An Overview Of The Asset Management Industry, Including Career Case Studies, Salaries and Exit Opportunities.
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What Is Asset Management?
Definition: Asset Management refers to the division of a financial institution or hedge fund that manages investments on behalf of clients, from planning an investment strategy through to execution of trades, diversification, reporting and rebalancing.
Because Asset Management is so broad, this article features a number of case studies that illustrate the range of AM careers that are possible.
Topics & Case Studies
Breaking Into Asset Management
The main “pure play” asset management firms are mutual funds – firms that collect money from the public and invest it into specific pooled investments.
Mutual funds tend to be much more stable from a personnel standpoint. There’s far less entry-level recruiting than, say, hedge funds, and there’s lower turnover – especially at the top levels.
AM firms seek the following qualities in candidates:
- Passion for the markets and investing
- Ability and willingness to be a team player.
- Work experience in a related field, such as equity research or smaller mutual funds.
- Ability to generate new investment ideas.
- Risk management and staying calm under pressure.
Grades and university/MBA quality matter, and, unlike in Investment Banking or Private Equity, a CFA designation may help.
As a student, you can boost your chances of breaking in with internships, participation in investment clubs, and networking, networking, and more networking.
The Asset Management Firm Recruiting Process
The recruiting process is typical of other roles in finance:
- Apply online or do a lot of networking
- Take an initial phone or HireVue interview
- Do a series of in-person or video interviews
For more detail, refer to our article on asset management internships.
Salaries and compensation at AM firms such as mutual funds tend to be lower than those in IB, PE or Hedge Funds.
If a high salary is your goal, you’re usually better off starting at one of the largest firms worldwide with $100+ billion in AUM – the likes of Fidelity, Wellington, T. Rowe Price, PIMCO, MFS, and so on.The higher the AUM, the higher the fees, and the higher your potential compensation.
Assuming you’re at a large AM firm with $100B+ AUM:
- if you start as an Associate (i.e., out of undergrad rather than an MBA program), expect something closer to hedge fund Junior Analyst pay: the $100K to $150K range.
- As a post-MBA Analyst at a large mutual fund, total compensation might be on par with what post-MBA IB Associates earn: around $250K to $350K.
- At the Portfolio Manager level, earning potential is around $1.0 – $1.5 million per year.
At smaller firms, you can assume lower compensation closer to the bottom of these ranges and perhaps much lower, especially at higher seniority levels.
On The Job, Lifestyle and Culture
In general, AM offers better work/life balance and less stress than hedge funds, but also a lower compensation ceiling and slower advancement.
Here are a few differences between the two:
- Lower Stress Levels and Shorter Hours – most AM professionals work 50 to 60 hours per week, compared with 60 to 70 per week in hedge funds. Also, stress levels tend to be lower because you’re not paid directly based on performance.
- Less Granular Analysis – Many hedge funds tend to be fairly concentrated in specific positions. But many mutual funds hold dozens or even 100+ stocks. At that level, it’s not possible to analyze each company’s new quarterly or annual reports in detail.
- Less “Banker Culture” – While hedge funds recruit plenty of former bankers and private equity professionals, the mix of professionals is quite different in AM. As a broad generalization, the culture is less “fratty” and more intellectual.
When you work at an AM firm, your most likely exit opportunities are other funds that use similar strategies.
You are unlikely to get into fields like private equity, investment banking, venture capital, or corporate development because they all require deal experience.
You may be able to do it if you’ve worked in one of those before joining a hedge fund or mutual fund, or you complete an MBA, but otherwise, it’s a challenge.
Career Resources
Like all types of finance careers, There are more professionals seeking Asset Management roles than there are jobs available.
Funds need people who are technically proficient and who demonstrate strong “fit” and passion for investing. They want to hire small teams of the top professionals who can hit the ground running and add value from day one.
That’s why many aspiring AM professionals invest in specialized courses and training to help them get noticed, get hired, and get promoted.
Some of the courses offered by Mergers & Inquisitions and Breaking Into Wall Street include:
