Alternative Entry Points for Investment Management
- Buy-side trading and operations: As we suggested in the previous section, many smaller firms integrate trade reconciliation and reporting with the portfolio manager assistant position. However, the larger firms typically have extensive back-office operation teams. These trading and operations personnel process the investment trades done by portfolio managers.
In general, the positions include mutual fund accounting, trade confirmation, trade reconciliation and report processing. The job really doesn't prepare you directly for the investment side of the business, but it does afford you the opportunity to get to know people in the business and build goodwill with the asset management firm. Moving from the operations side to the investment side of the firm is challenging (therefore, this is only a suggested option for recent college graduates with limited experience). To improve your chances, we would suggest considering firms that encourage this type of maturation process and integrate operations into the investment business --many firms create a clear separation.
- Sell-side investment research: Many buy-side investment professionals come form the sell-side. It is a great place to learn to do analysis, generate financial models and construct investment reports. The quantitative skills and knowledge of the overall investment business makes former sell-side people desirable to asset management firms.
- Investment consulting: These are the firms that advise institutions, high-net-worth investors and 401(k) plans on appropriate diversification strategies and which asset managers to hire. At the entry level, you will assist on manager searches and data collection for multiple investment styles. It is a good introduction to the different firms and the dynamics of the industry as a whole.
- Take the CFA Exam (Chartered Financial Analyst): This is a three-part exam that tests your knowledge in financial accounting, statistics, investment analysis, economics and ethics, among other subjects. The exam is offered in the late spring and is taken over the course of three years. The CFA is becoming a standard for the industry and many people begin the process prior to even entering the industry. It is not a prerequisite to getting an investment job, but working toward achieving it can certainly give you a leg up on your peers, especially pre-MBA candidates.
Don't give up if a typical investment management position isn't available for you -- these are difficult jobs to get. If you are having no luck getting positions with portfolio management or investment research teams, there are many other alternatives to pursue that will better position you to reapply with only a year or two of additional experience. Below are descriptions of some of the best options to consider.