Investment Analyst vs. Portfolio Manager: What Are the Differences?

If you’re interested in a career in finance, you may be wondering what the difference is between an investment analyst and a portfolio manager. Both roles are involved in making decisions about investments, but there are some key differences between the two. In this article, we’ll discuss the job duties, skills, and education requirements for both investment analysts and portfolio managers. We’ll also provide some tips for those interested in pursuing a career in finance.

What is an Investment Analyst?

Investment Analysts conduct research and analyze financial data to provide recommendations to their clients about which investments to make. They use their findings to develop investment proposals and present these to their clients. Investment Analysts work in banks, insurance companies, investment firms and other financial institutions. They typically have a bachelor’s degree in finance, accounting or economics. Some Investment Analysts may also be certified financial analysts.

What is a Portfolio Manager?

Portfolio Managers are responsible for making investment decisions on behalf of their clients. They create and manage investment portfolios, selecting stocks, bonds and other securities in an effort to achieve their clients’ financial goals. Portfolio Managers conduct research on potential investments and monitor the performance of existing investments to make recommendations for buying or selling. They also keep abreast of economic and market trends that could impact their clients’ portfolios. Portfolio Managers typically work for banks, investment firms or insurance companies and often specialize in a particular type of investment, such as stocks, bonds or mutual funds.

Investment Analyst vs. Portfolio Manager

Here are the main differences between an investment analyst and a portfolio manager.

Job Duties

Portfolio managers are responsible for managing the entire investment process for a particular portfolio. They’re in charge of deciding which investments to make, then overseeing those investments once they’ve been made. This includes monitoring the performance of each investment and making adjustments as necessary. Portfolio managers also regularly communicate with clients about the status of their investments.

Investment analysts work on individual investments, providing research and analysis that can help portfolio managers make decisions. Analysts may conduct extensive research, such as conducting field studies or surveying competitors, or they may provide more technical support, such as creating financial models to aid in decision-making.

Job Requirements

Investment analysts and portfolio managers typically need a bachelor’s degree in business, economics, finance or a related field. Many professionals also pursue a master’s degree in business administration (MBA) or a master’s degree in finance (MSF). Some employers prefer candidates to have a professional designation, such as the Chartered Financial Analyst (CFA) designation offered by the CFA Institute. To earn this credential, candidates must pass three exams that cover topics like financial analysis and investment management.

Work Environment

Investment analysts typically work in an office setting, but they may also travel to meet with clients. They spend most of their time researching and analyzing investment options for their clients. Portfolio managers usually work in an office environment as well, but they may also travel to visit the companies or individuals that hold investments under their management.

Both professionals can expect to work long hours during busy periods, such as when a client is seeking new investments.

Skills

Both investment analysts and portfolio managers use research skills to inform their investment decisions. They also need to be able to understand financial reports and statements. However, investment analysts tend to focus more on analyzing companies and specific investments, while portfolio managers are responsible for making decisions about which investments to buy or sell and managing a team of analysts.

Investment analysts need to have strong analytical skills to be able to dissect a company’s financial reports and identify trends. They also need to be able to communicate their findings clearly to their clients or bosses. Portfolio managers need to have excellent decision-making skills as they are constantly making choices about which investments will perform well and generate the most return. They also need to be able to manage risk effectively and monitor the performance of their portfolios.

Salary

Investment analysts earn an average salary of $81,395 per year, while portfolio managers earn an average salary of $96,423 per year. Both of these salaries may vary depending on the size of the company at which you work, location of your job and the level of experience you have prior to pursuing either position.