What Are the Different Types of Roles in Asset Management?
Although it may not have quite the cachet of investment banking, asset management is still one of the most prestigious and desirable areas in finance. Many graduates and experienced professionals are eager to work in the field, and it’s a preferred exit route for investment bankers who want a better work/life balance without sacrificing compensation. A variety of different skill sets can be applicable in an asset management setting. For example, front office roles demand strong knowledge of the markets and investments, while middle and back office jobs require strong operational and administrative skills. Typically, entry requirements are high as competition is intense. In some areas, specialized knowledge beyond finance can be a valuable asset. For example, candidates with math or physics degrees are often in demand for quantitative strategy roles.
Key Learning Points
- Asset management is a prestigious field that demands top talent. There are fewer positions available than in areas such as investment banking, and the relatively lower number of jobs coupled with the high level of qualifications can make landing an opportunity in this field a challenge.
- Asset management offers an attractive work/life balance, along with excellent remuneration packages that vary across firms and
- There are various types of roles that fall into two or sometimes three categories – front office, middle office, and back office.
- Although hierarchical structures are relatively flat compared to investment banking, asset management jobs still offer excellent prospects for career advancement.
Actual Role and Responsibilities
As already mentioned, job responsibilities vary widely depending on the segment of the business.
Managing money and all client-facing activities fall within the front office. Positions include portfolio manager, research analyst, product specialist, and relationship managers. This is regarded as the most interesting segment of the asset management business, but landing a job requires a strong academic record, significant market and investment knowledge, and soft skills like presentation and communication skills. Below are some positions:
Research analysts typically do the heavy lifting on researching different markets, sectors, industries and companies in order to make investment recommendations for portfolio managers. Depending on the level of experience, education, and other qualifications, research roles can be junior or senior. Asset management firms usually offer a range of products in different asset classes such as equity, fixed income, alternatives, or multi-asset. Analysts tend to specialize not just in a specific asset class, but also by sector. For example, credit analysts may focus on investment grade or high yield bonds, while equity analysts focus on an industrial sector such as financials, consumer discretionary, utilities, etc.
Also known as a fund manager, the PM is in charge of the overall management of an investment strategy. Their activities include portfolio construction, asset allocation, security selection, ongoing monitoring, and rebalancing portfolios. They are usually very experienced investors who have spent time in an analyst role before moving into money management. They typically report to the Chief Investment Officer and are accountable to a number of internal bodies such as the risk committee.
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Middle and Back Office
The objective of middle and back office roles is to provide support and facilitate the smooth operation of investment teams. Middle office roles include compliance officer, risk manager, and trader, while accounting and administration are considered as back office.
Also known as a dealer or broker, this role is responsible for executing orders from fund managers. They trade in various instruments such as equity and debt, provide bid and ask quotes, and are involved in market making activities. Depending on the jurisdiction in which the entity is registered, dealer activities are regulated and rigorously monitored by regulators in order to prevent insider trading or front running.
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Fund accountants engage in reporting activities and calculate the net asset value (NAV) of the fund, which is typically done daily for liquid funds. For less liquid strategies, NAV may be calculated on a monthly or quarterly basis. NAV is estimated on a per share basis and depends on inflows and redemptions in the fund since the previous calculation.
How to Break in and Top Companies
To break into the asset management industry, candidates use a few approaches. Many firms offer structured programs for graduates that include rotations across various departments in the business, which could be followed by an offer after completion (typically a program lasts for two years). Another route is to apply for junior roles that do not require experience and offer learning opportunities. The third approach is to secure a position in the middle or back office and work toward moving into the front office over time.
For more experienced candidates, an analyst position is the main target. Candidates with a background in investment banking, private equity, or accounting typically offer relevant skills.
BlackRock is the largest asset manager in the industry, as measured by assets under management. Other large companies include names such as Vanguard, JP Morgan, T Rowe Price, and Columbia Threadneedle.
Education and Qualifications
When it comes to education, asset managers are looking for talented individuals who can demonstrate a high level of numeracy, intellectual curiosity, and strong soft skills. Our online portfolio manager course will help you to master the skills needed to build successful investment portfolios, and upgrade your resume with a Wall Street recognised certificate.
While a bachelor’s degree is considered a prerequisite, many decide to pursue graduate degrees such as a Master’s in Finance or Master of Business Administration (MBA) after a few years of experience in order to advance their careers.
Another way to demonstrate a high level of competence is by obtaining professional qualifications that may include the Chartered Financial Analyst (CFA) designation, Chartered Alternative Investment Analyst (CAIA) or Chartered Wealth Manager. These credentials are highly valued.
Compensation, Advantages and Exit Opportunities
Compensation in asset management can be quite attractive. Junior base salaries start around $70,000 and compensation also includes a performance-related bonus. After a few years of experience, base salaries typically exceed $150,000.
Typically, turnover in the asset management industry is much lower than in investment banking given the more attractive balance of personal life and compensation. However, those who want to move to private markets or hedge funds should be well positioned to do so. In addition, it is not unusual for analysts to take senior financial positions in portfolio companies since they offer significant industry expertise coupled with strong knowledge of the companies they cover.
In the free download you will find typical activities and responsibilities across the front, middle, and back office.