Lead The Charge With Product Development

Product development is an important area in financial services and it’s specifically crucial when it comes to investment management. Determining what asset management fund products will be released, in what countries and at which times are pivotal decisions for any firm.

Those in product development are often the ones who make the final decision on which asset management products their investors will have to choose from and their pricing structure. This may be the career for you if you’ve got your ear to the floor regarding what’s new and what could be a big hit.

Key Takeaways

• Product development involves crafting and honing the financial products available to a firm’s clientele.
• Product developers decide which securities and investment vehicles to offer and what pricing structure to attach to them.
• Complex and offshore financial products can also be developed to suit more sophisticated investors or high-net-worth individuals.
• Those with MBAs are looked upon favorably by hiring firms but enrolling in the CFA or CAIA programs can be helpful as well.

The Role of Product Development

Those in the product development department often search for gaps in the product lines when they’re looking to launch new products. They work with the legal and compliance teams to make sure the investment vehicle meets all regulatory and legal requirements when a new fund is in the process of being established. They also work closely with the marketing and sales departments to craft the promotional material for the new investment product.

The product development team also plays a role in assessing competitors’ products. This helps the team ensure that their firm’s products are adequately positioned to compete effectively. They’ll often make recommendations when it comes to merging or eliminating funds and setting the pricing of funds as a result of their competitive intelligence.

Product Development: What It Takes

Staffers in product development often have experience in other areas of investment management but entry-level positions do open up from time to time depending on the company. You might want to consider taking courses in economics, accounting, math, and marketing if you’re an undergraduate student considering a career in investment management product development,

An MBA degree is always looked favorably upon by investment management firms. Enrolling in the CFA or the CAIA programs may also be helpful, however, if you don’t have an MBA.

Chartered Financial Analyst (CFA)

The Chartered Financial Analyst (CFA) program is offered by the CFA Institute. It consists of three levels of tests that you can study for independently. Passing all three levels in addition to gaining four years of eligible work experience and completing a professional conduct statement will earn you the CFA charter.

Important

This charter is so hard to earn that it’s a highly regarded emblem of knowledge within the investment community.

Chartered Alternative Investment Analyst (CAIA)

The Chartered Alternative Investment Analyst (CAIA) program offers a curriculum focused on alternative investments. The specialized CAIA program has two levels of exams that cover hedge fund and private equity investment products as well as real estate, managed futures, and commodity products.

The Chartered Alternative Investment Analyst Association confers the CAIA designation upon those who complete the program and have at least one year of professional experience.

Developing Offshore Products

The CFA or the CAIA designations could be of great value within an offshore product development department.

Offshore product development focuses on the launch, sale, and marketing of funds outside the United States. Legal regulations vary considerably in different countries and offshore product development staffers must work carefully with legal and compliance departments to make certain that the funds are compliant for each country in which they’re issued.

Sales and marketing approaches must also be tweaked depending on the country in which the investment vehicle is issued, especially when a particular country has important cultural traits to consider when determining strategies.

Some product development staffers specialize in offshore marketing due to these compelling challenges. You’ll generally learn the ropes of domestic product marketing or the practice of developing fund products sold within the confines of the United States, however, before moving on to offshore investment vehicles.

What to Expect

A day in the life of a product development staffer is varied and complex and requires keeping incredibly up to date. They tend to start the day by reading The Wall Street Journal and the Financial Times, watching CNBC and financial news shows, and checking out online forums and sites that discuss current financial events and developments.

A member of a product development staff may have an early-morning meeting with the legal department to go over the prospectus for the launch of a new fund. There may later be a similar gathering within the compliance department to go over issues with that same fund that’s due to launch shortly.

The product development department may informally have lunch together to compare notes and discuss the latest developments on fund launches. The afternoon may bring meetings with the sales and marketing departments to discuss another investment vehicle that’s recently launched. Topics might be on the collateral required to sell the fund or briefing the sales force on the best way to position the sale of the fund with potential investors.

The staffer might finally pour over competitor pricing data before heading home to consider a pricing strategy for a new fund product that’s about to launch. Some of these reports may find their way into the staffer’s briefcase so they can be assessed over dinner at home.

What Does a Compliance Team Do?

A compliance team is tasked with making sure that its firm or organization confines its activities to stay within legal and industrial standards. This can involve training and overseeing employees and monitoring policies and actions.

What Is the CFA Institute?

The CFA Institute defines itself as a “global not-for-profit organization that provides finance education for investment professionals. By promoting the highest standards of ethics, education and excellence, we help shape the future of the industry for the ultimate benefit of society.”

What Are Alternative Investments?

Alternative investments typically aren’t regulated by the U.S. Securities and Exchange Commission and they don’t trade on public markets. They fall outside the scope of traditional stocks and bonds. They can diversify a portfolio when they’re held in conjunction with stocks and bonds but they also tend to be a bit riskier. They include hedge funds and private equity.

The Bottom Line

Product development is a challenging but ultimately rewarding career path within an investment management firm. Those in product development have their fingers on the pulse of exciting new fund launches and they’re integral in developing the strategies behind new products. You might want to consider a career in product development if you like the idea of being at the center of this kind of storm.