What is Investment Management?
Investment management, also known as asset management, is the professional management of various equities, fixed income securities, derivative products, and other assets (e.g. real estate), to meet specified investment goals for the benefit of the investors.
Investment Managers fall into four basic categories: hedge funds and proprietary trading desks, mutual funds, high net worth (clients), and institutional funds such as pension or retirement funds. Investment Managers are the "customers", or "buy side". Working opposite the Investment Managers on the "sell side" are the Investment Bankers (traders and salespeople). They essentially create stocks and bonds through underwriting, or change companies through Mergers and Acquisitions.
The potential clients of an Investment Manager can vary widely. Investment Managers who work for mutual funds, for example, manage money for individual retail clients, while Investment Managers at investment banks often invest money for institutional investors like companies or municipalities (often for pools of money like pension funds.) Investment Managers can also work for hedge funds, which combine outside capital with capital contributed by the partners of the fund, and invest the money using complex and sometimes risky techniques, with the goal of receiving extraordinary gains.
Overview of Investment Management Firms
Investment Management firms are typically classifed by the clients they serve. Many firms offer specialized services dedicated to a specific client base, but others serve all areas including mutual funds, hedge funds, institutional funds, high net worth individuals, and real estate investment trusts (REITs). It is critical that you understand the differences between these client types. Although many investment management firms serve all of these clients, individual job descriptions vary depending on the type.
Back to topMutual funds are investment vehicles for individual investors who are typically below the status of high net worth. Mutual funds are often referred to as the retail division of asset management firms.
Example Investment Management Firms specializing in Mutual Funds include:
Back to topInstitutional funds are unique in comparison to mutual funds. These clients represent large pools of assets for government and corporate pension funds, endowments and foundations for entities like universities and not-for-profit organizations. A major distinction between institutional funds and mutual funds is the conservative investment approach used by institutional funds managers given their fiduciary responsibility to the people whose retirement assets they manage.
Example Investment Management Firms that manage institutional funds (many of the firms in this space also offer comprehenisve services for mutual funds, hedge funds, and institutional funds):
CalPERS (Pension Fund)
Federal Retirement Thrift (Pension Fund)
A hedge fund is a private investment partnership invested primarily in publicly traded securities or financial derivatives. Hedge funds use a variety of strategies, from betting on or against stocks, currencies or commodities to more esoteric strategies involving "derivative" investments or turning around distressed companies.
Example Investment Management Firms that manage hedge funds (many of the firms in this space also offer comprehenisve services for mutual funds, hedge funds, and institutional funds):
Back to topHigh net worth individuals represent the smallest but fastest growing client type. High net worth individuals usually have minimum asset portfolios of $5 to $10 million. High net worth investors require high levels of client service. Those considering entering this side of the market should be interested in, and capable of handling a high degree of client relationship management.
Back to topReal Estate Investment Trusts (REITs)
Real estate investment trusts, known as REITs, are entities that invest in different kinds of real estate or real estate related assets, including shopping centers, office buildings, hotels, and mortgages secured by real estate. There are basically three types of REITS:
- Equity REITS, the most common type of REIT, invest in or own real estate and make money for investors from the rents they collect;
- Mortgage REITS lend money to owners and developers or invest in financial instruments secured by mortgages on real estate; and
- Hybrid REITS are a combination of equity and mortgage REITS.
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Overview of Investment Management Areas
Portfolio Management – The portfolio management segment of an investment firm makes the ultimate investment decision. Individuals in this area leverage research and industry expertise to establish an investment strategy, select appropriate investments and allocate each investment properly. |
Investment Research – The investment research segment is responsible for generating recommendations to portfolio managers on specific companies and industries. |
Sales and Marketing – The marketing and sales management divisions are responsible for identifying new clients, presenting the firm’s investment capabilities to new and existing clients, solidifying new relationships and servicing existing clients. |
What type of entry level jobs exist in Investment Management?
| Back to top | Description: New hires are typically hired into investment managment as Portfolio Management Assistants. They are typically responsible for screening for potential investments, monitoring portfolio characteristics, and assisting in client relations. This role varies depending on which segment of the firm you work in – mutual fund, institutional or high-net-worth. Entry-level positions with hedge funds are typically difficult to find. Individuals looking to work with alternative investment vehicles may be able to find entry-level positions with Real Estate Investment Trusts (REITS). |
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Skill Requirements: Newly-hired Porfolio Management Assistants are often recent graduates with degrees in accounting, finance, or economics. All candidates should have:
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Tasks:
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Education: BA, BS, BBA |
Hours: 70+ per week |
Salary: $45,000 - $55,000 |
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| Back to top | Investment Research Associate: This is the role for most people that have earned MBAs or those with equivalent experience. Top-notch Research Assistants can be promoted to Associate without an MBA, as well as thouse with CFA certification. For the most part, Investment Research Associates have the same responsibilities as Senior Research Analysts with one exception: Associates are given smaller industries to follow. Typically, the industry assigned to an Associate is a component of a broader sector that is already being analyzed by a Senior Analyst. Salaries range from $60 - $120,000. |
Senior Research Analyst: Senior Research Analysts are investment experts in their given industry focus. An equity analyst covers stocks; a fixed income analyst covers bonds. Their role is to predict the investment potential of the companies in their sector. Senior Research Analysts typically have at least 10 years research experience with a specific sector. Salaries range from $100,000 and up. |
| Back to top | Sales Manager: An Associate can be promoted to Sales Manager after 5-6 years of experience. Otherwise, positions are typically reserved for people who have earned an MBA. Marketing and sales managers are responsible for identifying new clients, presenting the firm’s investment capabilities to new and existing clients, solidifying new relationships and servicing existing clients. Sales Managers can make $70,000 + bonuses. |
The Investment Management Hiring Process
Consolidation and the focus on globalization have transformed the industry from a fragmented “specialist” structure to an industry of consolidated firms that offer comprehensive financial services. For example, many Investment Management firms also undertake I-Banking firms. As a result, the recruiting process for positions in Investment Management is very similar to recruiting for investment banking analysts.
Various recruiting teams from firms visit William & Mary during the recruiting season. They give presentations about the company and the numerous career opportunities they offer. These presentations provide you an opportunity to meet people across the businesses, including senior representatives and those who have recently joined the company. This gives you an excellent opportunity to learn, first hand, about the company, what differentiates the firms and what makes them tick.
What I Need to Start Doing TODAY?
- Before you start contacting firms, take a moment to review the checklist below and answer the following motivation questions, which should help you decide whether you would enjoy working in investment management
Are you prepared to take on early responsibility? |
Are you excited by challenges? |
Are you effective working in teams? |
Can you work on your own initiative? |
Are you highly motivated, enthusiastic and driven? |
Have you read the web site of investment management firms in more detail? |
Have you thoroughly researched the business division you would like to apply to and what graduate program it offers? |
Do you have an excellent academic record? |
Are you looking for the opportunity to make a difference and to create change? |
- Aim for an internship at a reputable firm. Make it a goal for your resume to be on the radar screens of every recruiting director by January.
- Network – Talk to EVERYONE. Prove yourself to be dependable and accurate in your follow-up communication.
- Go to wherever you want to be ultimately located, and introduce yourself to alumni that work in Investment Management in that location. Ask for their observations, perspectives and advice on how to get connected with other industry players.
- If you’re a non-business student, take courses in accounting, statistics, finance, and technology.
- If you haven’t already done so, get involved in campus organizations – especially those that could use some help with managing their financial resources. You need to be able to show that you have some sort of financial orientation.
Getting Connected Before Recruiting Begins
- Just like I-Banking, Investment Management is all about relationships. Contacts matter.
- Again, talk to EVERYONE – alumni, relatives, parents, friends of parents, classmates, friends of classmates.
- Alumni are among the best connections you can make – meet them, learn from them what’s happening in the firms and in the industry. If they offer to take your resume to circulate among their co-workers, take them up on it. Ask if there are others within the alum’s firm that they could recommend to you for contacting.
- Remember – Internships in Investment Management are scarce, and the competition for these is intense. Your goal is to be on recruiting directors’ radar screens by the December holidays, if you are seeking an Investment Management internship.
- What constitutes a good Investment Management resume?
- Demonstrated quantitative and analytical skill
- Results orientation
- Written and verbal communication skills
- Team player mentality
- Reflect on industry exposure and/or experience, leadership skills and experience, knowledge of financial operations, multitasking skill, client service orientation.
- Do NOT include an objective on your resume.
- Use Times New Roman font in point size 10-12.
- Use bullet points to accentuate appropriate elements and make your resume easier to read overall.
- Use a basic, conservative format – avoid “flash.”
- Keep your resume to ONE PAGE. Multi-page resumes are often discarded.
- Print your resume and cover letter on matching white or off-white paper.
What to Emphasize on Resumes and in Cover Letters:
- Attitude – Enthusiasm for Investment Management, commitment to the work, “can-do” attitude.
- GPA – GPAs of new Investment Management hires tend to be in the mid 3-point range or higher. Some firms won’t consider applicants with GPAs under 3.6. If your GPA isn’t strong, highlight work experience and campus involvement that show your ability to work hard and achieve.
- Classes – A good background in Math, Statistics, Economics, and Finance is helpful. Investment Management firms often express interest in candidates with engineering or science backgrounds that are trainable.
- Activities – Investment Management firms look for leadership, initiative, teamwork, commitment and experience related to finance in extracurricular activities. Some also look for people who’ve been involved in sports, because the teamwork and dedication parallel the demands of Investment Management. Be sure to include any activities that relate to finance: creating and/or managing budgets, serving as an organization’s treasurer, etc. Mention whenever possible the number of hours per week that you dedicate to your activities.
- Work Experience – If you didn’t have an Investment Management internship, do your best to put an analytical spin on the work you’ve done – highlight quantitative aspects of your work, whenever possible.
- Community Service – Firms love to see this on resumes. It shows dedication to issues and causes.
- Well-Rounded Experience – People with a wide variety of experiences are valued, especially those who can demonstrate intelligence in many areas outside of finance.
- Know every detail on your resume
- Prepare answers to the common questions
- Expect the unexpected and be nimble enough to listen to what's being asked so that you can respond accordingly.
- Practice interviewing repeatedly. Make an appointment with a Career Center counselor for a mock interview.
- Why did you choose to attend William & Mary?
- Why are you interested in the “buy-side” instead of the “sell-side?”
- Why are you interested in equities versus fixed income securities?
- Why specifically are you interested in working with High Net Worth clients?
- Why do you want to work for (firm name)?
- What have you done to prepare for a career in investment management?
- What courses have you taken that are relevant to investment management?
- Describe what you’ve learned about yourself from being involved in (campus or volunteer activity).
- Can you summarize how your work experience relates to an investment management career?
- What part of investment management appeals to you most, and why?
- What funds do you follow and why? (for Portfolio Management)
- What’s been happening in the markets today? (Dow Jones, NASDAQ, yield on 10-year T-notes, Fed discount rate, GDP growth, average P/E of the stock market)
- How do you do a Discounted Cash Flow (DCF)?
- What are the principal ways to value a company? (see Career Center/Finance Academy Reference Guide on Blackboard)
- What would be a good instrument to use to hedge a portfolio of
preferred stock? - The Situation or Task that you faced
- The Actions that you took
- The Results or changes caused by the action
- Tell me about a time that you demonstrated initiative?
- Describe a situation when have you motivated yourself to complete an assignment or task that you did not want to do?
- Think about a difficult boss, professor or other person. What made him or her difficult? How did you successfully interact with this person?
- Think about a complex project or assignment that you have been assigned. What approach did you take to complete it?
- Tell me about the riskiest decision that you have made. What were your considerations in making that particular decision.
- Can you tell me about an occasion where you needed to work with a group to get a job done? What were the challenges and difficulties and how did you face these?
Preparing for the Interview
It goes without saying that time spent preparing for an interview often separates the candidates that get the job from those that don't. Prior to your Investment Mangement interview be sure to:
Research: Do your research on the firm’s history, business strategy, operating structure and financial performance. Understand the area of the firm you are pursuing: Mutual Funds, Institutional Funds, or High Net Worth clients.
Plan: Position yourself during the interview. Think of an interview as a sales presentation and the product you are marketing is yourself. You need to establish the critical points of your background and character that will make you a solid candidate for the job.
This is the screening interview, the chance for the firm’s representative(s) to get to know you and your opportunity to express your enthusiasm for finance and highlight what you have accomplished that aligns with the position. Screening interviews will take place either at the Career Center or at one of the firm’s offices. Regardless, be VERY prepared to discuss the following (if applicable):
The second round interview is typically a structured behavioral interview. The first round determines your background and interest in finance, while this round provides the interviewer the opportunity to see how you will respond and react to certain situations. During a second round interview you will be asked questions that focus on situations you’ve encountered in the past. When you answer, there are three pieces of information the interviewer will collect for each behavioral example:
General answers about behavior are not what the employer is looking for. You must describe in detail a particular event, project, or experience and how you dealt with the situation, and what the outcome was. The premise behind behavioral interviewing is that the most accurate predictor of future performance is past performance in similar situations.
Although it will be more difficult to prepare concrete answers in advance to these interviews (as opposed to traditional ones), you can and should take some time to review your understanding of yourself, your past successes and concrete examples of your accomplishments. Work on honesty, sincerity and candidness. When you start to tell a behavioral story, the interviewer may try to sort out the details by understanding your behaviors.
The interviewer will probe for more depth, detail or understanding with questions like: “What were you thinking at that point?” or “Tell me more about what you discussed with that person.” If you’ve told a story that’s anything but totally honest, your response will not hold up through these probes.Listed below are some examples of behavioral questions:
Other interview preparation items:
- Get into the habit of reading the online Wall Street Journal, the business section of the New York Times, or the Financial Times.
- Start following several stocks and be ready to discuss.
- Check the market activity before leaving the hotel for your interviews.
- Prepare a list of questions – but do NOT ask something that has already been addressed in another discussion.
You and other candidates may also be taken to dinner at the end of the interviewing day. Don’t let your guard down, and always remember names of people that you’ve met.
Links to Provide an Overview of Career Alternatives
Difference Between Hedge Funds and Mutual Funds
Links to Keep You Current on Market Conditions and Trends
Chartered Financial Analyst (Information about CFA Exam)
Investment Management Websites
Bear Stearns - Alternative Investments
Citigroup - Alternative Investments
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Investment Management Job Opportunities
William & Mary Recruiting - Investment Management Job Search - You will need your William & Mary login and password to access the job opportunities within e-recruiting.
Boston University (MS - Investment Management)
University of Virginia (Darden) (MBA - Finance Concentration)
William & Mary (Mason School of Business) (MBA)
University of North Carolina (Kenan-Flagler MBA)
University of Pennsylvania (Wharton School) (MBA)
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