2020 Career Counseling Update (Part 2)

Picking up where I left off, here are my current thoughts about becoming an investment advisor representative (IAR).

I don’t feel like I can really talk to friends or family about investing because I am not registered to give financial advice. Strictly, a three-prong test exists for what constitutes an IA:

• The person gives advice on securities.
• The advice is given as part of a regular business.
• The person receives compensation for the advice.

In talking to others, I would be regarded as doing the first. I may be regarded as doing the second if I give advice along with trading, which is now my regular business. While I would never accept compensation without being registered, two out of three is too close for comfort. I therefore choose to say nothing at all.

And since I haven’t written this in a while:

     > Nothing in this blog constitutes investment advice or any recommendation
     > that any [portfolio of] security[s], investment product, transaction, or
     > investment strategy is suitable for any specific person. As a blogger, I
     > cannot assess anything about your personal circumstances, your finances, or
     > your goals and objectives, all of which are unique to you. Any opinions or
     > information contained in this blog remain just that: opinions or information.
     > You should not use my blog to make financial decisions. You should seek
     > investment advice from someone authorized to provide it.

Returning to the topic at hand, while part of me resents not being able to communicate with friends/family about the topics I love, another part is at peace. Quite honestly, I still have reasonable doubt as to whether anything I have studied is significantly better than long-term passive investing despite trading full-time for a living over the last 12+ years.

While I maintain hope that some strategies I implement do offer alpha, I am not qualified to evaluate the suitability standard (see here) in recommending them. As an IAR, I would be well-versed in suitability from training to everyday application.

I still have great interest in backtesting and developing trading systems. I would like to learn more about programming and statistics to acquire powerful tools to answer my research questions. I may or may not be able to continue this work as a full-time IAR working 40+ hours/week. I certainly don’t see this work fitting in with my target clients—most of whom will probably be laypeople when it comes to financial literacy.

I miss working with others. Other traders with whom I can communicate have been like a proverbial “flash in the pan” on a variety of different wavelengths. Many of them have been quick to believe what they get from books or the internet as opposed to doing the hardcore testing to confirm or deny hollow claims (so many of which are not true or actionable). For these reasons and others, I have been unsuccessful in cementing long-term collaborative relationships.

As an IAR, I would be able to collaborate with colleagues on the advising; could I also find other professionals committed to quantitative work? Or is the only place I could really hope to find such like-minded folk among the hedge fund and other performance-chasing firms that look to hire MSFEs and PhDs? One thing I don’t want to pursue at this juncture is a whole other degree field* unless I can merge it with IAR training (and tuition reimbursement?) to ultimately benefit my firm.

As a final thought, I definitely want to continue trading options even if I go the IAR route. I’ve never been a day trader and I do not require being glued to a screen to watch every tick. I would want to check the market 1-2 times per day and place trades/adjustments accordingly, though. This would have to be approved by my firm’s compliance department.

* — For what it’s worth, I did pass the Series 65 exam [for the second time] in fall 2019.