Make the Big Decisions, Make the Big Money

Forget law and medicine. If you want to make really big bucks, become a mutual fund manager.

The people who decide which stocks or bonds to buy for funds generally earn more than $100,000 a year and sometimes in excess of $1 million. “The sky’s the limit for an experienced, successful fund manager,” says Lawrence Lieberman, senior vice president specializing in fund-industry recruiting for Wadsworth & Associates, a New York executive-search firm.

Investors will flock to managers who build a superior track record. The more dollars a fund attracts, the higher the company’s advisory-fee profit and the greater the compensation a manager can expect.

The fact that fund total-return numbers are so readily available makes it simple to gauge a manager’s talent. “It’s an easy environment in which to judge performance,” Lieberman says. “These guys live and die by their numbers.”

The pay scales for fund managers vary widely, although all make comfortable livings. Usually, the compensation package combines both salary and bonuses. “As you work your way up the career path, bonuses get to be more and more of compensation--often above 50% for a portfolio manager,” says Rick Spillane, director of research for Fidelity Investments in Boston.

If the manager also owns a stake in the fund family--as many of the best stock and bond pickers do--he or she would derive a share of profit too. “A range of $75,000 to $200,000 would cover most managers,” says A. Michael Lipper of Lipper Analytical Services, which publishes the performance numbers used to evaluate managers.

But pros who have beaten rival funds for at least three to five years while running a decent-size portfolio typically command at least $250,000 and often closer to $500,000, says George R. Wilbanks, managing director and partner at Russell Reynolds Associates, a New York executive-search firm.

International and small-stock specialists can often command a premium, since sales are hot in those areas right now, Wilbanks says. Also, equity managers typically make somewhat more money than bond experts.

Of course, people don’t just start out as fund managers. First you need to land a job.

Would-be managers typically start out as research analysts, evaluating the companies in a particular industry and perhaps overseeing a portion of the money in a mutual fund. The competition for analyst or related positions can be keen, as exemplified by the fact that Fidelity, the biggest fund company, hires only 10 to 12 job seekers each year from about 500 it interviews, Spillane says.

Plan on spending perhaps five to 10 years in this capacity, where annual pay ranges from about $30,000 to $60,000, Wilbanks says. Ten or 20 years into your career, if all goes well, you can look forward to graduating to portfolio manager or a related position, such as director of research. Senior research jobs at the larger firms may pay $400,000 or more, according to Lieberman.

What sort of educational background do you need to work in this field? While some seasoned fund managers have degrees in disparate areas such as law, chemistry, foreign languages and nuclear engineering, the trend is toward business majors.

If a person has been in the field less than 15 years, there’s a high probability he or she has an MBA degree, Wilbanks notes. Another increasingly common requirement is the Chartered Financial Analyst designation, which professional investors typically earn while on the job.

Helpful attributes for money managers include solid analytical skills, intelligence, integrity, curiosity and a high level of energy, Lipper says.

Also, you should have a keen interest in the financial markets. Ability to handle pressure counts, as performance results are widely publicized, monitored and ranked each quarter. “It’s like having your boss look over your shoulder every minute of the day,” Wilbanks says.

Social skills and a willingness to travel also weigh heavily with fund families that emphasize field research. At Fidelity, for example, analysts and portfolio managers often work 60 to 80 hours a week, and spend perhaps 40% of that time on the road.

“In this business,” Spillane says, quoting famed stock picker Peter Lynch, “the person who turns over the most rocks wins.”

* Who Needs an MBA? Although a business degree helps open doors for would-be mutual fund managers, it’s not a prerequisite for the job. Some managers with other educational backgrounds have flourished in the investment business, as the following list shows. All of these funds are rated average or better by Morningstar Mutual Funds of Chicago.

Fund Manager Advantage Growth Robert Thomas Baron Asset Ronald Baron Berger 100 William Berger Lindner Dividend Eric Ryback New York Venture Shelby Davis Pioneer Fund John Carey Shearson Apprec. Hersh Cohen* Shearson Apprec. Harold Williamson Jr.*

Fund Degrees/Institution Advantage Growth BA English literature/Princeton Baron Asset BA chemistry/Bucknell; JD law/George Washington Berger 100 BA English/Yale Lindner Dividend BS secondary education/ Idaho State New York Venture BA history/Princeton Pioneer Fund BA history/Columbia; MA, Ph.D., history/Harvard Shearson Apprec. BA history/Case Western; Reserve; Ph.D. psychology/Tufts Shearson Apprec. BA international relations/Yale

* Denotes co-managers