Advice for those wishing to enter the Investment Management business

December 21, 201630 Comments

Every year I write a related yet somewhat off topic blog near Christmas. Topics in prior years have covered the similarities between driving a stick shift and trading, the discipline necessary for successful athletics and trading, and perhaps my most controversial blog to date—last year’s scathing outlook on the consequences for the economy under the current Canadian political leadership.

This year  I’d like to offer some thoughts for some of the younger readers of this blog concerning what it takes to travel the path of entrepreneurship in any business – specifically focusing on forming a successful career in the financial industry. Obviously, I don’t know all there is to creating a successful business or career in finance, but I certainly can draw from my own path. Success is a personal definition, but I believe that, no matter how you define it, much of being “successful” in any endeavor will come from your mental attitude. With that in mind, I thought I’d draw on a bit of a history on my journey into creating ValueTrend, with its failures and wins. I hope that you will gather from this brief history that it was attitude and drive that ultimately brought me and ValueTrend to where it is today.

I really do believe that the principles of success are universal – and are readily available for anyone to follow and achieve their goals. I realized very early in life that with a floor to your income, there is also a ceiling. I’m a capitalist. I believe in the libertarian concept of individual accountability, working hard, taking risks and reaping the benefits – or bearing the consequences – of the free market. No safety nets, no entitlements. This goes hand in hand with my objections to those who feel “entitled” to take the riches away from the producers in society for redistribution to those who didn’t take the risks and employ success principles.  I hope this “biography” helps some of my younger readers find inspiration that the struggle to become successful in the financial industry (or any business, for that matter) is worth it.

 

A brief history of time, space, and ValueTrend – with apologies to Stephen Hawking

I’ve been an entrepreneur for most of my working life. At college I had a brief stint in Civil engineering before redirecting into Phys Ed (not finance as you might think). I was a young bodybuilder at the time (another shock for those who have seen my currently skinny cycling body ). I had no money – I rode a bicycle everywhere or took the bus.

bodybuilder

But I read a book called “Think and Grow Rich” by Napoleon Hill, and that book convinced me that “Anything the mind could conceive and believe, it could achieve”. This mindset afforded me the courage to approach neighbors and friends to borrow money to realize my dream. I purchased a gym. The gym business changed over the early 1980s, and my little gym was left on the wayside as the big mega-gyms moved into Brampton, Ontario. The closure of my gym left me saddled with debt, and rather shocked at how harsh it can be to run a small business.
think-and-grow-rich

But there was a bright side – for according to Napoleon Hill’s book – every failure brings with it an equivalent, or greater benefit. The gym business had taught me to sell. Despite my debt and the failed business, I remained ambitious. So, after sadly closing the gym, I went on to work as a salesman for Titan (Costco’s predecessor). I continued to read books on business, success and motivation.  I worked harder than any other salesperson in the company. At Titan I became their top national salesman.  Titan closed, and I moved on to sell the services of credit and collection behemoth Dun & Bradstreet.

db

Helping companies work with their balance sheets through tough markets was different from selling $200 gym memberships – or convincing small grocery stores to buy inventory at Titan. D&B clients were sophisticated corporate Controllers and CFO’s. I was a Phys-Ed jock. But I wanted to succeed. The great thing about D&B was their wonderful sales and motivational library. I was by far their biggest user of this resource– and, as at Titan,  I became their top National Salesman for 3 years running. I was ambitious, no stranger to working hard – and willing to do what it took to move me to the top of the field.  Ironically, I started at D&B on Black Monday in 1987! Perhaps this was a sign that the investment industry was waiting for my entry. This was my introduction to the world of finance – an awakening experience that differed vastly from my experience in running a gym or dealing with the wholesale crowd.

 

The making of an Investment Advisor

I left D&B to briefly try my hand at running a sales and motivational material distribution business. I sold training programs by Bob Proctor, books and tapes created by Tony Robins and Brian Tracey. While running this business, I met a stockbroker (Investment Advisor) at a party in 1989. I was already investing a little, and asked him questions about the field. Before you knew it, I was in his managers office – who subsequently offered me a job as an Investment Advisor with McConnell & Co in 1990. I should point out that this position was 100% commission with no salary, benefits etc. I accepted his offer.  I’ve always believed in capitalism – and working for commission with no safety net is the purest form of the free market economy. You get paid what you are worth, and nothing more – but nothing less either.

Applying the same principals and ambition that I had exhibited in the past – I plunged into the investment business. The brokerage business is a hard one to start as a rookie. Who invests with the new guy? I was also with a small independent firm—no bank or big brokerage to feed me new clients. I worked 70-80 hours a week, spent thousands of dollars on auto expenses, new suits, educational upgrading, etc. My wife wasn’t working, and we had a new baby at home. I only made $6000 in total that first year – and spent about 5 x that in expenses. We almost lost our house – it was stressful, and my wife almost begged me to get a stable job. But I survived, and eventually I began to land clients.  Suddenly, McConnell folded! Talk about luck… I was just starting to make headway. Thankfully, Midland Walwyn took a chance to hire me and transfer my business to their firm. I began making money. What a joy to pay off my debt and avoid potential financial demise!

midland-walwyn

Eventually, Midland Walwyn was bought by Merrill Lynch, and later again by CIBC Wood Gundy – where I became a Vice President. I got my CMT (one of the first 40 people in Canada to hold the designation) and created the ValueTrend Managed Equity Platform in 2007. I eventually left Wood Gundy – leaving behind several hundred thousand dollars in shares   – to start my own firm – ValueTrend Wealth Management. I had to leave a secure job, well over a quarter million in shares that had been part of my compensation (so long as I stayed with the firm) and convince clients to come with me to run my own business – one without a bank behind me. It was a worry that clients might not want to leave the bank, and I would fail in this endeavor. And it cost me lots of personal money to set up my own shop—not just in what I left behind at Wood Gundy. Another sacrifice, another risk with no assurance of success, more hard work and long hours. Are you starting to see a pattern here?

 

A capitalist despite it all

My mother and father were liberal voting, left-leaning people- as are most of my family, with the exception of my younger brother. My dad was a high school teacher. Coming from this background, one would think that I would have been influenced to seek out a “safe”, salaried position, never putting my family’s income in danger. You know—the job where you work 9am – 5 pm with a salary, and maybe get an increase periodically . Perhaps you will advance to a supervisory position. You retire after 25 or so years with a pension. Safe, and secure. Nothing wrong with that – for other people.

A couple of years ago, one of my two left wing siblings was discussing my business success with me. I was called “lucky”. As in – I hadn’t had an alcoholic father who beat me, I never lived with a single parent in a trailer park or ghetto, I had good nutrition and a stable environment, was able to finish high school and go to college.   A privileged white male coming from middle class suburbia  – that’s why I was successful. While I acknowledge my stable middle class upbringing as helpful, it doesn’t change the fact that the middle class lifestyle breeds more of the same for most of us. Not that there’s anything wrong with that – but I wanted something more. Success is dependent on taking the risks, often in starting businesses– failing – then  getting back up. Rather than going the “safe” route, I was on the path to do what I wanted in life. What I wanted out of this business would require bypassing a guaranteed salary, and working for 80 + hours a week looking for clients to give me a chance. I did this with no second income by my wife to support my family. Talk about having your back against the wall!

the-fountainhead

I took a long term vision on staying away from the lucrative business of selling mutual funds in the 1990’s when my fellow Investment Advisors were raking in the dough selling them. I needed that income badly – but I wouldn’t sell funds.  My convictions prevented me from selling them. Ayn Rand’s book “The Fountainhead” rings a bell with me for that part of my life. To understand the idea of principled convictions, read it if you haven’t already.

I committed to improvement through hours of study – courses, books, lectures, laptops, trading software and research services – when others around were selling mutual funds and playing golf in their spare time. I spent weekends away from my family to learn technical analysis, study my CMT, and write a research paper for accreditation, even making sales calls between classes! For whatever success I’ve had in this business – it was not luck that gave it to me. It’s for this reason that I have made a point of supporting political leaders who favor a free market economy and self-reliance. I do not endorse the current left wing government’s ideals of entitlement and high taxation of success. Below is a shot of me meeting Alex Nuttall (MP for Barrie, Springwater and Oro-Medonte and Barrie) and Member of Parliament Maxime Bernier.

with-alex-nuttall-and-maxime-bernier

 

Starting in the investment industry

If you plan on getting into this business today, you won’t have to face the hurdles I faced. These days, the banks will hire a new Advisor, give them a salary, and even feed them new leads for clients.  And I think that’s a shame. They’ll grow their book of business much easier and quicker than I did. But they won’t build something unique, they won’t hunger to improve. That’s because they won’t need to – their backs aren’t against the wall.

My advice for those who want to get into this business and to do something special– do it the hard way. Study and become an analyst through the CFA or CMT programs. Create a trading system that is unique based on a style you develop through hard study and practical application. Don’t just sell a solution made by “Big Brother”. Become the solution. Get to know people in the industry and ask them to share their knowledge. Do right by your clients, and forget about your income. Stick to your principles. Do it the hard way. It will pay off.

Read the Fountainhead and Think & Grow Rich! You may have to start off with a bank firm – and that’s OK. But to do something unique, you will have to develop a unique trading plan—and avoid their in house products or mutual funds. Don’t drink the Kool-Aid.  Eventually you have to leave the nest of the bank if you want to do something that you will be remembered for – but it’s a great place to start.

indocrination

If you don’t want to do anything special – there is nothing wrong with going the traditional path of an Investment Advisor. Stay at the bank or big firm, gather their clients and put their money into the recommended list of stocks, mutual funds or their in-house managed products. Work for 25 years. Collect your employee share plan or bank shares over that career, and look forward to your pension. Retire and be another long-forgotten Investment Advisor who had nice relationships with clients, and passed their book of business on to an incoming rookie within the bank. That’s okay. But it’s not the path of the entrepreneur who wants to make a difference. I suspect that the younger readers of this blog are independently minded – that’s why you read this blog. You want to learn, and to grow. You want to trade and prosper rather than put your brain in park and buy some mutual funds.  For those considering a career in the investment business, I believe that your current study of technical analysis says something about you, and your individuality. I salute you.

 

To all of my readers – 

happyholidays

I really appreciate that you read this blog, and I love the comments and discussion that is created from it. We live, we learn, we grow together though this type of medium

 

All the best in 2017.

 

 BNN studio

Keith on BNN’s “MarketCall Tonight” Friday Dec 30th 6:00pm

 

Phone in with your questions on technical analysis for Keith during the show. CALL TOLL-FREE 1-855-326-6266. Or email your questions ahead of time (specify they are for Keith) to [email protected]

30 Comments

  • Great read Keith, even for blue collar HD Mechanic , have a Merry Christmas and good New Year …..

    Reply
    • Mike–thanks and best wishes to you as well—-and for the record– I believe that all productive hard working persons who take responsibility for their lot in life share the same integrity and basic philosophy.

      Reply
  • Amazing story! Wow, a rare breed. You did have some luck in finding a woman who stayed with you. She is probably a gem and a life-time keeper.

    Many men are trapped in their current lifestyle and can’t change for fear of losing their family.
    Half our family and friends are divorced since they could not handle the tough times.

    Looking back at my own life I too have some entrepreneurial success.
    I was very lucky to attend a high-school in Etobicoke which had the only computer courses in the city at that time. That led me into the field of computer science.

    I attended UofT and got my Bachelors in Computer Science, Applied Mathematics & Finance.
    I had the grades to go to graduate school for my Masters but got rejected due to a quote system of favoring women and foreign students. Other universities were no better since they tend to favor their own undergrad students first. Unless you are a super-star, you may be stuck in the herd.

    I decided to just get a programming job and start making money.
    I was lucky in that my career choice was a growing field and landed a job at the TSX.
    I met my wife soon after who worked for the City of Toronto in their IT department.
    I learned a lot at the TSX but eventually left since there was too much politics.

    My wife was very supportive since she had a well-paying govt job and we had just
    finished paying off the home mortgage within 8 years. People say we were lucky but
    the truth is we saved like crazy and bought a small home unlike our friends who bought a monster size home and expensive cars. So the 8 year mortgage was possible, you just have to live within your means.

    Warren Buffet was right when he said, “Only buy what you need, and don’t overpay”.

    I formed my own company and became an IT consultant for hire. It was very tough at first, but I was lucky to have a wife with a good paycheque. I did land one contract after another and started making good money. I guess I was lucky to live in Toronto since most of my contracts were to write software in the capital market divisions of various banks.

    My wife and I did some travelling and their is very real hardship in other countries.
    People need to be more appreciative of living a modern country.

    Unfortunately the advisors we trusted with our investments never made us any money. After the switching advisors multiple times, note they had 5 years to prove themselves before I fired them, so I don’t think I was too demanding. I wish I meet advisor like yourself.

    Eventually I decided to open discount trading accounts, and take matters into my own hands.
    Again my wife as supportive and my investment choices paid off very nicely. But it was a lot
    of time and effort. The rich only get richer, if they work harder that the average.

    At 54 now, me and the wife are planning to retire in 4 years to Whistler and live a very comfortable life. She has a generous pension and my portfolio is huge. My wife and I now hope we are lucky and inherited healthy genes so we can continue skiing & snowboarding in retirement.

    Reading your story, I realize now, I never had your hardships but the plan was the same.
    Not so sure, I could have endured, what you went through. You are a tough guy!

    There is some luck in which family, which area, and which society class you grow up in.
    It just means your problems will be different and that doing hard work is still necessary.
    Left wingers need to stop complaining and put in some extra effort.

    Believe in yourself, educate yourself, take on some risk, accept that there is ugliness in the
    job market and being independent you need to sometimes suck up to clients to get the work.
    Whatever luck you have, use it and build success.

    If I get bored in retirement, I am seriously thinking of starting up a web-based investment
    software company. Something like http://ca.finance.yahoo.com and http://www.bigcharts.com
    but designed to help individual investors with which sectors, which securities, entry & exit times and allocation strategies. It will be heavily automated and inform users about alerts and suggest actions. Lots of web sites only offer lots of raw data but no intelligence.
    Something like a robo-advisor. I already have written quite a bit of my own software, I use myself to help with my trading but it is very techy and not easy to use. The interfaces needs a lot of polishing before it is a viable product.

    Maybe it will be a future hobby project since I can’t ski and golf everyday. Or can I 🙂

    Happy Holidays.

    Reply
    • Robert–thanks for sharing this about yourself! I feel that the readers of this blog are of similar mindset–and you are a good example of the productive type of person who reads the blog. Keep in mind, your luck was based on decisions you made as an individual–to take advantage of perceived opportunities or take a risk that such an opportunity may work out – with no guarantee of that happening. Luck only comes to those ready to recognize it and take the chance of its fruition or failure. Every one of us has opportunities thrown our way — only once in a while to we take advantage of them. I must say that I have thrown away as many opportunities as I have taken–and it was nobody’s fault but my own when I failed to utilize them.
      Much appreciated for your continued readership and I’ll look forward to your input over the years!
      Oh, and yes–my wife is the rock star in our relationship. I just have the rock star name!!

      Reply
  • thank you for your insight Keith! Always a pleasure to read your blog. I always learn something new. Wish you and your family a very merry Christmas and a happy new year.

    Reply
    • Much appreciated- looking forward to more interesting markets in the New Year!

      Reply
  • I enjoyed reading a bit about your history Keith. Happy Holidays and all the best in 2017.
    Ron

    Reply
  • I look forward to your blogs every week and truly enjoy reading them. This last blogs was extremely inspiring for me after knowing what you been through to be where you are today. I truly appreciate how you stuck to your principals even going thru difficult times for your clients.

    Thank you for sharing. Have a great holidays.

    Harj

    Reply
    • Thankyou Harj–believe me, hearing this means alot to me. I like to know that I might have helped add a bit of inspiration to a few people–thank you for the comment.

      Reply
  • Thanks for the read Keith. You are so right that, at some point in time, you have to “pay the piper” to get ahead. It is amazing to me how some people are so quick to diss success and put it down to “luck”, and have limited or no true appreciation of what it takes to make it to the next level. The bottom line is that, unless the lifestyle is experienced, one cannot empathize with the struggles, discipline and hard work that it takes to be successful. Thanks for sharing your story, and congratulations on all of your achievements!

    Merry Christmas and I’ll look forwards to your blogs next year!

    Reply
    • Thanks Christopher–nice to see you are of the same mindset-we need more doers, less excusers in this country-all the best in 2017!

      Reply
  • Hi Keith,

    Looks you had more challenging times compared to me. Good Job & Result.

    Wishing you, your family, staff & all who come in contact with you ( eg visitors to this Blog)

    HAPPY HOLIDAYS

    Reply
    • Best to you as well Muntazir–and thanks for the long termed following of the blog!

      Reply
  • hi keith thank you for the many blessings and talents that one may observe on this site. Much happiness and good health.Cordially earl

    Reply
  • Great article. I happened to run across your blog after a search on laddered pref share ETFs somehow took me to your site. As it happens, I have seen you on BNN and you are one of the few technical analysts that I enjoy.

    I also was heavily influenced by Ayn Rand – I can’t believe it’s now almost 50 years since I read her books.

    I was struck by a wealth advisor a couple of weeks ago telling me I was lucky because I have accumulated some modest wealth. Of course most successful people are lucky to be born with some talents and willpower, and, like you, I was genuinely lucky not to have grown up in a tar paper or tin shack in an EM slum. But I thought to myself that the advisor – in spite of (or maybe because of) doing the usual KYC exercise – knew and understood little about me, or about what work effort and saving had been involved in accumulating that wealth, and of the bumps I had encountered along the way.

    best wishes in ’17

    Reply
  • There may be too few people in Canada like yourself. Seems to me too many Canadians strive for the security of a government job or quasi government job.

    Reply
    • Yup–its the Canadian way. Then for the individuals who realize any degree of success (most entrepreneurs fail)–they are rewarded for their risk by losing 53% of their income through a tax penalty. To quote Arthur Laffer, an advisor to Reagan: “Somehow western governments have conflated helping the poor with hurting the rich. We’ve found out…If governments tax those who work and pay those who don’t, there will be a lot of people not working”

      Reply
  • Wonderful read Keith. Nice to know a bit more about you as it deepens the respect I have for your opinion. We have plenty in common (phys. ed degree included) except I sold my business at age 51. There is no luck in success, just lots of hard work. All the best in 2017.

    Reply
    • Thanks Terry–appreciated.
      glad so many readers keyed into the “no luck in success” part of the message–reality is that we all have chances – but those chances require us to take risks that may or may not result in favorable outcomes. Success comes to those who take a chance, do not give excuses as to why its “easier for the other guy”, and try again with another chance if that one fails.

      Reply
  • Keith, I see you on BNN’s Market Call and Market Call Tonight almost every time, as I run the website Stockchase. You are any easy guy to follow, as you are very clear in your thinking. Believe me, as a reporter that is a real godsend. I also appreciate that you are not afraid to let the viewers know that they should Buy, Sell, Hold, etc.

    I was very impressed with your personal history, and hope that young people get a chance to read your message as to how you had to work to succeed. (A little late for me as I am in my upper 80’s.)

    Keep up the excellent, excellent work.

    Bill

    Reply
    • Bill–thankyou!
      I am sure you have seen some real changes over the years regarding the attitude towards risk and rewards!

      Reply
  • Inspiring read Keith ! So many people quit with the excuses of I don’t have the right skill set or the background. Your attitude of constantly learning and changing is inspiring. I have shared it with some of my younger family members. Best wishes for 2017.

    Reply
    • I love that you shared it with some younger people Gaya–that’s the best time!

      Reply

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