What Is a Portfolio Manager?

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A portfolio manager is a licensed investment professional who makes investment decisions and manages a portfolio of securities on behalf of clients. They have legal authority to buy and sell investments without client pre-approval, operating under a discretionary management model.

Portfolio managers handle the day-to-day management of investment portfolios, including:

• Asset Selection: This involves choosing a mix of investments — such as stocks, bonds, and ETFs — that reflect a client’s specific goals and comfort with risk.

• Portfolio Construction: Once suitable assets are identified, the manager blends them into a diversified mix designed to balance growth with stability.

• Trading Execution: Buying and selling securities as market conditions and client needs change.

• Performance Monitoring: Tracking portfolio performance and making adjustments to maintain target allocations.

• Risk Management: Implementing strategies to manage downside risk and volatility.

• Client Reporting: Providing regular updates on portfolio performance and market outlook.

These managers have full authority to make investment decisions without consulting clients before each trade. Clients grant discretionary authority through a portfolio management agreement, allowing managers to act quickly on market opportunities.

While technically not portfolio managers, these advisors recommend investments but require client approval before executing trades. They include investment advisors and financial planners who provide guidance without discretionary authority.

These professionals manage large pools of capital for pension funds, endowments, insurance companies, and other institutional investors. They typically handle portfolios worth millions or billions of dollars.

Focused on individual investors, retail portfolio managers typically work with high-net-worth clients who meet minimum investment thresholds, often starting at $500,000 or more.

Portfolio managers in Canada must register with provincial securities regulators and are subject to strict oversight:

• Registration: Must register as Portfolio Managers (PM) with the securities commission in each province where they conduct business.

• Proficiency Requirements: Portfolio managers and their advising representatives must hold appropriate credentials, such as the Chartered Financial Analyst (CFA) designation or complete approved proficiency courses.

• Regulatory Oversight: Regulated by the Canadian Securities Administrators (CSA) and provincial securities commissions.

• Compliance Obligations: Must maintain adequate insurance, implement compliance systems, and submit to regular audits.

• Fiduciary Duty: Held to a fiduciary standard, meaning they must act in the best interests of their clients at all times.

Every working relationship starts with a detailed conversation — understanding where the client stands financially, what they want to achieve, and how much risk feels acceptable.

A formal document outlining investment objectives, asset allocation targets, risk parameters, and performance benchmarks is created and agreed upon.

The manager constructs the portfolio by selecting appropriate investments and executing trades to establish the initial positions.

Portfolio managers continuously monitor, rebalance, and adjust holdings as market conditions or client circumstances change. Some portfolio managers prefer tactical shifts, but others take a long-term, strategic view depending on the client’s tax situation. Ongoing management may include tax-loss harvesting, taking profits, or shifting allocations.

Clients receive detailed reports showing portfolio holdings, transactions, performance metrics, and comparisons to relevant benchmarks.

Portfolio managers typically charge fees based on assets under management (AUM):

• Management Fees: Usually range from 0.5% to 2% annually, depending on portfolio size and complexity.

• Performance Fees: Some managers charge additional fees based on returns exceeding a specified benchmark.

• Minimum Account Sizes: Often require $500,000 to $1 million minimum investments. Investors with smaller portfolios (under $500,000) are often better suited to robo-advisors or self-directed investing through discount brokerages.

While the terms are sometimes used interchangeably, there are important distinctions:

Portfolio Managers have discretionary authority and are registered to manage portfolios directly. They operate under a fiduciary standard and can make investment decisions independently.

Financial Advisors typically provide broader financial planning services and may include investment advice, but often require client approval before trading. They may be registered as dealing representatives or advising representatives rather than portfolio managers.

Benefits of Using a Portfolio Manager

• Guided Expertise: A portfolio manager brings years of real-world experience — they follow markets daily so you don’t have to.

• More Free Time: Clients often say the biggest advantage is simply having someone else manage the details.

• Disciplined Approach: Systematic investment process helps avoid emotional decision-making.

• Customization: Portfolios tailored to individual needs rather than one-size-fits-all solutions.

• Risk Management: Professional oversight helps manage downside risk and volatility.

• Registration status and regulatory compliance record
• Investment philosophy and approach
• Track record and performance history
• Fee structure and transparency
• Minimum investment requirements
• Communication style and reporting frequency
• Credentials and experience of the management team

For many Canadians, working with a portfolio manager is less about chasing returns and more about having a professional partner who understands their long-term goals. Their discretionary authority, combined with regulatory oversight and fiduciary obligations, provides clients with expert guidance while maintaining important investor protections. For individuals with substantial assets and complex financial needs, a portfolio manager can provide valuable expertise and peace of mind in navigating investment markets.