Different Advice Needed - Career Change to Investment

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MorningstarFan
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Different Advice Needed - Career Change to Investment

Post by MorningstarFan » Thu Feb 02, 2017 11:52 pm

Hi all,

I am a young engineer and simply fell in love with long-term investment strategies. I have volunteered to help non-profit organizations with personal financing. I hope to transition into stock/mutual fund analyst or financial advisor (more than just earning commissions).

What should I do? Anyone recommend pursuing MBA degree? Also, what are the other ways to build connections and where to find them? Unfortunately, I am located in Seattle, which is not a city known for financial services.

I welcome any idea and questions! Thank you all for the help in advance! :D

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Phineas J. Whoopee
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Re: Different Advice Needed - Career Change to Investment

Post by Phineas J. Whoopee » Fri Feb 03, 2017 12:09 am

Hi MorningstarFan,

One should always encourage recent graduates to pursue their passions.

The financial advisery predatory sales industry is fighting tooth and claw against the idea that they should suggest their clients invest in what is good for their clients, rather than what helps themselves keep their boats from being repossessed.

If you can find a way to make money in that situation, perhaps by being better but expect to be beat by those who are slicker salespeople 'cause that's the business, you'll get somewhere.

I bet you can't.

Prove me wrong, if you can.

PJW

tibbitts
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Re: Different Advice Needed - Career Change to Investment

Post by tibbitts » Fri Feb 03, 2017 12:23 am

MorningstarFan wrote:Hi all,

I am a young engineer and simply fell in love with long-term investment strategies. I have volunteered to help non-profit organizations with personal financing. I hope to transition into stock/mutual fund analyst or financial advisor (more than just earning commissions).

What should I do? Anyone recommend pursuing MBA degree? Also, what are the other ways to build connections and where to find them? Unfortunately, I am located in Seattle, which is not a city known for financial services.

I welcome any idea and questions! Thank you all for the help in advance! :D
Being a stock analyst is completely different job than being a financial adviser. it's like saying you either want to be an airline pilot or an aircraft mechanic. They're sort of related, but not really. My suggestion is to add to your post to describe what activities you're looking to do.

I will say that a lot of Bogleheads seem to have this vision of being paid handsomely to dish out Boglehead advice to clients who mysteriously appear out of nowhere. Giving Boglehead advice is a noble goal but only a tiny number of people have figured out how to do that and also make money at it. Even John Bogle peddled relatively high-cost, actively managed, commissioned products early in his career. It's possible that some advisers who may have "seen the light" later in their careers wouldn't have even been around to do so had they not nearly sucked the life out of friends and relatives first to get their start in the industry.

MorningstarFan
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Re: Different Advice Needed - Career Change to Investment

Post by MorningstarFan » Fri Feb 03, 2017 1:11 am

tibbitts wrote: Being a stock analyst is completely different job than being a financial adviser. it's like saying you either want to be an airline pilot or an aircraft mechanic. They're sort of related, but not really. My suggestion is to add to your post to describe what activities you're looking to do.

I will say that a lot of Bogleheads seem to have this vision of being paid handsomely to dish out Boglehead advice to clients who mysteriously appear out of nowhere. Giving Boglehead advice is a noble goal but only a tiny number of people have figured out how to do that and also make money at it. Even John Bogle peddled relatively high-cost, actively managed, commissioned products early in his career. It's possible that some advisers who may have "seen the light" later in their careers wouldn't have even been around to do so had they not nearly sucked the life out of friends and relatives first to get their start in the industry.
I absolutely agree. Being a stock analyst is nowhere same as a financial analyst. Let me expand my two different areas of interest a bit more.

As an engineer, I really enjoy analyzing details. I want to learn from the people who focuses on bottom-up, fundamental analysis to stocks. It would be a dream to work for some of the top mutual fund firms that focus on long term investment (T Rowe Price, Dodge & Cox, Wellington, Primecap).

In addition, I also enjoy working with people. Being able to help someone with investment is very rewarding. Most young folks do not have a single bit understanding of investment. Hence helping them out, even with basic concepts in retirement savings, can be a fulfilling career for me.

I am still expanding my interest and do not want to limit myself. Let me know if you have more thoughts! Thanks!

Cruise
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Re: Different Advice Needed - Career Change to Investment

Post by Cruise » Fri Feb 03, 2017 1:26 am

MorningstarFan wrote: It would be a dream to work for some of the top mutual fund firms that focus on long term investment (T Rowe Price, Dodge & Cox, Wellington, Primecap).
This is akin to working as a scientist developing new techniques for a war criminal to use. Not really, but you would be making your money off products that suck the earnings from under-informed investors.

Just something to think about as you decide what kind of career makes you happy. Good luck in your journey...

rgs92
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Re: Different Advice Needed - Career Change to Investment

Post by rgs92 » Fri Feb 03, 2017 3:44 am

It seems like most of the securities analysts at all the decent firms have Ivy League degrees, especially MBAs.
So just get one of these degrees from one of these universities (earning good grades), and you may well be on your way.
That's the easiest path. You will make connections while you are engaged in social activities at school and making friends with you classmates.

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Watty
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Re: Different Advice Needed - Career Change to Investment

Post by Watty » Fri Feb 03, 2017 8:53 am

You really need to consider the long term career prospects and they may not be all that good for what you want to do. The problem is that people are getting smart and putting their money into index funds instead of actively managed funds so the role of stock analyst is under pressure. For financial advisors there will likely be a lot of competition by robo advisers. If you are good with software then one possibility would be for you to go to work for a robo advising company or the robo advising group within a huge company.

Up until the 1990's there were lots of travel agent offices almost strip mall, they were about as common as dry cleaners. I know someone that was looking for a career change so he went to a travel agent night school and then got his first job as a travel agent. Within about a year two that business pretty much collapsed as everyone started researching and buying their travel online. Today you would have to look hard to find a travel agency.

One thing you might want to do is to research the mutual fund managers that have outperformed a comparable benchmark over the long term to see what sort of educational and career background they have. The problem is that you might have a hard time finding one.

If you google "mutual fund managers that beat the market" you will find lots of articles like this;
Within that sample, 98.9 per cent of US equity funds underperformed over the past 10 years, 97 per cent of emerging market funds and 97.8 per cent of global equity funds.

“There are some good managers out there but they are not easy to find. At a regional level, at a global level, in emerging markets, you name it, they are not performing well. On a one-year basis it is still possible to outperform, but it is very difficult on a consistent basis over the long run,” Mr Ung said.

Asset management experts said the findings will exacerbate investor concerns about overpriced, underperforming active funds.

These fears have fuelled demand for cheap index-tracking funds, enabling the low-cost exchange traded fund market to grow more than sixfold over the past decade, to $2.9tn.
https://www.ft.com/content/e555d83a-ed2 ... add5fbc4a4


All that said just like the remaining travel agencies there there is a roll for fee only financial planners to help people that are unable or unwilling to try to manage their own finances. You could research the "The Garrett Planning Network" to see what sort of background those financial advisors have. The problem with that business model is that a good fee only financial planner might be very valuable for a few years to clean up a mess and put the client into a good mix of lox cost index funds but after that it is hard for them to add enough value for them to justify their fees so many clients don't stay more than a few years. My impression is that it is hard to make a good living doing that.

Despite a few dips the stock markets have been really booming since the low in 2008. If you have not been following it since before that you might not be able to appreciate how hard it can be to pick good stocks. There is a saying by Warren Buffet, "Only when the tide goes out do you discover who's been swimming naked."

MorningstarFan
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Re: Different Advice Needed - Career Change to Investment

Post by MorningstarFan » Thu Feb 09, 2017 3:19 am

Thank you all for the honest opinions. Just out of curiosity, are there any people who work in financial services industry, specifically to invesment? I am still trying to keep my mind open and need some help exploring more options in the industry. Since I am an engineer, my network is very limited. Any resources would be helpful as well.

Thank you all again. Changing a career is honestly scary, but you guys are helping me a ton already! :D

bigred77
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Re: Different Advice Needed - Career Change to Investment

Post by bigred77 » Thu Feb 09, 2017 10:43 am

MorningstarFan wrote:Thank you all for the honest opinions. Just out of curiosity, are there any people who work in financial services industry, specifically to invesment? I am still trying to keep my mind open and need some help exploring more options in the industry. Since I am an engineer, my network is very limited. Any resources would be helpful as well.

Thank you all again. Changing a career is honestly scary, but you guys are helping me a ton already! :D
You will find better information here: http://www.wallstreetoasis.com/

(Use that site for information on how to break into the finance industry in an entry level role. Ignore the rest of the advice.)

rjbraun
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Re: Different Advice Needed - Career Change to Investment

Post by rjbraun » Thu Feb 09, 2017 2:02 pm

In New York, there is NYSSA, the New York Society of Security Analysts. NYC is a big place and NYSSA is just one of a number of places for security analysts to learn, network, etc. (so any New Yorkers reading this, I'm not suggesting that NYSSA is the definitive place to go). The comparable organization in Seattle would seem to be the CFA Society Seattle. Perhaps you could attend an event or two there to learn more about what security analysts do and potential career opportunities in investing. Depending on what type of engineer you are (petroleum, etc.) maybe you could try to leverage that expertise into a relevant market sector (oil & gas, etc.)

Good luck!

https://www.cfaseattle.org/

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patrick013
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Re: Different Advice Needed - Career Change to Investment

Post by patrick013 » Thu Feb 09, 2017 3:38 pm

MorningstarFan wrote:Thank you all for the honest opinions. Just out of curiosity, are there any people who work in financial services industry, specifically to invesment? I am still trying to keep my mind open and need some help exploring more options in the industry. Since I am an engineer, my network is very limited. Any resources would be helpful as well.

Thank you all again. Changing a career is honestly scary, but you guys are helping me a ton already! :D
I would think a BS degree in finance would be a minimum, but I have heard of
engineers working in finance here and there. Those in the MBA curriculum
were very strong in math concepts but less in business/finance concepts,
which is why they enter MBA programs in the first place. :)

Qualification Exams are common exams (twice as many as needed IMO) which
finance professionals in the USA generally need for licensing.

Series 7 - every broker/dealer you call needs this.

Series 65 - every financial advisor needs this

Series 86 and 87 - Research Analyst Examination (RS), needed to perform and publish
research reports. Mostly procedural with the metrics the big firms like to use.

The others are special to certain situations and operational needs of trading firms, etc..
CFP or CFA aren't really needed as long as you understand the finance and statistics
req'd for the job. But feathers in the hat are feathers in the hat. Try eBay for a used
exam book for the 86 and 87, sounds like the one you're looking for down the road.
The Series 65 you don't need a firm to sponsor you BTW.
age in bonds, buy-and-hold, 10 year business cycle

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Meg77
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Re: Different Advice Needed - Career Change to Investment

Post by Meg77 » Thu Feb 09, 2017 3:56 pm

I suggest reading the book or one of the articles about the book Designing Your Life by Dave Evans and Bill Burnett. I heard one of them on a radio show yesterday discussing this topic, and read a few articles afterward to follow up. There are many interesting ideas, but one thing he highlights that may apply to you is the danger of "following your passion" or attempting to turn your hobby into a career. This can often cause more problems than it solves (if it solves any problems at all, such relieving burnout or boredom at your current job). It can even turn the thing you love into something you hate.

Amateurs do what they do for the love of the craft ("amateur" actually means "lover of" in French). This includes Boglehead forum members as far as I'm concerned, many of whom are amateur financial planners. Professionals do what they do for money. This means delivering a product or service in a way the market desires and will pay for. Writers may need to write click-bait instead of poetry; a wood craftsmen may be forced to build the same boring stool that sells when he really loves birdcages. A financial planner must charge fees (the horror! :shock: ).

I for one have stuck to my profession despite noodling repeatedly on the option of transitioning to a financial planner - which would be relatively easy for me since I'm already in financial services and have many wealth advisor/planner contacts. But it would require a pay cut, especially if I charged only for my advice and not for investment products themselves, which would be my preference. Otherwise it would require selling products I probably wouldn't otherwise recommend or purchase myself. I scratch that itch with Bogleheads and financial blogging and volunteering with things like junior achievement.
"An investment in knowledge pays the best interest." - Benjamin Franklin

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Meg77
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Re: Different Advice Needed - Career Change to Investment

Post by Meg77 » Thu Feb 09, 2017 4:05 pm

For the record, if you do want to move from engineering into financial services or financial planning, I recommend taking several people in that industry for coffee to ask them about their work. What they like, what their day looks like, what they regret, and what certifications or education they need or have.

You definitely do not need an MBA to be a financial planner. The CFP is the best and most recognized designation in that field. There are dozens of others though for niches like retirement planning, insurance coaching, et al. In my CFP classes there were actually a fair number of engineers attempting a second career. Financial planning does appeal to that type of person I think in general.

PS if your interest is long term investing strategy, a hedge fund or mutual fund job, or any analyst job where the focus is on the next quarter's earnings may not be "your thing." Financial planning is different. And there are many types of planners. Younger folks are increasingly opening their own RIAs and giving advice to younger cohorts via new pricing strategies such as monthly retainers. Many of those use roboadvisors or other technology to supplement their one on one advice. This enables them to have more clients and also helps with the sort of things that demographic needs, like cash flow monitoring. Some boutique firms provide comprehensive financial plans for a flat fee that depends on the complexity of the situation ($1250 - $10,000+). Then the client pays an annual retainer to have the plan updated. The most commonly understood type of advisor actually sells and manages investments, usually charging a percentage of assets under management as a fee, or AUM.

There are lots of great advisors out there, but the industry is going through a growth spurt and a major transition in pricing and competitive landscape. This can be painful and which may push a lot of the current folks out who came of age on the notion of picking stocks and/or charging big commissions. On the other hand there is a major shortage of advisors under age 35; the average financial advisor is in his (usually his) late 50s if I recall. And there are more over age 70 than under age 30.
"An investment in knowledge pays the best interest." - Benjamin Franklin

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