Investment managers are individuals or organizations who handle activities related to financial planning, investing, and managing a portfolio for their clients.

From the day-to-day buying and selling of securities and assets to transaction settlement and performance measurement, investment managers oversee investments and act on behalf of their clients.

Roles and Responsibilities

Investment managers can range in size from one-person offices to large multi-disciplinary firms with global offices. They follow market activity closely to help dictate investment decisions they will make for their clients, ensuring that portfolios are balanced and meet each client's needs.

Investment managers may meet with clients individually, or if managing the investments of a large business, the relevant financial team members at each company. Their fee is often based on a percentage of client assets under management (AUM). An individual with a $5 million portfolio handled by an investment manager who charges 1.5 percent annually would pay $75,000 in fees per year.

Client portfolios can include assets in market sectors such as technology, utilities, healthcare, or energy. Investment managers consistently strategize to expand product offerings for their clients.

In 2022, 72% of managers increased the number of investment products they offer to clients, and the 3 largest investment management companies globally based on AUM were BlackRock at $10 trillion, The Vanguard Group at $8.5 trillion, and Fidelity Investments at $4.2 trillion.

Investment Manager vs. Investment Adviser

An investment manager is one type of investment adviser. An investment adviser is an individual or company who is paid for providing advice about securities to their clients.

Asset managers, investment counselors, investment managers, portfolio managers, and wealth managers are all considered types of investment advisers.  

While they all provide tailored investment advice, investment advisers can manage investment portfolios, offer financial planning services, provide licensed brokerage services to buy or sell stocks, or a combination of all these services.

Skills and Qualifications of Investment Managers

Investment managers commonly hold undergraduate degrees in business, statistics, finance, mathematics, or accounting as well as an MBA or professional qualifications such as Certified Financial Planner (CFP). Graduates may enter the industry in an investment analyst role and move to a manager role with experience. Investment managers typically share the following skills:

• Excellent communication skills
• Ability to obtain and sustain a client's trust
• Analytical skills to interpret market information
• Ability to understand financial data
• Work effectively under pressure

How to Become an Investment Manager

Individuals interested in careers as investment managers should follow the same path as all regulated financial advisers:

• Complete a bachelor's degree program with a major such as finance, accounting, or economics. An advanced degree, like an MBA, is often an asset for future promotions and salary increases.
• Research job opportunities with clients such as banks, investment firms, and other financial institutions.
• Take the Series 65 exam through the Financial Industry Regulatory Authority (FINRA). FINRA is a private institution that writes and enforces rules for registered brokers and broker-dealer firms in the United States.
• Gain additional knowledge and training through certification programs such as Certified Financial Planner (CFP), or Personal Financial Specialist (PFS).
• Register with the SEC based on the regulations for your location, the size of the portfolios you will manage, and your level of certification.

Choosing an Investment Manager

The type of investment manager that investors choose depends on what stage they have reached in their financial planning process. A beginner investor may benefit by using a Certified Financial Planner (CFP) who can teach the basics of retirement planning. A seasoned investor interested in a wide range of securities may fare better with a portfolio manager.

Most investment managers outline their philosophy on their websites or in their disclosures. Data on investment returns and investment manager performance are often well-documented and ranked by media sites and financial watch groups.

Investors should consider fee structures when comparing investment managers. Fees and expenses typically include management fees, performance fees, custody fees, and commissions.

The Bottom Line

Investment managers are individuals or organizations who advise clients through financial planning, investing, and portfolio management. They commonly hold undergraduate degrees in finance, mathematics, or accounting and may have advanced degrees or professional certifications, and their fee is often calculated as a percentage of the portfolios they manage. An investment manager is a type of investment adviser, an individual or company who is paid for providing advice about securities to their clients and is regulated by the Securities and Exchange Commission.