My 1st Million At 33 - yes, you can do it too » Career/Salary

A big raise for this year

Frugal — Fri, 28 Mar 2008 12:01:55 +0000

This year’s raise is less than previous year, but my raise is still about the double of the average engineers in my group. It’s fairly good by any measure.

One of the best ways to make more money is to invest yourself in your job and career. Whether it’s spending more time, volunteering, attending seminar and conferences, or picking up some broader knowledge. In the long run, it will pay off.

I was blessed to be recognized for my contribution, after pulling off a mission impossible, delivering a complex design in less than 4 months, which would have been normally completed for 8 to 10 months. I was working about 100 hours a week for about the last two months during that crazy schedule. It was a mis-management on the product map, but engineering came in and saved the day.

My working group has all the best people, so I probably won’t rise up to become a manager for another 10 years, even though I’m very experienced already. It’s very weird to have a (or multiple) former regional manager from a big company to work at the same (lowest) level as you are. But that’s just how good the quality of my working group is.

Unfortunately, by the time when I could possibly rise up to the next level, I think my industry would have been either outsourced to Asia, or being taken over by Asian companies. High-tech industry in the US is getting less competitive as China rises up. Therefore, before my retiring age is reached, I will probably need to find another career.

But I don’t think it would be such a big deal. I respect every profession as the necessary component of the entire society, and I’m sure I won’t have a problem doing something else.

Getting Rich by Generating Wealth

Frugal — Fri, 22 Feb 2008 12:01:39 +0000

I came across an excellent article while web surfing on How to Make Wealth. The article is extremely long, but the author is very impressive and had such a good understanding of the money matter.

Here are some key excerpts from his article:
1. Why is joining a start-up or starting up a company a good way to get rich? In a big company, you can’t get paid 10 times more if you work 10 times harder. Start-up is a place where you can work extremely hard and have an impact and possibly get rewarded.

Here is a brief sketch of the economic proposition. If you’re a good hacker in your mid twenties, you can get a job paying about $80,000 per year. So on average such a hacker must be able to do at least $80,000 worth of work per year for the company just to break even. You could probably work twice as many hours as a corporate employee, and if you focus you can probably get three times as much done in an hour. You should get another multiple of two, at least, by eliminating the drag of the pointy-haired middle manager who would be your boss in a big company. Then there is one more multiple: how much smarter are you than your job description expects you to be? Suppose another multiple of three. Combine all these multipliers, and I’m claiming you could be 36 times more productive than you’re expected to be in a random corporate job. If a fairly good hacker is worth $80,000 a year at a big company, then a smart hacker working very hard without any corporate bullshit to slow him down should be able to do work worth about $3 million a year.

2. Money is not Wealth: According to the author’s explanation, wealth is the stuff we want. Money is only a medium for exchange. The amount of money may be fixed (theoretically), but one can create new wealth (stuffs that people want) that is not already there.
3. Measurement and Leverage:

To get rich you need to get yourself in a situation with two things, measurement and leverage. You need to be in a position where your performance can be measured, or there is no way to get paid more by doing more. And you have to have leverage, in the sense that the decisions you make have a big effect.

The jobs that can be easily measured for the performance and have an impact are CEOs, movie stars, hedge fund managers, professional athletes. A good hint to the presence of leverage is the possibility of failure. Upside must be balanced by downside, so if there is big potential for gain there must also be a terrifying possibility of loss. CEOs, stars, fund managers, and athletes all live with the sword hanging over their heads; the moment they start to suck, they’re out. If you’re in a job that feels safe, you are not going to get rich, because if there is no danger there is almost certainly no leverage.

I’m going to stop quoting directly. This article is extremely powerful in its messages. And it really makes me want to do my own start-up company. I’m one of those workalcolics who can work 48 hours straight if necessary, and produce at least 3 times in quality output per hour. I once coded so many lines of codes in a couple of months, such that my small baby finger was hurting because of skin abrasion from too much typing.

Anyway, if you get a chance, I strongly suggest you to read over the article. There is quite a wealth of information on How to Make Wealth.

Book-smart or Street-smart?

Frugal — Mon, 20 Aug 2007 12:01:46 +0000

I just went to a college reunion with a small group of my old college friends. After more than 10 years, it’s amazing how much has changed, and how much has not changed.

I’m the youngest among all, because I’m the book-smart guy who took the same classes with them, while at a younger age. In fact, half of my friends is older than me for this very reason since high school and college days. Being younger in your friends has the advantage of seeing things farther ahead at your age, while being out-of-touch most of the time except academics.

Among my college friends, one guy is 12 years older than me, but I always know him to be very smart. He is the street-smart type, and never paid much attention to class work. When he went to college with me, he only wanted to get a degree, but not really learn anything from it, only because he was so much older and his focus was not in academics anymore. Despite his lack of (interest in) book-smartness, I often relies on his advice (even now) for his street-smartness.

And by the measure of his financial success, he is far and beyond on what I may be able to achieve. Before the age of 45, he already made enough money and has retired for 4 years. Now he is back in (a different) business, aiming to bring a company to IPO, with two billion dollar revenue in a couple of years. Amazing, isn’t it?

This is not to say that book-smart is useless (at least, I’m a positive example of this category). Rather, being book-smart gets you to the basics, but it does not end there. However, if you hope to being street-smart and out-smart most people, you should stop hoping and take actions. No success can be built upon day-dreaming without doing your homeworks. One of the quality of success is that it is relatively infrequent or rare. And for obvious reasons, a rare event cannot happen without someone working hard to make it happen.

Whichever type you are, you should work hard. But know that statistically, being booksmart gets you to above-average lifestyle more easily, while only few percentage of the people being streetsmart goes far and beyond. So if I were making the plan for my children (or myself), I would always ask them to acquire the basics first before “going for the extra bonus”.

Am I a workalcoholic?

Frugal — Wed, 09 May 2007 12:01:26 +0000

It’s 1am, and I am still working for my company. I am probably a total workalcoholic by most standard.

Why am I still working? I just want to get this project done. The “problem” is that this project is due in June, actually June 2008. I want to finish this project so that I can move on to the next project which I have volunteered. Talk about passion for work, I probably have too much (well, it depends on what kind of work).

Yeah, I’m very glad that I’m almost done with this June 2008 project. Still haven’t figure out one single mis-placed bit out of 16384 random bits tonight. But I’m sure I can figure it out tomorrow. I’ve probably squeezed in 4 months worth of work into 1 single month. Probably another week to go and I will be all done.

I found the following article describing the true workalcoholic. By those criteria, I’m actually not that close as one:

1. In your cellphone directory, 80% of the numbers are business contacts. The 20% others are friends you can call sometimes to give you a hand for your job. And you feel great about it.

2. The last time you had a real deep conversation with the person you are living with and you sometimes remember you are in love with (what’s his/her name already ?) was… in January ? February ? 1999 ? Or something like that. But you truly remember it was dealing about your new promotion.

The last time you had a real deep conversation with your boss was yesterday.

3. You sincerely believe that your job is the best part of your week end.

4. For their first 3 months in your company, the newcomers think your are the night watchman. Until they really get into work being assigned to your department.

5. You always have so many things to do, to think about or to validate that having a clone or two would be helpful. Though, your job would be boring and so far, you can handle it.

…Click to see the other 5 criteria….

Why am I still working? Not for money, not for recognition. You can call this the self-motivation to be driven to success, or you can call me nuts. Either way I am determined to finish what I am doing so that I would get more “fun” to do. I guess the bottom line is that I like to do what I do at my work. The rest is secondary. But one very important distinction that I have from the above workalcoholic is that I know too well that my job is not my number one priority. Family definitely ranks higher. In fact, I have been going home earlier since my work progress has been too far along.

Well, but then I come home, and work from home some more. Yeah, today I didn’t even have much time to blog on money/finance because of my work.

Tips on How to Make a Million

Frugal — Fri, 16 Feb 2007 12:01:41 +0000

Just received March issue of Kiplinger’s Personal Finance Magazine. This is a very good magazine targeted at general public. The article of How to Make a Million gave you the eight tips (only 5 are shown to respect their copyright) and 11 examples of people reaching over a million dollar net worth:

Follow your passion
Seize an opportunity
Exploit your talent
Put in the time
Learn the ropes (be employed first before becoming an employer in the same business)
etc.

After reading through the entire article, I found out that there are basically two types:

The crawler: save/accumulate and invest/grow their money, given enough time.
The passionate: yeah, somehow some people find their way into their niches. But ALL of them love what they are doing, whether it’s side-business, hobby, or their job.

Got the message? If you are both, the chance of you making to a million will surely increase more.

If you cannot love what you are doing on a daily basis, you cannot be successful in doing that. Success in what you are doing won’t necessarily bring you a great fortune. But without a success, it is pretty sure that you won’t get to a great fortune. And the other way is obviously taking small steps at a time, saving/accumulating wealth. Given sufficient amount of time, you will get to a big fortune.

I can attest to you that I’m both. Definitely has helped me to reach a bigger fortune sooner.

Posted by “Frugal” at My 1st Million At 33.com

Ask for More Money When You Get a Job Offer

Frugal — Mon, 25 Sep 2006 10:48:26 +0000

This week’s Digg is at Free Money Finance which is one of the best personal finance sites. The thing that I like the best about his site is that he provides invaluable career advice that you should certainly check them out. Your career is probably one of the most important assets that you have. I’m digging his article “Ask for More Money When You Get a Job Offer” this week.

Other articles that I think will be useful to many of you are:

Your Career is Your Most Important Asset

The right way to quit your job and what to do after

Frugal — Mon, 11 Sep 2006 11:05:25 +0000

My digg of this week is the article The Right Way To Quit Your Job And What To Do After at Financial FreeDumb. Quitting a job is a big step. Make sure you make a smooth transition between the two jobs. Financial FreeDumb has provided some of his thoughts on how to plan your ways out of a job.

Here are some other articles from Financial FreeDumb that may be worth a read:

How I stretch each dollar I spend, for good pointers to website that will save you money.
Frugal Dog Home Remedies, Tips, and Tricks. If you have a dog, you may want to check this one out.

Engineering Salaries from MIT, Stanford, and Berkeley

Frugal — Sat, 05 Aug 2006 12:01:28 +0000

Ever wonder how much is the salary of the graduates from the top 3 engineering schools according to US News? I just came across the exact pages. Here is the 2004 salary survey for MIT(2005 data seems to be a little messed up), and here is the 2006 salary survey for Stanford. I couldn’t find the corresponding page for UC Berkeley, but from PayScale, I was able to find some salary information for UC Berkeley graduates. The PayScale data for MIT is here, and for Stanford is here.

A couple of observations:

The payscale data from MIT seems to be higher than the others probably because the percentage of highly paid engineers is bigger.
From both MIT and Stanford data, it appears that the highest paid graduates are the computer science, or software engineers. This is consistent with the data in my post of Engineer Salaries in Silicon Valley.
Comparing the data to the post of engineer salaries in silicon valley, both the new graduates from MIT and Stanford tend to be quite high. Graduating from a top school does help.

Of course, both MIT and Stanford are private universities, and very expensive. The graduate program tuition at MIT is $32300, and the graduate program tuition at Stanford is $35184=$11728*3 quaters. Both figures don’t include any living expenses in the high-cost cities of Boston and Silicon Valley area. You are looking at an investment of close to $50,000 per year. Is it worth it? If you just invest in the shorter Master’s graduate degree (1 to 2 years max), probably it is worth the money. Comparing to UC Berkeley which is a public school in California, the tuition is only $4500 for CA residents, and $12,000 for non-residents. It’s so much more economical.

Probably a more invisible benefit of attending these three schools is the school reputation. The reputation of these three engineering schools are very high. I have never seen them dropping out of top 3 spots, any of the years that I have checked. The reputation by itself can land you multiple offers a lot easier, and in a down cycle of employment, that could be the only factor that matters.

Engineer Salaries in Silicon Valley

Frugal — Tue, 30 May 2006 05:45:28 +0000

The following 2006 salary numbers are from http://www.salary.com. (Took me a long time to pull all these numbers out). The salary is defined as total cash compensation (cash + bonuses). From my personal contacts & experiences, the numbers seem to be fairly accurate. All the experience levels are defined as follows:

Level I: 0 to 2 years experience after Bachelor’s degree.
Level II: 2 to 4 years experience
Level III: 4 to 6 years experience
Level IV: 6 to 8 years experience
Level V: 8 to 10 years experience

A master’s degree I believe counts as 1 or 2 years of work experience, and a Ph.D degree counts as 2 more years of experience beyond the master’s degree.

I have used San Jose metropolitan area, and only looked up job titles related to IT, software, and hardware because they’re the more commonly held positions. Other good sources of salary surveys include http://www.engineersalary.com/, and IEEE salary survey which you need to sign up. Somehow http://www.engineersalary.com/ was giving a smaller salary number.

Job Title	25% percentile	50% (median)	75% percentile
Software Engineer I	57054	64261	71759
Software Engineer II	69680	78013	87687
Software Engineer III	82257	91992	102755
Software Engineer IV	99007	109277	121146
Software Engineer V	108396	118815	129968
Software Engr Manager	107251	144540	168786
Programmer I	54352	61471	69101
Programmer II	63227	71120	80328
Programmer III	79794	90449	101798
Programmer IV	93145	104937	118120
Programmer V	101645	113366	125687
Network Engineer I	61185	70121	81522
Network Engineer II	72530	84018	96087
Network Engineer III	88818	102424	115711
Unix Administrator	86539	101505	117370
Webmaster	68356	81674	98782
Electrical Engineer I	59568	65512	71383
Electrical Engineer II	70396	78463	86313
Electrical Engineer III	82583	94489	107386
Electrical Engineer IV	99243	106999	114990
Electrical Engineer V	115228	124574	134377
Hardware Engineer I	53110	58237	65744
Hardware Engineer II	62075	70848	78601
Hardware Engineer III	74289	85399	94336
Hardware Engineer IV	84128	91916	102182
Hardware Engineer V	94660	103215	118742
Design Engineer I	60769	67821	77379
Design Engineer II	74834	82994	96126
Design Engineer III	95297	108677	127039
Design Engineer IV	113352	124909	148304
Engineering Manager	110482	128783	152304
Engineering Director	163910	178921	203392

If there are any missing entries, such as Design Engineer V, it is because it is not available. The last two entries, Engineering Manager and Director didn’t seem to be specific enough. I expect that the data may be mixed with all kinds of engineering.

After my recent salary raise, it appears that I am still underpaid by about 10% to 18%, which will take a 11% to 22% salary increase to adjust to the market. Obviously, it is fairly unlikely to get such a big salary raise from the boss. The fastest route of adjusting your salary to the market price is still changing jobs.

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Cautions on “Rich Dad” Robert Kiyosaki

Frugal — Thu, 11 May 2006 07:57:34 +0000

Many thanks for one of my readers, BlueDaze, for posting this link in the comments:

http://www.johntreed.com/Kiyosaki.html

If I recall correctly, I visited this very same link probably three years ago, when Kiyosaki only had his very first book on “Rich Dad, Poor Dad”. I got all the negative information on Kiyosaki, which I never thought could be possible.

About Rich Dad’s books, I have only read his first book “Rich Dad, Poor Dad”. The only things that I walked away from is a good, but basic summary of how everyone makes money. I must say that he was quite good at putting these things together as four quadrants of E/S/B/I (employee/self-employed/business owner/investor), and explained the cashflow & taxes of each quadrant. But it was nothing new to me. The rest of the pages is simply not helpful in getting a person to become a better B/I, or even a better E/S for that sake. A couple of my friends are so enamored by his books and him, and even lent his books to me, and talked to me about his books constantly. My only reaction is almost puking. The Bible says NO IDOLS. If you have ever contemplated on that commandment, it really means no idols of ANY kinds, whether it is a wooden statue, or a singer, or a book-writer, or any persons, or any physical thing. I think no one should ever adore another to an exceeding extent.

Robert Kiyosaki has a lot more books after his first one. When I am in the bookstore, I never want to lay my hands nor my eyes on those books, so that I won’t waste a second. In fact, I did pick up the Rich Dad’s series of OPM: Other People’s Money by Lechter because I was going to write a negative article on the book. Actually, it turned out to be so much different than Kiyosaki’s empty talk. Tagging the book as Rich Dad’s series is really degrading Lechter’s book.

Unfortunately for the unwitting readers, this guy, Robert Kiyosaki, pretty much speaks of anything possible that can happen, and of course, these readers will be even more enamored by his “correct” prophecy. Any valid predictions should always be properly stamped with the predicted timeframe. If you don’t give any timeframe, or give a wide timeframe, you will most likely eventually be correct. Just let time approach infinity, and all kinds of things can happen.

Kiyosaki’s negativity towards E or even S is simply not correct. A good education and good grades in school will give you a good paying job. With a good salary and a saving habit, you can go very very far (as I myself have demonstrated, saving $360K in 9 years). If there is anything that I regret not doing is that I should have listened to my parents, and given more thoughts to becoming a medical doctor. If you know how much medical doctors can make, you will not be complaining to be a S (self-employee). The savings that can result from the high salary or self-employee as being a doctor are probably 2X to 5X of my savings. That really makes a huge difference.

To all the young people who are still in school, I advise: To become wealthy, you need to start with first penny, and start with solid learning in school. Don’t think that you can study later. Life does not give you the luxury of going back in time. The only time that you can study in school is NOW or probably never. Going back to schools after having a family is extraordinarily difficult and only put unnecessarily emotional and financial stress on yourself and your family. Mathematically speaking, studying to become a medical doctor or an accountant or a lawyer, has a much higher probability of becoming a (multi-)millionaire, comparing to daydreaming of becoming a successful business owner, or winning the lottery.

P.S. You must click on the title to be able to comment on this post. I don’t know what happened to WordPress. Somehow it had a problem with this post.

How to deal with company stocks & options

Frugal — Fri, 05 May 2006 13:51:42 +0000

More people have some part of the compensation tied to company stock these days. Some are stock options. Some have company stock match in the retirement accounts. Some have shares purchased from employee stock purchase plan (ESPP) at a discount. Some have shares granted through restricted stock unit (RSU). The question arises naturally on how to deal with the company stocks in various forms, especially when you have multiple forms of the company stocks. The decisions would be very easy if you know beforehand that the company stock will go to zero like Enron’s, or will out-perform the general market like Google’s. Unfortunately, no one has this knowledge. Considering both tax consequences and asset allocation, here is my two cents worth:

One should not keep too much networth in the company stock shares for the purpose of diversification. How much is too much can be hard to determine. My conservative suggestion is maybe less than 12%. Anything more than 35% is definitely too much. Obviously you work for a company that you think or hope to be promising. But having too many eggs in one basket is never good. Company stock shares are defined as any shares owned in the form of RSU, ESPP, or 401k account matching.
Stock options of your company are a different game. At appearance, their purpose and function are like shares, except that stock options have more leverages. Financial leverage can give you big gain or big loss. However, in the worst case, you gain nothing from your options. The half-empty view on options is that once the stock price goes below your strike price, your options will become worthless. The half-full view on options however is that without putting any money down, except your agreement to continue working at your company, your options will financially control a much bigger stake of assets. That is the same as having some equivalent amount of money invested in the stock market, without putting any money down. Therefore, I think only under two circumstances should one sell the stock options:

You think the stock price is too high or quite high, and may not reach this price for a long time in years, or at least this is the high point before you make your exit from the company.
The percentage of your networth in company stock options is getting too high to be comfortable for you. Because of the leveraging power of options, I will not use 12% rule from the company shares. I think even 50% is advisable, but probably not beyond that. Remember that the value of your options is different from the controlling stake of your options. The true value of your options when you exercise the options is after deducting the strike price, and after some 40% tax bite. But the controlling stake of your options is simply the number of shares of options multiplied by the current market price. For obvious reason, if you hold onto stock options, then you should definitely cut back on your company stock shares.

When you have various forms of stock equity interest in your company, such as options or ESPP, you should diversify out of your company by selling the LOWEST cost basis first. The lowest cost basis shares are in the following order: 401k company matching shares (because there are no taxes in retirement accounts), RSU (zero cost basis in an after-tax account), ESPP (shares that you bought with your own money), and then stock options. Selling shares in such order will enable you to sell the least amount of shares to get the most of the after-tax money which you can then allocate to other types of investment to adjust your overall portfolio risk. The only exception in which I will sell options first is when I firmly believe that the stock price will never go this high again (before I leave the company), and in the near future, the options may go under-water.

I often see people doing the exact opposite to #3 above, fearing that their options will go worthless after the experience of the 2002 great bear market. But they forget that one of the hidden values in the company stock options is that their option expiration dates can be 4 to 10 years long from the grant date. If you were to buy such long term call option (also called LEAP) at the open market, you either can’t find such options with long expiration, or that they are outrageously expensive (possibly priced by the Black-Scholes option valuation model ). Exercising the stock options early is essentially giving up all the time value inherent in the stock options. I’m not saying that you should exercise the stock option on the last day before it expires. But simply having a longer term view on the stock options will probably bring you more gain, especially under an inflationary environment.

Leverage: the secret of making big money

Frugal — Sun, 30 Apr 2006 14:06:24 +0000

Have you wondered how some people get so incredibly rich? There is a saying: “you need money to make more money.” If you hear that from a poor person, it may sound a little sour-graped. But underlying it, there is probably some grain of salt, not well-understood by the person who says it, but a good observation nevertheless.

What happens usually is that you need money or asset to borrow a lot more money, using which you can make even more money out of it. It is a game of leverage. The money-making potential is always proportional to the total amount of money involved. Whether it’s borrowed or not, it doesn’t matter. So when a business owner is successful in his or her venture, he or she will be handsomely rewarded. But if he or she fails, the leverage works in the reverse gear and may lead to substantial loss or even bankruptcy, depending on the company structure and amount of risk and leverage that is undertaken.

In fact, leverage comes in many forms, and in each case, you can see its multiplicative power.

Leverage of employee’s time: As long as each employee can bring in more money than his or her wage, then the money left or the net profit goes into the employer’s pocket. The employer or the business owner is leveraging on employee’s time to make money. Multiplying by more employees is multiplying the profits.
Leverage of the machinery: As an example, for an internet retail business, it leverages on computer equipments to take purchase orders. Equipments have a fixed cost. As long as the equipment brings in more money before its utility is fully depreciated, then it’s good business. Multiplying by more equipments for machinery is multiplying the profits.
Leverage of copies or copyright or franchise: This is leverage in the purest form of multiplication. More copies of songs or CDs, more copies of software, more copies of books or DVDs, will all result in more profits for the owner of copyright or franchise.

These are the reasons that in Robert Kiyosaki’s four quadrant of E/S/B/I, B (business owner) is a better money-making model than S (self-employed) because of the multiplicative power, while S relies solely on the available time of oneself, to be multiplied by a very high per hour rate to reach a good income level. However, using leverage is not risk-free at all even when you control your own business.

The other forms of leverage are financial leverages:

Margin: Margin power in stock is usually 2X of your cash. Margin in forex trading can go upto 400X.
Asset-back loan: mortgage debt.
Other loans that are not back by assets: Credit card debt falls into this category.
Marketable options: These are call & put contract in the stock or futures market.
Employer’s granted stock options: It’s essentially a long term call option on the given stock.

The only leverages that I recommend of pursuing are mortgage debt and stock options. The other ones like #1 and #4 are better for professionals. And the interest rate on #3 is usually too high to be worthwhile carrying, unless it’s for very short timeframe. The advantage of carrying a mortgage is explained in my post: “Why is your home the best investment?“ #5, the stock options are very good if you are fortunate have them. Under non-bubble conditions, value of stocks tend to go up along with inflation, and one should be rewarded with certain gain.

P.S. Be sure to check out comment #1 by Financial Reflections. He filled in the point that I forgot to make about leveraging other people’s time for internet business.

An investment platform for independent money managers

Frugal — Sun, 23 Apr 2006 09:00:27 +0000

So, you have decided to become a financial advisor for an average earning of $122,500? Wow, that’s actually higher than my salary, despite the fact that I think I know more or at least as much about investing than all of the advisors that I have met so far from various big banks and brokerage houses (read my experiences here).

How about going even one step further and become an investment advisor to officially manage other people’s money for fee? Well, look no further, I have got it all planned out, except I don’t have any potential clients. Here is a direct route plan to become a small independent money manager in the fastest timeframe:

Get your NASD series 65 license & register as an investment advisor in your state. This will probably cost you one to two thousand dollars, and some annual renewal fees of several hundred dollars.
Now you are qualified to open a master account at ScottradeAdvisor. With this platform from Scottrade, you can essentially open up a money management firm of your own, with very little back-office support. The master account allows you to have unlimited client accounts. You can set up various rules for distribution of bought shares into your client accounts, and in a single master trade order, you can buy or sell from all of your client accounts. Every client accounts are subjected to the same Scottrade commission and fee structure. You can set up your management fee automatic deduction with Scottrade, with your client permission. Your clients will own their accounts directly, while giving you the trading authorization and fee deduction authorization. Since they are the direct Scottrade account holders, this will solve the biggest client trust problem when they give you money for management. Their accounts will receive the full SIPC insurance coverage up to $500,000. Plus that you and your clients will enjoy one of the lowest trading commission of $7 offered by Scottrade. I have personally contacted Ameritrade, ETrade, and TDWaterhouse, and none of them has similiar platform like Scottrade’s. I know that Charles Schwab has similar service to Scottrade’s, but the trade commission is higher, and they only seem to offer the platform to very big money management firms.
Well, that’s it. You just need to have some marketing plan, and find your clients now. After that, it’s all about your money management performance, and you will have a very scalable business that can potentially bring you millions of income every year.

Want to be my first clients? My base fee is only 1%, and I don’t have a minimum opening amount (which is usually north of $100K). I’m also doing very well, returning about 37% since April 1st of 2005, and returning about 16% since Jan 1st of 2006. And I didn’t get this performance from a single stock portfolio, but rather diversified among some 60 stocks, most of which has a total return from 35% to 110%. I will be posting the “brochure” on my website for my own investment firm pretty soon….