Asset managers got hit where it hurts over the past year. A massive decline in the stock market, along with a tough bond market, sharply reduced assets under management, and as a result, revenues. The result has been job cuts at firms big and small, although compared to the layoffs at Wall Street brokerages, the reductions are relatively small. Meanwhile, the big changes on Wall Street are forcing money managers to shift strategies for attracting clients.
But unlike some parts of Wall Street, the business of managing other people’s money -- be it through mutual funds or pensions or other kinds of accounts -- isn’t disappearing. Tough times have firms looking for employees who can give them an edge either in the markets or in bringing in new business.
There are thousands of money management companies around the country, ranging in size from just a few employees to tens of thousands. Some run mutual funds, while others run individual accounts for investors big and small. The industry can loosely be divided into two sides: money management and marketing.
WHERE THE ACTION IS
At any given time, there are usually both winners and losers in the money management game; while one firm’s strategy is working, somebody else's strategy is out of favor. Stocks may be do well for a few years and bonds the next. But in this economic cycle, the damage was across the board. That means most firms are shrinking and not adding to their headcount.
Companies like Fidelity Management and Research LLP, the Capital Group Companies Inc. and Janus Capital Group Inc. have all cut staff. Though there are exceptions. T. Rowe Price Group Inc. and the Vanguard Group Inc. are among the few that haven’t announced layoffs. And when it comes to job cuts, money management firms try to avoid cutting investment staff and core sales staff. Back office operations are usually the first on the cutting block.
In fact, some executives say they are looking to take advantage of the dislocations on Wall Street and among hedge funds to upgrade their investment staff. Last year, bond giant Pacific Investment Management Co.
said it was looking to hire.
And, if anything, the financial markets meltdown has added to the urgency among money managers to come up with new investment products tailored to the needs of retiring baby boomers. That’s an opportunity for investment professionals who have a background in guaranteed investments at insurance companies or derivatives.
There may also be opportunities for those with an investment background in risk management, which in recent years has often become more integrated with portfolio management.
The upheaval on Wall Street has also changed the way investments such as mutual funds are marketed. No longer is it enough for a sales rep to show up at a branch office with a nice lunch and golf balls. Money managers are looking for employees with financial markets experience to explain complicated investment strategies and help create tools -- often web-based -- that financial advisors can use with clients.
On the investment side, different firms can have vastly different cultures which can determine how the operation is set up and how employees move through the ranks. In some shops, investment research is seen as a stepping stone to becoming a portfolio manager. In others, analysts are considered the equals of money managers. Equality between analysts and managers has become more prevalent as firms realized too many talented analysts were walking out the door when their ambitions of running money were frustrated.
Progression can also vary even with a firm -- the stock side of a business may have more of a hierarchy while the bond department may be more flat, with a blurring of the lines between research, portfolio management and even trading.
When it comes to educational background, it depends on the culture and the area of focus of the firm. Some firms pride themselves in hiring those with experience outside of finance that will help them analyze businesses in their former industries. Certain industries, such as biotechnology, have had a history of breeding many successful investment professionals. Other firms stick with business school grads.
On the sales and marketing side, investment experience is increasingly a valued commodity. In some firms, having a Chartered Financial Analyst designation is just as important for marketing as it is for money management. That’s especially the case for positions known as “account managers” or “product managers”, whose role it is act as a liaison between the portfolio managers and clients.
“The need for financial literacy has gotten higher and higher every year,” says one senior marketing exec.
GETTING THE JOB
Money management firms are very culture-conscious companies. Most have a well-defined investment approaches that is reflected in how they not only buy and sell stocks, but also in what products they offer and how they sell them. Often times the company founders are still actively involved. As a result, they expect that culture to be reflected in their employees. So while a deep resume is going to be important during tough times in the market, it’s also crucial to do the homework on a firm’s history and philosophy before walking in the door.