Investment management is the business of investing other people’s money. It is the “buy side” of the broader financial industry. Investment managers, sometimes called asset managers or money managers, put their clients’ money to work in common stocks (equities), bonds and other fixed-income securities, commodities, or a combination of any of these. Their clients may be companies, government agencies, nonprofit organizations, and individuals—in short, anyone who has money to invest.
The investment management industry (IM) manages hedge funds, mutual funds, private equity, venture capital, and other financial investments for third parties, which include companies, pension funds, endowments, insurance companies, private banks, nonprofits, and individuals. The IM industry is also known as the asset management industry. The competent management of hedge funds, mutual funds, and other financial investments provides financial security to Americans, allows companies to grow and prosper, and fuels the U.S. and world economies. The U.S. financial crisis of 2008–2009 underscores how important strong investment management is to the health of the U.S. and world economies.
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- The work is demanding, but every work day offers a different set of challenges and opportunities. Investment advisors and investment managers have a high degree of independence on the job.
- There is plenty of personal interaction in this business. Investment advisors have frequent telephone or personal contact with clients, people at the companies they follow, distributors, and servicers.
- The work is rewarding financially. Investment advisors and managers are highly compensated for their efforts, and talented employees typically receive excellent benefits and vacation packages.
- Advancement opportunities are numerous, especially in firms affiliated with a commercial bank, investment bank, or insurance company. Investment professionals with an entrepreneurial drive can move up by starting their own advisory firm.
- Individuals with strong problem solving skills will thrive in this business. Investment firms want people who can write clearly, verbally express ideas to clients, and have an interest in all things financial.
- The work week can be long, often 50-60 hours a week when you first begin. Your work day may be filed writing reports, meeting deadlines, and returning phone calls late in the day.
- Getting in the door can take years of work and require certain credentials, such as state licenses or industry certification. Many people start out doing something else, often crunching numbers as research analysts or working in an industry outside investment management.
- Highly compensated employees may find themselves accepting a buyout offer at an unexpected time. In a tough economy investment management firms are constantly trying to rein in costs while retaining top talent.
- Career paths and advancement opportunities in smaller firms may be ill-defined. Many of these firms lack written job descriptions, potentially a turn-off for new hires.
- Compensation can be highly variable if tied to investment performance. Don’t count on big bonus every year if you’re working at a hedge fund or a major Wall Street firm.