The summer is upon us and the sun is shining. The perfect time to take stock of what has gone before, where I am now and what the future may hold.
This post is a follow on from the previous discussions around the three plans to financial freedom. The key part of this discussion can be found in my posts ‘The three plans to success’ and ‘Solidifying the three plans’.
In short, I have three plans to be executed in parallel, each of which has a different risk reward ratio in effort to becoming financially free, or free from the requirement to swap time for money.
Slow plan
This post is about the slow plan. The slow plan is the plan most people are familiar with, and that is the career; the swapping of time for money over a long extended period to slowly buy a house and to build assets to live off when retirement comes. It is not without its risks, but has the benefit of the most likely path to achieving financial security at some point.
I therefore have had this plan going on, whilst experimenting and pursuing other plans which have more risk and a higher rate of return.
The slow plan, however, still needs planning, and I have spent some time thinking and designing this plan over the last few years, and am now at a key junction point in the plan.
The definition of the slow plan has the following attributes:
- Must stand on its own and not rely on any riskier strategy
- Must have a clear end point that achieves success in a reasonable amount of time
- Must be reasonably achievable given my skills and personality and current wealth
- Must be compatible and help with other plans, i.e. what I am doing in my day to day must go towards the other plans progress even though it does not depend upon the other plans
- Must make me happy and excited about going to work
- Must be flexible enough to allow me to work from home occasionally (few times a month)
- Must have an entrepreneurial atmosphere
- Must allow me to work autonomously and to be the boss of my own area
Let’s have a look at each of these items and see how they build up the picture into a career plan.
Must stand on its own
The job that I end up doing must be able to stand on its own to bring in the required income and not rely on some factor of risk, such as being able to sell and idea, or convince someone to buy a product. It must bring in income regardless of the success of the project.
This typically is how a salary or contract rate works.
Must have a clear end point
The amount of income generated from the work, must be sufficient to be able to support me and my family and to allow me accumulate enough to break free. This path must be well defined and show a clear date and amount when this will happen.
Must be achievable
The plan must be achievable, given my skill set and personality. This is the lowest risk plan and should not rely on steps which are not easily achievable. For example, the low risk sure plan, should not include steps such as becoming an astronaut, becoming president or prime minister, or even in a totally new discipline or industry.
Must be compatible with the other plans
It has to be said, I am not a career person and although this slow plan is required to ensure success, it must not be the only plan in progress. The slow plan never achieves great riches and only just allows financial freedom. Therefore other plans are very important.
Given that there is only so much time in the day, it is vital the day to day work supports and compliments the other plans to facilitate in their execution and success.
Must make me happy
In the introduction to this blog, there is a sentence in capital letters: AT NO TIME IN MY PURSUIT OF MATERIAL WEALTH WILL I DO THINGS THAT MAKE ME FEEL UNHAPPY.
This is still true today as it was when I wrote it four years ago.
Must be flexible enough for me to work from home
This is a key requirement for me, as I have a very young family and sometimes I am needed at home.
Must have an entrepreneurial atmosphere
At heart, I am an entrepreneur; I love the challenge of making projects successful and profitable. This is a key passion and what drives this blog as much as anything else. When I have worked in places which are blame orientated, document heavy or just unprofessional, I find myself frustrated and less able to achieve the success I am there for. These types of organisations must be avoided.
Must allow me to work autonomously and be the boss
I have reached a point in my work where I know my area inside out. I know more than most people about how to run a company, department or team and how to deliver what is required. I get frustrated when I cannot make the decisions needed to drive success. If I have a boss, then I need him to be hands off and leave me alone to get on with my job.
What sort of a role might allow me to achieve this?
I started a few years back in designed the three plans and the driver for the day to day was what fits in with the other plans and what makes me excited and happy. The most exciting an interesting plan was trading in the market place and this lead me to take on a any role in an Investment bank to get closer to this action.
The first role I took was in the back office for Goldman Sachs running their client on boarding and compliance tech teams. I now have an expert level of understanding of the regulatory aspects of the financial markets and trading in them.
After nearly two years and completing these projects for Goldmans, I wanted to get closer to the trading itself and so took a role to architect a trading platform and multi-lateral trading facility for the New York Stock Exchange – Euronext global derivatives exchange.
I now have first-hand experience in knowing how the entire order and trade lifecycle works and architecting an end to end facility to allow trading of equities, indices, FX, options, commodities and Futures.
It is now time to move towards the decision making process of how to decide what trades to buy.
Where does this decision making happen?
It happens in prop trading groups, hedge funds, front office trading desks in investment banks.
Looking at the entrepreneurial side, this lends itself more to the Hedge fund industry. It is also where a lot of money is to be made.
I then reviewed the career history of a lot of hedge Fund managers, specifically CTO (Chief technical officers) in hedge funds to see what path they had taken to get there.
What was clear was that I already had most of the experience needed, which fulfils another criterion, to make it a reasonably achievable.
However, there is still a gap to becoming a Hedge Fund CTO. The task is to analyse this gap and see how it can be filled.
Filling the gap between me and a Hedge Fund CTO
I drew this diagram to express the situation.
One the left you can see where I am now. The lines coming out of those boxes show the current state of those items and how long I might need to complete these things to a level where I could do the CTO role.
Most are already complete. The two which need work are completing the CFA course (two years) and being more successful in trading (unknown time).
The next stage, the big middle box, is the interim period to fill any gaps. I see this as my time to gain experience of Hedge funds by working in one or similar environment. It is also time to complete my trading track record and also to gain CFA status.
I estimated this period at 2-3 years, mainly as it will take this long for
the CFA course and also this is not a bad length of time to work in Hedge Fund before trying to run one (from the technical side).
Making sure it is financially viable
My initial investigations show again that a permanent PAYE job, even as a CTO is not as profitable as a contract role. This is frustrating somewhat, as I would rather take a perm role for the career progression, but see no reason to reduce salary for more commitment to the company and more responsibility. It just doesn’t make sense.
Therefore, I see the best course of action, is to spend 2-3 years as a senior architect on a contract role at a Hedge Fund, where I can take full responsibility for technology from a high level, but perhaps not the overall boss. I can gain the learning from this to become a CTO later. This will allow me to build up my personal resource to a level where I can take a drop in salary later, and in return have some equity in the business. I can also build significant contacts in this industry.
This fulfils the clear endpoint goal, as the salary would still need to be of sufficient level to continue the plan to fulfilment, and the equity would allow me to become very wealthy if the fund is profitable.
Next steps
I have already started putting this process in place. I have finished architecting the retail trading and MTF for NYSE and have planned a clean exit from this role once all items have been delivered. I have learnt all that I need to know from this role.
I will then take some time off to consolidate my architecture and CFA learning and to make contacts in the Hedge Fund world.
I will go out and get this contract architect position that meets the above criteria and try to keep this or a set of similar roles until I have enough contacts, qualifications and financial resource to take a permanent CTO role at a hedge fund with part of the remuneration as equity.
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