become portfolio managers. Portfolio managers are responsible for creating and implementing investment strategies to meet the needs of their clients. They work with a team of analysts and researchers and make crucial investment decisions. This role often involves building client relationships and requires strong communication and interpersonal skills.

Step 8: Leadership and Specialisation

As you progress in your career, you may take on leadership roles within your firm or start your own firm. Additionally, you may choose to specialise in a particular area of investment management, such as equity or fixed-income investments, or develop expertise in specific investing approaches like hedging techniques or growth-oriented management.

Step 9: Continuous Learning and Adaptation

The investment management industry is dynamic and ever-evolving, so it is essential to stay updated with market trends, economic indicators, and regulatory changes. Continuous learning and professional development are key to staying competitive and advancing in your career.

Step 10: Networking and Building Connections

Building a strong professional network is vital in the investment management industry. Attend industry events, join professional organisations, and utilise online platforms to connect with peers and potential mentors. Networking can open doors to new opportunities, provide insights into different areas of the industry, and help you stay informed about the latest developments.

Career progression in investment management typically follows a path from entry-level analyst positions to senior analyst roles and eventually to portfolio management. It requires a combination of education, experience, certifications, and a strong network. A passion for finance, analytical prowess, and the ability to adapt to market changes are key attributes for a successful and rewarding career in this field.

Frequently asked questions