Finding the Best Portfolio Manager: Responsibilities and Qualities

For investors, it’s not a piece of cake to tackle all tasks related to investing.  They have a lot of things at hand.  So they need someone to help them do all stuff that needs doing.  And here comes Mr. Portfolio Manager, with his skills and expertise, to help such investors.


the best portfolio manager qualities and responsibilities

A portfolio manager develops and implements long term investment strategies for investors.  Portfolio management positions are available with pension plans, hedge funds, private investment companies, or as part of an investment department.

Portfolio managers have many names: investment managers, wealth managers, asset managers, or financial advisors.  However, what makes true portfolio manager is his ability to focus on the analytical side of investing instead of the sales aspect.

What does a portfolio manager do?

Creating and managing investment allocations for private clients rest on top of a portfolio manager’s responsibilities.  There are portfolio managers who work with individuals and families.  Others serve institutional or corporate investors.

Most of the time, a portfolio manager follows a pre-set strategy for the investment.  An investment policy statement (IPS) dictates this strategy, with the goal of achieving the client’s investment goals.  Some portfolio managers make the investment packages given to clients.  Others simply handle client expectations and transaction.

A portfolio manager also has the task to buy and sell securities in an investor’s account.  This is to maintain a specific investment strategy and hit an objective over time.

Additionally, a portfolio manager needs to determine his client’s risk level based on time horizon, risk preferences, and return expectations.   He also needs to consider the prevailing market conditions.  Overall, he has to know and fully understand his client’s investment needs.  His ultimate task is to make sure those needs are met.


The portfolio manager needs to have a deep understand of the market condition, trends, and overall economic outlook.  He will have to use these to construct portfolios that will be used for the client’s position.

To accomplish this goal, the portfolio manager needs to always keep up with relevant investment and trade news.  He needs to be in the loop.  The portfolio manager sometimes has to meet with investment analysts and researchers to have a better understanding of market conditions.

Furthermore, the portfolio manager needs to have a good relationship with his client.  This entails regular contact with the investors and meetings about the market, research, and economic trends.  As part of their fiduciary duties, portfolio managers need to update clients and tell them if their investment objectives have shifted.  They have to make sure that the current portfolio allocation is still in line with the client’s initial demand.

Being a good wealth manager

If you’re planning to be your own portfolio manager, you’d have to learn many things first.  Luckily, it’s easy to start learning.  All you have to do is to build up on the following habits of a good portfolio manager.

a person writing wealth management on a transparent screen


Patience, patience, patience

If you haven’t noticed yet, the financial world is moving faster and faster every year.  And because of this, more and more investors and wealth managers find it difficult to sit tight and remain focused.  That’s to say they’re becoming more and more impatient.

The investing population expects breaking news every single day and updates on their portfolio holdings.  This has pushed investors and managers to fuel an extreme news-hunting tendency.

The problem is that putting too much stress on intra-day fluctuations does not necessarily solve any problem.  Even if there’s something bad, something big, on the day, it’s almost always better to allow a time-out period.  Let the news sink if first and see how the overall market reacts before you make your move.

You can gather your thoughts, and maybe contact your client (if you’re already a portfolio manager), and analyze the new information.

Avoiding herd mentality

One of the best qualities of a wealth manager should be his ability to think for himself. However, herd mentality isn’t easy to avoid.  It’s very much rampant in many fields.

In the world of investing, however, you cannot exactly know what the whole group thinks.  What you can see is the result of their collective thoughts through the way they influence stock prices.

A good wealth manager can say no to going with flow.  Instead, he tries to conduct his own analysis of the situation, and then come up with viable strategies.  He doesn’t get swayed easily to popular opinion, becoming a yes-man.  He thinks independently.

Understands his own psychology

A good portfolio manager doesn’t shy away from introspection. He’s not afraid to admit when he has reached his risk limit and is unsure of what to do next.  Every portfolio manager knows that psychology plays a very large role in the market movements.

As a portfolio manager, you need to make projections about the macro market participants.  You have to be truthful about your risk tolerance, as well as your ability to be objective and analytical.

There are good chances you’ll reach the end of your wits, making your decision-making processes un-analytical.  This is the time when the risk of losing money grows bigger.

Visualizing scenarios

As a portfolio manager, you’ll have to buy and sell stocks for your client.  There are good tips when picking stocks.  But it’s still incredibly difficult once you’re at it.  Visualizing scenarios comes in handy in this kind of situation.

When you first decide to include a stock in your portfolio, you’re probably counting on it to trend upward in the long term.  While you’re doing this, try to visualize what will happen if the stock moves too erratically.  Stocks never really follow straight pattern.   Decide when you’re sure that your portfolio can survive the worst case scenario for the stock.

Prepare for the things that can go wrong before committing with the stock.  Expecting the unexpected makes it easier to decide wisely when the real thing pops up.  You’ll be prepared to make tough decisions when the worst scenario you’ve visualized materializes.

Acknowledge your weaknesses

Never, ever ignore your weaknesses, or you’ll put your holdings in jeopardy.

When you know where you are weak, you know where to protect yourself.  Additionally, you can proceed to making careful investments that won’t hurt you.

If possible, you can group yourself with people who know your weaknesses.  Have discussions with them and let them help you put a finger on the things that may go wrong due to your weaknesses.  A value-based discussion will always be a treasure for a growth-minded stock investor.

Ultimately, you should try to transform your weaknesses into strengths.  That may sound cliché, but it still works like magic.

Capitalize on your strengths

After fingering your weaknesses, you should start pounding at the strengths you have.  Find where you’re best at, and start from there.  You can try and leverage those strengths when looking for an ideal company to invest it.

For instance, if you know something about technical analysis, why not help yourself with the charts and indicators that can help predict stock movements? If you are quite well versed when it comes to balance sheets and financial statements, why not try fundamental analysis?

You can always start at where you’re good and then start learning more new things along the way.


This doesn’t only go for portfolio managers and their clients.  This also goes for individual investors.  Communication is very much necessary for an investor or a portfolio manager who needs to come with a good strategy.

Communication helps you gather as much information as you can.  And the more information you have, the better you can position yourself for higher earnings.

A portfolio manager must keep an open line of communication with his clients.  He must make sure that the client understands the nit and grit of the strategy.  The manager should be reachable enough to answer the client’s inquiries at any given reasonable time.


Being a portfolio manager isn’t an easy task.  But if you’re good at it, you can earn a lot.  You can even turn it into something as full-time career.  However, first you have to possess the skills and qualities of a good portfolio manager.


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