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Left the Investment Industry for the "Real" Industry

^Hm sounds interesting, haven’t seen anything like this yet.  But I would say there have been many surveys done that show retail clients (particularly HNW ones) still want human involvement or some kind of hybrid algo/human combo.  I think this makes sense given communication is a huge factor when dealing with someones majority, if not all, of their financial wealth.  Think of algo custom workouts that are much lower cost than getting a personal trainer.  The former has been around for maybe a decade, yet personal trainers can still be found in almost every gym.

There are those that say they can and those that say they can't and they are both usually right

Yeah, because neither of those help you lose weight…. I always hear the human interaction argument, but I think it really only applies to high-maintenance customers who waste your time on stories about their problem-grandchild. I think data privacy is still the biggest concern.

The biggest challenge robo-advisors will face is how their clientele will react as they go through a market cycle or the next crisis comes along and then they have no idea what to do next. An “Advisor” will be available to speak to the investor, who will likely be a PM. But guess what, the this advsior has never talked to this client before. He doesn’t know them at all or have any relationship with them. Robo-advisors will have a place in the financial services industry and will likely act as pipeline as investors continue to build up assets then transition them into the traditional advisory model.

For the DIY investors, it will offer them more choice and flexibility. Which is good. Advisors don’t want those clients anyway.

Yeah, I think people still want some sort of “expert” to hold their hand in investments. With a “robo advisor”, the investment decision is still in your own hands, and that is quite a scary thing. The 1% or whatever management fee charged by humans is cheap in most peoples’ view.

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

Are services industries not “real”?  I’m not bebating the quality of investment at advice versus an ETF, but the business is real….

Industries that are not real generate no revenue. Therefore service industries are real. They are billion dollar industries.

“Your beliefs become your thoughts,
Your thoughts become your words,
Your words become your actions,
Your actions become your habits,
Your habits become your values,
Your values become your destiny.” - Gandhi

Not super great sample size, but relevant to our discussion.  HNW still want human touch.

http://www.forbes.com/sites/forbesinsights/2016/06/02/the-future-of-weal...


There are those that say they can and those that say they can't and they are both usually right

It is a very interesting post indeed. I used to be a sell-side oriented person in my career aspirations but fate led me into the industry. Industry is not equal to industry through. Financial services is not much different in terms of mental attitude no matter which function you are performing, it shapes people. But funnily, the last few years in the real industry, with down-to-Earth people made me flee back to services. It is a very subjective issue. I personally like the industry better than services for the work-life balance and sort of independence but it comes at a cost of a very short-term functional career. So I am simply sick and tired of the fact that my line of work in the industry is so black-box and subject to corporate strategy changes and all the really worthy roles in major structured companies (the way I like it!) are taken by ex-BB bankers, that I would rather be at the source that at some corporate not knowing where it is steering… I strongly dislike the idea of my career being a ping pong ball in hands of minor players. So it all depends on your experience.

Very interesting post.  I recently made a thread asking advice on finding a low cost advisor.  Throughout my research to find a viable financial advisor over the past several months, I figured out that for my family, we’d probably be better off with low-cost index funds and find someone to utilize their software to rebalance accordingly on a retainer fee basis.  Fees based on a % of AUM as your wealth gets larger is not good for the client IMO unless you are getting very good advice and beating the benchmark consistently.  Say you have $20M and you pay an advisor 50-100bps (it’s a sliding scale downward the bigger you get).  Even at the low-end of 50bps, you’re doling out $100K per year which is outrageous if we look at it on a per hour of work basis.

I don’t mean this is a full knock on financial advisors.  They certainly have a place for HNW individuals who aren’t as sophisticated and frankly have no business in financial markets.  The hand-holding can be value-add.  That said, the high fees for the advisor (we haven’t even factored in fund expense ratios and other fees) make this industry particularly ripe for change especially since on average active management hasn’t demonstrated strong results.

^Defintely ripe for change.  Agreed there.  But your a CFA Charterholder so your example is not the norm.  Doctors, tech start ups, etc. have likely 1/10 your financial knowledge and probably have enough wealth coupled with busy life to be ok with 50-100bp.  Not all, but enough to keep the engine running.

There are those that say they can and those that say they can't and they are both usually right

Having come from a non-financial industry before doing CFA studies and finance related stuff, I can say that for the vast majority of people, it is nearly impossible to believe that indexing is better than having someone smart picking securities for you, and they think that they can choose people smart enough to outperform.  So they will pay 1% of AUM easily, or 1-and-10 or whatever. 

Most of us who know more may believe that active management can add value (or not), but we at least know that alpha is not an easy game and being smart isn’t enough on its own. 

A lot of guys making money today outside of finance are in industries with a high return to brainpower and so it’s easy to convince them that the fee structures are worth paying for by playing up that experience. 

In 20 years, that may no longer be the case, but for now, I think it will be a while before this changes. 

You want a quote?  Haven’t I written enough already???

I_am_the_highway,

just curious, what industry did you move into?

I’m back, turns out there aren’t that many jobs that allow you to go to 5-course champagne dinners on a weekly basis…

Grass was not greener?

For some time it was…

I left finance to work as a programmer for more than double my Finance salary. And another benefit is that I no longer have restrictions on my investment activities.

Honestly, I think all the learning that I put into Finance only benefitted me in managing my own personal investments rather than managing others’ money. 

Never underestimate the power of having a thick skin.

blackomen wrote:

I left finance to work as a programmer for more than double my Finance salary. And another benefit is that I no longer have restrictions on my investment activities.

Honestly, I think all the learning that I put into Finance only benefitted me in managing my own personal investments rather than managing others’ money. 

Can you describe in detail how you changed your career? 

left for “real” industry as in real estate!! Build some buildings…brick and mortar except it’s H beams and rebars and concrete!

Be yourself. The world worships the original.

dasstienn wrote:

blackomen wrote:

I left finance to work as a programmer for more than double my Finance salary. And another benefit is that I no longer have restrictions on my investment activities.

Honestly, I think all the learning that I put into Finance only benefitted me in managing my own personal investments rather than managing others’ money. 

Can you describe in detail how you changed your career? 

Not sure if this is enough detail:

- Graduated with a MS in Financial Engineering in 2009.

- Could not find any work for a year so settled for a no-name investment firm managing a few small hedge funds as a trader, quant analyst, and fund accountant.  They literally paid me only like $40K/yr to do the job of 3 people.  This was 2010.  I got fired in 2015.  This was a firm on the West Coast, not a huge market for quant funds.

- While I was at that noname investment firm, I tried really hard to jump ship pretty much from the 2nd year till the 5th with no dice.  I even passed all 3 levels of the CFA during the time.

- After I got fired, I decided to switch to doing Machine Learning..  I had an engineering background from my undergrad days though.  I worked on a certificate in Machine Learning from Udacity and did a lot of self study during the time while looking for another job.  It was tough trying to break into a different line of work but I managed after about a year and landed a quant machine learning position at an investment firm in a small town in the middle of nowhere.  Pay was great: about 90K/yr.

- I stayed at that small town investment firm for about 18 months before I wanted to move back with my family (was away from wife during the time I was at that firm)  There were few Finance opportunities but plenty of Machine Learning jobs in her town so I jumped ship to one.  Pay is over 100K/yr.

Never underestimate the power of having a thick skin.

your quant fund couldn’t make money from 2009-2015?

"You want a quote? Haven’t I written enough already???"

RIP

Welcome back, I_Am_The_Highway. I was wondering if you could share more about the turn of events, and perhaps you can comment on what surprised you to the upside “in the industry” (and maybe share with us what industry that was, or at least your functional role) and also what surprised you to the downside. Also, where in finance are you now? I think most people thought you were in an area of equities active management, which continues to face headwinds as I’m sure you’ve noticed. The fees still have to come down but perhaps the “base level” of income in finance/investing is still higher than most other industries, in spite of all of the flows from active to passive and fee structure pressure that will likely continue as a consequence…

igor555 wrote:

your quant fund couldn’t make money from 2009-2015?

Fund closed and fired me in 2015. Guess they deserved that fate. 

Never underestimate the power of having a thick skin.

damn. thought i was gonna get some knowledge on machine learning, or plumbing.

I love my cheese. I got to have my cheddar.

@ numi:

I was in multi-asset buyside (FA) before and switched to origination in downstream energy. It was a really sleeves-up environment with huge cost pressure at the time (main reason for leaving, ppl in AM really don’t realize how much slack there is still in the industry). I’m back at multi-asset buyside with a strong programming/ML focus (have my own AUM as well though). Business is strong and growing well (~5% net growth a year).

blackomen wrote:

dasstienn wrote:

blackomen wrote:

I left finance to work as a programmer for more than double my Finance salary. And another benefit is that I no longer have restrictions on my investment activities.

Honestly, I think all the learning that I put into Finance only benefitted me in managing my own personal investments rather than managing others’ money. 

Can you describe in detail how you changed your career? 

Not sure if this is enough detail:

- Graduated with a MS in Financial Engineering in 2009.

- Could not find any work for a year so settled for a no-name investment firm managing a few small hedge funds as a trader, quant analyst, and fund accountant.  They literally paid me only like $40K/yr to do the job of 3 people.  This was 2010.  I got fired in 2015.  This was a firm on the West Coast, not a huge market for quant funds.

- While I was at that noname investment firm, I tried really hard to jump ship pretty much from the 2nd year till the 5th with no dice.  I even passed all 3 levels of the CFA during the time.

- After I got fired, I decided to switch to doing Machine Learning..  I had an engineering background from my undergrad days though.  I worked on a certificate in Machine Learning from Udacity and did a lot of self study during the time while looking for another job.  It was tough trying to break into a different line of work but I managed after about a year and landed a quant machine learning position at an investment firm in a small town in the middle of nowhere.  Pay was great: about 90K/yr.

- I stayed at that small town investment firm for about 18 months before I wanted to move back with my family (was away from wife during the time I was at that firm)  There were few Finance opportunities but plenty of Machine Learning jobs in her town so I jumped ship to one.  Pay is over 100K/yr.

Did you learn python before taking course in Udacity?

I had learned Matlab, C++, and Java in college many years ago abd picked up Python along the way when learning ML with Udacity.

dasstienn wrote:

blackomen wrote:

dasstienn wrote:

blackomen wrote:

I left finance to work as a programmer for more than double my Finance salary. And another benefit is that I no longer have restrictions on my investment activities.

Honestly, I think all the learning that I put into Finance only benefitted me in managing my own personal investments rather than managing others’ money. 

Can you describe in detail how you changed your career? 

Not sure if this is enough detail:

- Graduated with a MS in Financial Engineering in 2009.

- Could not find any work for a year so settled for a no-name investment firm managing a few small hedge funds as a trader, quant analyst, and fund accountant.  They literally paid me only like $40K/yr to do the job of 3 people.  This was 2010.  I got fired in 2015.  This was a firm on the West Coast, not a huge market for quant funds.

- While I was at that noname investment firm, I tried really hard to jump ship pretty much from the 2nd year till the 5th with no dice.  I even passed all 3 levels of the CFA during the time.

- After I got fired, I decided to switch to doing Machine Learning..  I had an engineering background from my undergrad days though.  I worked on a certificate in Machine Learning from Udacity and did a lot of self study during the time while looking for another job.  It was tough trying to break into a different line of work but I managed after about a year and landed a quant machine learning position at an investment firm in a small town in the middle of nowhere.  Pay was great: about 90K/yr.

- I stayed at that small town investment firm for about 18 months before I wanted to move back with my family (was away from wife during the time I was at that firm)  There were few Finance opportunities but plenty of Machine Learning jobs in her town so I jumped ship to one.  Pay is over 100K/yr.

Did you learn python before taking course in Udacity?

Never underestimate the power of having a thick skin.