$700k/yr income in WM or leave to try to be a PM & hopefully start investment company in the future?
An opportunity has opened for me to be making approx $700k/yr doing wealth management/financial advising. My ultimate goal is to start an investment company like Berkshire Hathaway, or start a hedge fund. Just something that does pure capital appreciation and not life insurance, annuities, retirement planning, and other random stuff I will have to deal with in WM. I'm almost 30, and $700k is a lot of money. Will my experience in WM help towards my long-term goal? To what extent will the skills transfer? and which skills will I be lacking?
I'm currently an AFA. I took the job to break into finance. My plan was to get experience, do MBA and/or CFA, and then apply for an analyst or associate role, and work my way up in the portfolio management world from there till I am successful and comfortable enough to start my own investment company. But now, this opportunity has given me more to think about. Those offering me the opportunity believe that making about $700k/year starting around age 30 will put me in a good place financially to start an investment company in the future. They also think that I can take the CFA and continue to prep towards starting an investment company as I work in WM. I on the other hand think WM on the scale that I am being offered will take up so much of my time that I might not be as good of an investor as I would be if I was focusing exclusively on investments as a PM without worrying about the auxillary stuff such as life insurance, social security rules, retirement planning, etc. But then again, I just don't want to walk out of an almost million dollar/year opportunity without serious thought. Please help! I need to decide soon. And by soon, ideally before the end of the year. The uncertainty and the weight of this is uncomfortable to carry.
Thank you so much for the response and advice. You can see the previous post under my profile for more context. I will be buying one of my bosses' book. The $700k is the approximate income after payments for the book. The book currently earns over a million. & no, no sizeable inheritance that I know of lol. The pursuit is not solely for financial reasons. it is because I think I will enjoy buying securities and other businesses for capital appreciation purposes. The goal will be to keep getting bigger and bigger with no end in sight. To me, it is more single-minded than WM, and I am at my best when I have a single goal to focus on and dedicate all my energy to. In this case, that one goal will be to make my clients as much money as possible, which also works out well for me because I will make a lot of money as well if I am good at it and if I have a decent-sized AUM which will only keep growing, hopefully. I'm an enneagram 8, so my personality type is what I'd imagine as that of a conqueror. I need something very interesting, sports-like competitive that will keep my blood boiling. I think the strive for returns can satisfy this.
Beyond this, the other reason why I love investing is my need for control and power. It would be nice to eventually be at a place in life when I can have board seats on companies and influence certain outcomes. Also, being a person of varied interest, investing gives me the ability to partake in any field I want. For instance, I don't have to be Zuckerberg, I just need to buy a huge chunk of Meta to have a say. I also don't need to start a mining company to be involved in the mining industry, etc. These things and more are why I dream of running a successful investment company. I just think it would make me feel unlimited and actually live life in the way I want. I feel very constrained as is.
Now, in wealth management, I can't really do this. We are bound by suitability rules, so even if you're managing a huge AUM, you have to segment it and manage it per each client's needs and investment risk profile. Yeah, $700k is great living and I am beyond privileged to even have this consideration at this stage in life, but I am afraid that I might not be fulfilled in WM. It seems too tame, and it also seems too scattered. You are essentially a jack of all trades. You do investments (bound by client suitability), you do retirement planning, you're involved in estate planning, you master social security rules, you know much about life insurance, etc. I would be a bit more fine with it as a starter if it was just investments bound by suitability.
That's why this is so hard because the options seem like: (1) settle for a very lucrative position that I might not enjoy as much as what I am aspiring for; or (2) Pass on a great, probably almost once-in-a-lifetime opportunity at this relatively young age, and pursue my dream which is very hard, uncertain, but potentially very fulfilling to me and potentially way more lucrative than WM if done exceedingly well.
Or could there be a way to combine both? Maybe do WM for a while and make some money and learn important WM strategies, and then try to launch an investment company? Some of my WM clients might even double as early investors if they believe in my abilities that well. What do you think?
LOL I'm sorry but someone had to say it, you sound cringe and ridiculous. I don't think you know what you're actually getting yourself into. This just sounds like a teenager's wet dream of what he imagines investing/trading as a career would look like.
Do you think you're not constrained by client mandates as a PM? Do you realize that as a PM, your livelihood depends on these people not pulling their money out when you drawdown?
Investing/trading is equally as constrained, if not more so (returns, sharpe, drawdown, diversification, etc.). You're looking at this with rose-tinted glasses. Even with Buffett's acumen, you'd be fired several times over with the mandates that people have to keep. Do you think you're better than Warren Buffett?
Scaling a fund to any significant degree is extremely difficult unless you're pedigreed (i.e., have an established track record at a reputable fund already), and the economics don't really make sense unless you can get to $250mm+.
Dude I need to be honest with you, this is ridiculous. Point by point:
- You need something interesting & competitive: Do you have any idea how hard investing is, esp without any real experience? I'm at one of the best AMs in the world and we're still wrong 1 out of 3 times (wrong defined as underperforming the benchmark). We've honed our craft over decades & that's still the upper limit. I've trained for years and am just getting a solid grasp on one sector, never mind all the other sectors. There are virtually no great self-taught investors from the past 3 decades. The closest I've ever heard of is Mohnish Pabrai and that guy started his shop over 2 decades ago when markets were WAY less competitive. You have virtually no shot at replicating that over the next 2-3 decades esp with markets as competitive as they will continue to get as AI shifts the game
- Need for control and power: Are you serious right now? You really think you can buy a huge chunk of Meta, or for that matter any company that matters at all (>$1bl) and have a say? First of all, you will likely never have enough capital to buy that big a chunk and secondly, we're in the Top 5 shareholders of many, many large companies and even we don't get a say in how they're run. Not really, we offer some advice once in a while and the company takes it if they want or they don't
Can you share your journey till landing up at this 700k offer?
f me.
I need to do WM.
thats my takeaway from this thread
I personally would take the WM gig and see how you like it. After several years you'll have enough invested in your personal accounts that you can basically run your own money/test your investing prowess. I would continue to try and scale the business and you could probably clear $1MM+ a year at some point and you may find that you like the industry. Each client is different so it keeps it interesting.
Just keep the 700k a yr gig my man. You can be a PM of your PA
Are you at a wire house or independent? How much are they charging for the book and how long is the earnout (I’m assuming ~3x t12 production)? Honestly if it’s a quality book then this is a massive opportunity and at some point it does come down to money. Going the investment management route is a long road and doesn’t guarantee you’ll ever make $700k a year. Yes some make billions but that clearly isn’t the norm.
the way I see it, you have a chance to grow into $1-2mm a year job where you’ll have a great life, don’t need to live in a HCOL city, and will have time for family when the time comes. There’s a lot of people in high finance who dream of this type of opportunity. The grass isn’t always greener.
Send me the contact information for your boss selling the book. I’ll take that opportunity off your hands so you can focus on building your investment business. I wouldn’t want you to be distracted.
$700k/year? Take that WM position. That’s like unheard of at the age of 30. And if you grow the book…and you work another 20 or so years, you could be making way more than that. Then, guess what? You sell the book when you retire. It’s basically your business. Build in an investment strategy into the book for some portfolios and manage the assets. You’re still going to be a PM, just at the retail level.