What qualifications do asset managers strive for?

Guest post: How to become an asset manager

Today more than ever, the crucial question for wealthy investors is: “Who can I still entrust my money to?” Trust the facts and your feelings.

As an asset manager with your own discretion, it is you who trust the investors to place their money in the hands of. Anyone who claims asset management as a professional goal must be aware that this status entails a great deal of responsibility and that this leap of faith must be filled with life.

The Federal Financial Supervisory Authority (BaFin) has drawn up clear regulations on the granting of a license to provide financial services in accordance with Section 32 (1) KWG. The qualification level financial portfolio management stands out in comparison to investment advice, investment or contract brokerage through special requirements with regard to reported capital, compliance with capital ratios and, above all, the professional and personal aptitude of the managers. Only those who can provide proof of reliability and - in addition to various other criteria - have at least three years of managerial activity at an institute of comparable size and type of business are accepted as managing directors.

The essential criterion for a classification as a financial portfolio manager is the availability of decision-making leeway in the investment decisions to be made for the client. There is room for maneuver when the specific investment decisions are made at the discretion of the manager. The financial portfolio manager has to keep securities in a securities account of the customer at a bank, otherwise he needs a permit to operate the custody business and would in fact be a bank himself.

You don't become an asset manager through special vocational training or a degree, but you have to meet regulatory requirements that are specified by BaFin and are very strictly checked. Former bankers who want to specialize, for example, seek this license. Likewise, the activity for an asset management company offers a variety of career opportunities: for experienced investment advisors who do not want to act as a product seller, but rather convey an investment philosophy without conflicts of interest to the client. Or for sales employees who identify with the idea and represent a customer-oriented service.

Anyone who wants to provide financial services should have a solid background in banking and finance. In addition, one should deal with the topic of “personal discretion”. They do not simply recommend any systems or products, they are based on the specifications of the customers and can shift responsibility from themselves if they are not successful. You enjoy the full trust of the customer and must justify this with a full awareness of responsibility and risk, iron discipline and a high degree of integrity.

This individual discretion offers many advantages if “independent and individual” asset management is also practiced as such. You are free to choose the securities, you are not bound by third-party sales guidelines, and you can and must avoid conflicts of interest. As a good asset manager, you must also have the “inner conviction” that the optimal performance of a customer-oriented financial service can only be achieved with a conscientious and responsible margin of appreciation.

Who is not suitable as an asset manager? The following applies: "Extreme opinions involve extreme risks". It certainly becomes critical when one's own discretion has to serve to fulfill one's own, extreme opinions and is not acted on the basis of solid facts. The golden rule for a sustainably successful and honest asset manager is: “Don't wage religious wars with other people's money”. Those who are not prepared to make the investment goals of their clients their own should save themselves the trouble of dealing with the regulatory hurdles.

Torsten Reidel is the managing director at Grüner Fisher Investments