Broker for half decade with delima

[OldTrader]

So your situation is that really you have a very general education, and you got no dough. But you want to do something different.

I think your situation is that you either get further education that is going to appeal to hedge funds, mutual funds, brokerage firms, in the trading, portfolio type of business. Or, you stay where you are, suck it up, start working your butt off so that you make more money. Really you're in a business that some people do very well. But maybe you gotta use those analytical skills you say you have to select mutual funds/managers or whatever that will do well in the future investment climate.

As you make money for your clients via your recommendations, you will earn money for yourself which you can then invest for yourself.

You're not the first guy in the world that has to do what he doesn't necessarily want to do. You got a family that you need to support, so you can't exactly strike out on your own without alot of preparation.

Bottomline is you work your butt off doing something that isn't perfect, but keeps you around the business, allows you to invest your own funds, and keeps you in front of people with assets. Those people with assets may come in handy to you somewhere down the road...especially if you can select managers for them that do a good job in various investment climates.

OldTrader

 

[brownsfan019]

Wow... deja vu for me reading this. I was in the EXACT same position before I left to trade full-time. I feel your pain.

Not sure what to say other than you either need to accept that you are selling some bad products or make the jump. I made the jump.

 

[LEAPup]

Quote from jj90:

If you've done well trading your own acct the past 8 years, trade for yourself. You know where the blame lies and profits are 100% yours. I recommend a 2nd job to pay bills while this occurs.

Alternatively, you can look into getting your foot into institutions, but since your track record (although decent) isn't managing a large sum, expect to work up from back office to front.

Being sales isn't all that bad, might be useful when you switch over to institutional sales with that background.

Don't expect to be managing money instantly, you will have to work your way up. Just remember that big firms pull a decent amount of revenue from retail pitching. If your good and can land a book of 10MM+, 1% yearly comm is 100k. Not too shabby.

BTW, which department were you in the force?

jj90, I appreciate the reply!

I have considered a second job. It almost killed me with a Wife and three kids in High School (one in 5th grade)

Institutional I've thought about. I'd love to work on a floor in Ny or Chicago, but will entertain change.

I'm with an Independent B/D and RIA now after leaving "the dark side."

I was a Deputy in a large County in West Virginia. Sometimes (many times covering the entire County at night by myself and one Trooper from the State Police if I was lucky. It takes over an hour to drive from one end of the County to the other. Needless to say, I can drive fast, and multi-task. )

I grew up in New Orleans, and was transplanted here when my Mother and Dad (before the divorce...) were transfered with Union Carbide.

I enlisted in the Marine Corps after High School, and after seeing damn near every Country there is LOL, I came back here as it's a laid back lifestyle. I live in the Capitol City of Charleston which is riddled with Detroit, and Chicago drug dealers, instead of the old cliche of "hillbilly."

Now, if you go to the southern part of WV, it's literally like stepping back in time. Good people there. If they like you... If not, they shoot first, and ask questions later.

 

[LEAPup]

Quote from cvds16:

I feel your pain, I have been a broker too at one time in the past, when I could choose stocks there was at least some fun into it, but when a few years ago people only wanted to hire me as an investment advisor to sell mutual funds I really hated the job. I don't think high of the salesmen I met either: selling crap at any cost to get a commission without any ethics was not my chosen way to get on in life. At this moment I have a totally different dayjob, which I don't really like, but at least I am doing an honest job.
My solutions however was to learn a new method to daytrade. This took me a long time (as my previous method of trading options had disapeared a few years ago, so I had to start from scratch again). So now I daytrade as soon as I got home (I live in Europe and can stop at 4PM); leaving me a good decent four hours to trade fx. I have learned a lot over the last few months and my rather small account has consistently grown (although there have been up and downs) without me having to worry too much about my trades, no matter what happened I was payed at the end of the month. I am going fulltime again at the end of october. If you live in the US either trade fx or trade europeans markets or find some Asian market to learn the ropes. Try to keep thins into perspective: if you have a fulltime job, 4 to 5 hours of trading is about the realistic amount of trading you can keep up with in the long run.

CVDS16, I keep hearing from my family, "get an honest job." Maybe there's something to that...

When it comes to OPM, I don't think sales people have any busines with their hands on other's hard earned assets. Sales of refrigerators, cars, etc., is more of a "norm" I would think. Sales of products (paying a high commission) don't always benefit the Client, and that's just not me.

I appreciate your reply!

 

[LEAPup]

Quote from vhehn:

brokerage products are sold not bought. you are more useful to them as a salesman than a stockpicker.

That is absolutely correct! There's a lot of greed out there among the major firms all the way down to the Independent firms. Makes me ill seeing what I have seen done to nice people, and their retirement money.

 

[LEAPup]

Quote from BeatingtheSP500:

It's amazing to me the depth of the "the dirty little secret" i.e. the mutual fund industry is really the world's largest skimming operation.

I'll have to say even though I never liked Spitzer, he was on to something with his mutual fund investigations.

Some people think that once they pay the A share load, there aren't any more fees.:eek: Sad...

 

[brownsfan019]

Quote from LEAPup:

I'll have to say even though I never liked Spitzer, he was on to something with his mutual fund investigations.

Some people think that once they pay the A share load, there aren't any more fees.:eek: Sad...

How true is that... How about the retirement accounts holding B or C shares w/ their "no commissions"?

HAHAHAHA.

Quote from LEAPup:

That is absolutely correct! There's a lot of greed out there among the major firms all the way down to the Independent firms. Makes me ill seeing what I have seen done to nice people, and their retirement money.

And that feeling in your stomach LEA is why I no longer am a broker myself.

I focused on retirees and my typical client was 60-80 and had quite a bit of their entire liquid net worth invested. And then I got to peddle over-priced bonds, UITs, annuities and funds to them.

And when the market went down... just hang in there, it will bounce back.



I really do not miss those times at all.

I wish you well.

 

[LEAPup]

Quote from vhehn:

a friend of mine recently retired and wanted to roll his money out of his company. a morgan stanley salesman wanted to sell him a guaranteed 6% return product. he asked me what i thought and i told him not to do it there has to be a catch because nobody can guarantee 6%.
well a few months later i see him and ask what he did. he says he went ahead with the product. so we dig out the paperwork and i look it over. it pays him 6% but it had a nice load and the yearly expenses come to almost 3%. his 6% guarantee became a 3% guarantee net.
the hidden fees is where todays brokers make their money. if you get a large enough book of these residual products you can do well.

Sadly, your friend was sold a Variable Annuity. Probably a "B share." It sounds like the GWB (Guaranteed Withdraw Benefit) rider was on it. If it was within 10 days, he could have "free-looked" (backed out) of the contract with no surrender charge.

I don't use Variable Annuities. The Clients don't understand them. Hell, the Brokers don't totally understand all the moving parts.:eek: That's why the regulators love to pounce on VA selling Brokers. HIGH fees eating away at the returns, sub-par performance of the mutual funds inside of the annuity, etc., Snake oil.

Why did the MS guy push this on your friend? Fear. He scared the guy "you'll lose all your money kind of shit." Then put a band aid on the wound called a Variable Annuity that pays about 7% upfront. Since he's at MS, he gets to keep about 42-45% of the total commission. Sad.

Tell your friend to find out what the surrender charge schedule is. I bet it's seven years. If it's three years, it's an "L share." Of course the L share has even higher fees than the B share...

 

[LEAPup]

Quote from rwk:

I am surprised that you didn't know going in that being a broker is first and foremost a sales job. I interviewed for broker right after getting my degree back in 1971. The interviewer was very clear that my interest in trading was considered a red flag negative. He wanted people who liked selling and were good at it. It was better that they not care what it is they are selling. Used cars was just fine. And this was a major wire house.

It should be possible, while still working in your present job, to find money managers who have above average performance. Also, concentrate on developing relationships with accredited investors. I have a broker friend who has done that. Then when you have enough capacity lined up, go on your own as an asset allocator. Once you have a clientele and money rolling in, you can start trading a small fund of your own -- if you still want to.

RWK, I appreciate the reply!
Yes, I knew there would be 'some' sales going into it. Just didn't know it would be sales of snake oil products.

In my area an accredited investor is rather rare. LOL! But, I do have five right now. They're in managed (IAR) accounts. I'm losing one in December, and that one's "gonna hurt" since it's 4mm. I'm at the stage where I just don't want to be retail anymore.

 

[LEAPup]

Quote from trendy:

IMO, LEAPup, there is no easy way out of your situation. Either you continue to suck-it-up and be a modern-day broker with all its warts and flaws, or you strike it out on your own. But, having little capital is obviously a big problem. Oh, you can no doubt find some prop firm to trade through but the split and vig will make it tough to earn a living. You have a family, how do you support them while you establish yourself as a trader? With no nest egg to draw from during this period of time, all you are doing is adding pressure to an already stressful situation. What about your wife? Would she be supportive of you making a jump? If not, then tell life to super-size that order of stress. So, are you willing to risk it all, or do you want to play it safe?

Trendy, you nailed it. I'm in a tough spot. A true quandry. Family comes first for me too.