An Insider’s View on Jobs in the Financial Industry (Part 1)

My primary brokerage has a toll-free number I can always call and a general e-mail to support. They were nice enough to provide me with a local personal contact in case I ever have issues to discuss with a familiar voice, as well. Back in January, I had an informative phone call with my representative about working in the financial industry.

I prefaced the discussion by telling him that I have been trading my personal account full-time for over 12 years and am very thankful things have worked out thus far. Since I have successfully navigated my own account, I would like to do the same for others. How might I make this transition?

My expertise is in trading and strategy development. I think of myself like a quant but not as sharp as the professionals because I haven’t had as much [recent] math, statistics, and/or programming coursework. I would like to at least think I know my way around making money in the trading space. This has been true for the better part of 13 years [and could end at any point, which is why I don’t really like to talk about it much as noted in the second paragraph here]. Most everyone with whom I have shared my career story has been impressed with what I have done.

I asked how the suitability standard for investment advisors compares with option trading clearance for brokerage clients:

• Tier 1: covered calls and cash-secured puts
• Tier 2: Tier 1 trades and outright long options
• Tier 3: Tier 2 trades and vertical spreads
• Tier 4: Tier 3 trades, uncovered spreads, and naked short options

I think Schwab has three levels, but this four-tiered structure is currently in force at E*Trade. To get full option trading clearance, one needs to claim extensive knowledge, trading experience, and sufficient liquid net worth. The option application asks about investment goals (e.g. why are you investing in options?) but nothing about investment time frame. A suitability assessment will ask about time frame but nothing about investment experience.

If I want to continue managing my own accounts, my rep said most financial firms would require I move the accounts over to them (or their custodians) and would not allow me to trade during the business day. The latter makes sense since I’m being paid to work for them. Moving accounts over, though, might come at a cost of being able to trade options altogether depending on their custodian, clearing firm, and/or available permissions. This may or may not be a compliance issue.

I would never want to give up self-directed trading, which is my primary source of income. So much for working as an investment advisor for an established firm?

I am worthy of self-promotion (see here and here) but still missing the piece about how to get from here to there.

I will continue next time.