Introduction
.
What makes a great job? Many people will answer that what you do (the position) is most important. It very well may be, but it may not be all that makes you happy. The key to happiness in a job may be more complex than you expect. You could have the absolute best position, but be very unhappy with the pay. You may live in a part of the country that is far from your family, but enjoy performing your work and seeing friends each day. Many strengths in a position compensate for other factors that are less than ideal.
.
The grass is not always greener on the other side. Many people leave one firm for another only to find out that they miss what they had before. There may not be a perfect job, but what is good may more than make up for the bad. People who focus on one aspect of a job (a tree), but miss the big picture (the forest), may end up in the wrong job.
.
Through my own experiences and through mentoring students, I have determined that there are 6 Ps of Placement (please properly source me if you use this phrase and/or concept as the website is copyrighted). The building blocks of an excellent job have the best combination of position, people, place, philosophy, pay, and performance. Some Ps may be more important to you than others and the relative importance of the Ps may change over your career, but I expect all are a consideration at each career stage. The foundation for you may be position, whereas the most important Ps for me may be people and philosophy, but I expect these are also relevant to you.
.
Like a quantitative investment analyst who weighs and scores stocks on factors to determine the best securities, you should also weigh each of the Ps, score each, and then calculate a weighted average score to evaluate a job.
.
For instance, many years ago, I had to decide between staying in my current position (portfolio manager and director of research) at a larger firm (about $50 billion) in Ohio or moving back “home” to Wisconsin to step up to an assistant chief investment officer role (moving to CIO in a few years) at a firm that managed over $1 billion. It was a complex decision. At the time, my wife and I would have loved to live in Wisconsin and the position was great, but we really liked the people at my present firm and my then current role. To logically work through this complex and emotional decision, I wrote the 5 Ps (there were only 5 at one time – more on this later) in the first column on a piece (or two) of paper, made two more columns with one for each role, and then I wrote down everything I could think of that fell under each P for each job. When I was done, I scored the Ps. I should have determined the weights of the Ps first, but this came toward the end. Determining the weights of the Ps after your thorough review of each could bias your assessment of them. Last, I calculated a weighted average score and risk-adjusted the final score to determine the winner. The current role has fewer unknowns than the new role, so its final score should be adjusted up a little since the surprise factor is lower.
.
Of course, you are not obligated to choose the position with the highest final score. I did not (I stayed in Ohio). However, being logical with a complex and often very emotional decision will help you make the best choice (I believe I still did). And, if it was not the best choice, you at least gave it your best effort. Note that you will never know if it is the best choice. Why? Because you will never know for sure what would have happened if you took one job versus another. The path you choose will lead you to another path that may never have opened up to you if you followed the other route. Sometimes things happen for reasons. Some of my biggest disappointments in my career and life have been turning points to better things. Do your best, have good character (be honest, be a good person), be nice to people, and have faith. Do these things and all will work out (you should feel good about yourself).
.
Similar to my advice above, here is what Benjamin Franklin wrote to Joseph Priestly in a 1772 letter to help Joseph decide on a job.[1]
.
To Joseph Priestley
.
London, September 19, 1772
.
Dear Sir,
.
In the Affair of so much Importance to you, wherein you ask my Advice, I cannot for want of sufficient Premises, advise you what to determine, but if you please I will tell you how.
.
When these difficult Cases occur, they are difficult chiefly because while we have them under Consideration all the Reasons pro and con are not present to the Mind at the same time; but sometimes one Set present themselves, and at other times another, the first being out of Sight. Hence the various Purposes or Inclinations that alternately prevail, and the Uncertainty that perplexes us.
.
To get over this, my Way is, to divide half a Sheet of Paper by a Line into two Columns, writing over the one Pro, and over the other Con. Then during three or four Days Consideration I put down under the different Heads short Hints of the different Motives that at different Times occur to me for or against the Measure. When I have thus got them all together in one View, I endeavour to estimate their respective Weights; and where I find two, one on each side, that seem equal, I strike them both out: If I find a Reason pro equal to some two Reasons con, I strike out the three. If I judge some two Reasons con equal to some three Reasons pro, I strike out the five; and thus proceeding I find at length where the Ballance lies; and if after a Day or two of farther Consideration nothing new that is of Importance occurs on either side, I come to a Determination accordingly.
.
And tho’ the Weight of Reasons cannot be taken with the Precision of Algebraic Quantities, yet when each is thus considered separately and comparatively, and the whole lies before me, I think I can judge better, and am less likely to take a rash Step; and in fact I have found great Advantage from this kind of Equation, in what may be called Moral or Prudential Algebra.
.
Wishing sincerely that you may determine for the best, I am ever, my dear Friend,
.
Yours most affectionately
.
B. Franklin
.
Here is one more bit of advice if you are pursuing a career in investments. It is very difficult to break into this field, especially if you want to become an analyst or investment banker (e.g., many hundreds of talented applicants for each job). Just get in the door someplace/anyplace. Do not be picky about the Ps. If you are, you may very well end up nowhere. Short of working with people who are unethical, you can probably manage about anything for a couple years. You can be choosy about the Ps on your next job. Once you make it in to the field, people will find you if you perform well. It is a small business.
.
Let’s now dive deeper into the six Ps.
.
Position
.
I start with position because this is what most people focus on when deciding whether their job is good or bad or whether to move to a new firm. It is quite nice to walk into work and love what you do. You are at work more than you are at home or elsewhere with family and friends. If you love what you do, then you will probably work harder, be happier, and probably have better work outcomes. That will then help you move up (if you choose to do so) or be recognized in some other way (most people like to be appreciated).
.
However, be careful about placing too much emphasis on your current position or the one you are considering. First, the position you have or take may not be the last one you will have at a firm. You should also consider whether you can grow, move up (if you want to), and otherwise benefit from that position. If you take the perfect current role and give up opportunity of advancement, then this is not a good idea, right? Maybe a different position which allows you to learn will help you more in obtaining your next role. For instance, at my first firm I started as an analyst, was promoted to assistant PM, and then to director of research and portfolio manager. My first role allowed me to learn from many people with many different investment styles and to move up.
.
Keep your options open. There are many fascinating roles in investments. As your career advances, your priorities could change and you may want to move on to a new position. Most people new to the field want to become an analyst and eventually a portfolio manager, but is this really best? The work can be a lot of fun and is often highly compensated, but those people may be under much stress and work long hours (60, 70, 80 or more hours per week). Can you imagine your performance and bonus clicking away like a clock as you watch the market, which may not be entirely rational, determine your outcome? Maybe financial planning is best for you. Here, you get to work with the client and being trustworthy and taking care of their financial well-being may be the key factors in determining success (versus beating an irrational market benchmark). It can involve sales, which not everyone is good at performing. There is a trade-off. As an analyst and PM, I never met with my client. This somewhat bothered me, as I did not get to meet the people I was helping. Seeing those people may be important to creating meaning in your position – that you are making the world a better place. The closest I came to meeting my clients when I managed mutual funds was when I spoke with my colleagues and wife, who also invested in the funds. Besides this, I met with the regional directors of the financial planning businesses around the country once or twice when they traveled to our offices. Maybe you like analytical work but not the pressures of being an investment analyst. Then you could be the person behind the scenes selecting the funds and analyzing performance and risk. This is a growing field. Maybe you love analytical work and are a people person (you love talking with people). The sell-side may be for you, but be aware that the hours are long. What about a business valuation consulting role or role in credit analysis at a bank? These roles require analytical skills (like a buy-side and sell-side analyst) but do not come with the pressures of watching the market determine your performance. If you prefer project work, are really good at analytical work, and do not mind long hours, then investment banking may be for you. Etc.
.
To be happy with the job, it is useful for it to have a meaning. Jim Ware of Focus Consulting Group, Inc., notes that purpose as an investment manager can be summarized with the following statement, “As a member of the investment profession, I commit to positively influencing people’s financial life.”[2] Wow. If everyone adhered to this commitment then the investment profession would have a great reputation. The “why” you do your work really inspires. This video on how great leaders inspire action with a great “why” proposition is worth the time.[3] I started the last two classes of students in the investment program by watching this video (about the first 11 minutes) and discussing Jim Ware’s piece on purpose. Many positions can have meaning. A person working in an ice cream shop bringing happiness to customers may be a meaningful position.
.
Being pleased with your position – the actual work you do – can greatly increase your chance of happiness, and happiness is associated with good health and positive relationships. However, what you do on the job is not all of the story.
.
People
.
What if you have the best role, but the people you work with are lousy? Will you want to go to work? Will you be happy? No way!
.
Everyone is different, which means that everyone has a different view on what it means to have good colleagues. Fit is a very personal concept. It is up to you to determine the type of people you like most. However, the people you like will possess at least one or two common traits. They will respect your opinions and value you.
.
If you are young, then my best advice is to surround yourself with people who you can learn from over time. Find a great mentor who is willing to share advice (so you do not have to repeat his or her mistakes) and will listen to you and be a guide as you encounter roadblocks and forks in the road. I am fortunate to have had several great mentors – father and grandfather (two solid investors) and two great friends in senior investment roles. My father once said that just because a different role is more prestigious does not mean it will make me happy as he advised me to stay in a current role. He is also the nicest person I know. My grandfather always said to enjoy each day, and the key to happiness is to keep my wife happy. My good friend Dr. Tim Timura (held senior roles at several investment firms and currently directs a couple masters programs at American University) has done so many things for me. I once asked what I could do for him, and he said, “pass it on.” This is what I try to do for my students and for you on Coach Investing. My friend Joel Levy (held leading roles on the sell-side at Citigroup before he passed on) had “DTRTHO” in big letters on his window next to his office door (now on my office bulletin board). Underneath, in small letters so it made you look, it said “Do the right thing, help others.” These are great words of wisdom by great people.
.
If you are mid to more senior in your career, mentor someone younger and make the world a better place. I am called “Coach” by my students, and my bonusses are the thank yous students send me. Those words of appreciation and knowing that I am helping others are like gold.
.
The people around you will determine much of your success as you collaborate with them. This is especially true if you are young, but even if you are later in your career as much of your success will also be determined by the firm’s success and the firm is made up of many people producing results. Thus, being around competent and able colleagues is critically important. These people should also have integrity. Investments is based on trust, and you cannot be around people who are dishonest and cut corners to their benefit at the expense of the clients, the market, you, and others.
.
While earlier in my life I could have managed working with anyone (assuming they were ethical) for a couple years just to break into the field, I am older now. I can no longer put up with jerks even for the best position and to work with the most capable people. Life is too short. I would be unhappy going to work with people who are not nice. You are at work more than at home, so working in a toxic environment is just not sustainable for most people. However, what you like is all up to you.
.
Philosophy
.
Philosophy as an investment manager refers to how one manages funds; however, it also means the culture of the firm. Let’s start with culture, or a firm’s values. Then, we will move on to discuss the importance of the investment approach.
.
You may thrive in an environment that is very aggressive and cut throat. Two years of underperformance and you are out may be very motivating to you. You may love it if the firm fires the 10% at the bottom each year and highly rewards the top 10%. This culture breeds star players. Wow, going to work each day and competing for the big bucks may be exciting and a wild ride.
.
However, you could also hate that type of culture. You may want an environment that is collaborative, where everyone wins or nobody wins, and where people come together as a group and discuss decisions and have buy-in. This culture may have multiple PMs on a product, and generate really good discussions of ideas where people are not offended if others disagree as there is mutual respect for all. From what I have read and observed, it appears that more firms are moving to the collaborative approach and away from the star player approach, but what works for one does not work for all.
.
Jack Welch, former CEO of GE who is considered one of the greatest managers, had a no jerks policy.[4] [5] Many years ago, I read that if GE had a star player who caused problems for others then that person would be fired. However, it was not enough to just fire that great contributor. On the way out, the person was made an example of the type of behavior that was not allowed so everyone knew why the person was fired and what type of behavior -values and culture – was acceptable. A great analyst, who makes the firm’s environment toxic, destroys more value than he or she creates. Others around the person are unhappy and less productive, and this costs the organization more than the star player adds in value. Firing the jerk who is a star performer is not only good for culture, it is good for overall performance.
.
When I was director of research and hiring analysts, I had a criterion that I called “The Lunch Factor.” I pre-screened candidates, and then scheduled the last interview after my colleagues and analysts had a chance to meet the candidate. My interview of the candidate did not have a time limit. While I was trying to ascertain the person’s skills and knowledge and passion for the business, I was also trying to determine whether the person was a fit for the firm. I rarely took lunch, but I wanted to see if the person was someone who I believed would share the firm’s values and work well with others (and go to lunch with them). Actually, I scheduled my analysts to take the person to lunch. If the person did not pass the lunch factor, the person was not hired. As a reminder, fit is up to the individual. What works for one person does not work for all.
.
The other part of philosophy, which is critical for a fund manager, is how one manages money. This relates to growth, value, quant, macro investing and all of the investment approaches in between and beyond. Everyone must buy-in to how the firm invests. If you do not have a solid foundation, then when times go awry you may sway with the wind (after a time of underperformance) to the winning approach as pressure of underperformance mounts just before the wind changes direction again (to your prior approach). Then, you get clobbered with underperformance twice and clients rightfully fire you since you abandoned how you told them you would invest. Many approaches to investing work if applied consistently over time and have a fundamental and logical basis for outperformance.
.
Are you someone who loves quality things and always likes to buy the nifty new gadgets and nicest car? Then, you may be best as a growth (quality) or momentum (fads) manager. Are you always watching every dollar you spend? When you go to the grocery store, do you check which product is the best deal – the generic or the branded product and the cost per ounce? If so, maybe you are best as a value manger. I often ask my students the following question before they choose to be on the value or growth team that the students manage, “If you could have any car, what type of car would it be?” The type of car may help define what investment approach is best for the person. I cannot say more about this as my students may be reading this post and I do not want them to know why this is important before I discuss it in class, but you can probably guess. By the way, there is one right answer to the car question, but only one student, at most, each year guesses that answer (email me if you want the answer).
.
.
If you are older, you will have a preferred investment approach. If not, find it quickly and stick to it if it is well founded. If you are younger, explore until you learn what you believe is best. On some occasions, I tell students that if they believe they like value, then choose to be on the growth team so they learn a different way of thinking before settling in on value (I also say the opposite to people who like growth). The growth managers often sell to the value managers and vice versa so you can learn another viewpoint by doing the opposite of what you believe you most prefer. There is almost always a benefit to learning the opposite point of view. I wish our politicians would head this advice!
.
As I said earlier, I am getting older so besides refusing to work with people who are not nice, I refuse to work in a culture where different opinions are not valued. You can see that these two Ps (people and philosophy) would receive high weights in my scoring system. They kind of go together.
.
Place
.
Place has two dimensions. First, it is the firm, and second it is the geographic location of where you work.
.
Choosing the right firm may be more important than the position. For instance, one of my students wrote me a thank you last week for the advice I gave him about choosing an internship last summer. His internship was at a solid firm, but the position was not exactly what he most desired. He had another opportunity in perhaps his more desirable position, but chose the former. I advised him that the firm he went with had a great culture and that it was important for him to just get “in” its door. Later, he could move around. Over the course of the summer, he had the chance to meet various people at the institution and I believe the firm even has a mentoring program. This week, he told me that one of the people he met was in another division – his dream area – and they were impressed with him and offered him a job.
.
Pat Dorsey, former Director of Equity Research for Morningstar, has been kind and has met with my students on various occasions. I often ask him to tell his story of how his career began. It is quite interesting how a person with a bachelor’s degree in government from Wesleyan University went on to become the DOR for a prominent firm and helped (or led) that firm in the creation of its investment focus on identifying / rating businesses with moats (competitive advantages). In short (I hope I am getting this right), he met one person at Morningstar who decided that Pat was not right for the job that was advertised, but he liked Pat so he had him meet with someone else. That person then had him meet with someone else because he was not right for that area, and so on. He eventually joined the firm and moved into the role that helped shape Morningstar’s sell-side research. He advises the students to just get in at a great firm. Then, move around if you want another role. The best firms will allow this. The very best firms may also opportunistically hire a person if they believe they are good even if there is not a pre-defined role for the person. However, a company needs ample capital to be able to do this, which may be most readily available at large firms.
.
Do you want to be at a large or small firm? At a large firm, you will probably have access to more resources to do the job well. For instance, at my first firm, CFOs, CEOs, and others were always walking through our door to speak with us (we managed a lot of money). I had ample access to sell-side research. I could travel. I had numerous investment tools to get the job done right. I had many people who I could learn from, and great mentors combined with hard work resulted in quick advancements. I could not have advanced if there were not roles where I could grow into, unlike what may be available at many smaller firms. However, at a large firm you may be pegged doing a small job over and over. As an analyst, this could mean covering one industry. That is great if you like to know everything about a small number of stocks, but not necessarily if you like to learn about many areas to invest.
.
At a small firm, you may not have all of the resources and access a large firm will deliver, but you may have more tasks to do (you could cover all stocks, etc.) that will lead to faster and greater learning. This is especially important if you want to become a business owner yourself or a portfolio manager (it is probably easier to become a portfolio manager if you are a generalist than a specialist in one industry). However, you may not like that even the CEO of a 5-person shop takes out the trash. Well, maybe you will like that aspect since it means everyone is chipping in on everything to achieve success. At a small firm, you will have a greater chance of making a big difference in the success of the company. On the other hand, if things do not go well, your resume will be less pristine for your next interview since you did not take a job with a big-name firm. What is best for you – small, medium, or large firm – is really up to you. There is probably no perfect firm size. All sizes probably have pros and cons.
.
Place also means geography. In the investment business, for the highly competitive roles (perhaps up to 1000+ applications for early career analyst roles), it is critical to be flexible with location. One just cannot be picky. When you are young, you can take risk and explore the world. Once you are older and have a family, you still may need to make a choice to move to another part of the world, but it is much more difficult when others rely on you.
.
One of the worst things I could do to my new bride in 1994 was make her move with me from Wisconsin to Ohio for my first investment role. It was terrible, and it was difficult for a couple years. Those monthly phone bills (my wife calling her best friend mother) were sometimes as high as the rent! However, over time Ohio became our home. We loved Columbus and our work and colleagues. When we were planning our marriage, my wife knew she had to go where I went because of the supply (many applicants) and demand (few roles) in my part of the investment field. Her field was occupational therapy. She did not even unpack before a recruiter called her and asked her to interview (where the person found our number is still unknown). She told the recruiter that she did not even know where her dress and shoes were so how could she interview? By the end of the week, she had the job (without even a resume). In her field in Ohio, supply was less than demand. In investments, since the work is so much fun and can be highly paid, the opposite is true. After ten years in Ohio and some passed up opportunities to move back to Wisconsin, we finally did move back to family. However, by then my wife loved Ohio. For a few years after moving back to Wisconsin, she reminded me of this every time something went wrong!
.
Home is where you make it. Due to technology, communications are so much better. You can stay in touch with loved ones even from a distance. Plus, you will make new friends wherever you go. Geography may be important, but it is not everything.
.
Pay
.
You have probably been wondering why I have not yet discussed pay. Why did I wait until now? Well, because it is not important for the first job. The first job is all about learning. High compensation really comes later down the road when you have enough knowledge and skills to make a big difference. It may arise if you stay at the same firm, but more than likely, the big bucks will be in the next role or the one after at another place of employment.
.
Also, high pay does not make one happy. Numerous studies have shown that compensation, as long as it is sufficient to meet basic needs, does not lead to happiness. If you make $1 million or $70,000, you could be equally as happy. If you made $1 million last year and it falls to $500,000 this year, then you are probably very disappointed. What!? Isn’t $500,000 a lot? Yes, for most people. However, once you get accustomed to a level of compensation, falling short of it makes one unhappy. People tend to anchor expectations on the past, and if pay does not rise then we are disappointed. As a side note, the most important factor in determining happiness is love. That is why people and philosophy (culture and values) are so important to being happy in your work.
.
While I note that level of pay is not everything, it is important. While the highest pay possible may not make you happy in life, you do need to be rewarded for your contributions. If you are not, then this is simply not fair and will make you unhappy. Compensation can be used to motivate and retain people. The reward will differ depending on the firm and your relative contributions and the market rate for your skills and knowledge. If you are a top performer and could be pulled away for much more compensation, then you need to be paid more than other people. However, even that higher pay at your company could be less than what other firms would offer since your company may have fewer resources to pay the big bucks. If this is the case, then the most they can do is offer you a relatively high level for their firm and hope to retain you. They can increase the chance of retaining you if they deliver on the former 4 Ps and next P. I am a living example that pay is not the most important criterion to be happy. Based on firms which have contacted me, I estimate that my compensation could grow 6X or more if I left the academic world. Yet, I stay. I am happy – my role has meaning (helping students) and the students are great and appreciative (I keep those “bonus” golden thank yous from my students in my “feel good” email folder). As a final note, keep in mind that higher pay sometimes comes with more work and pressures associated with it.
.
Performance
.
The final and 6th P is performance. Earlier, I noted that at one time I only had 5 Ps of Placement. I learned over time as an investor in corporations and from personal experience that it is quite important to be at a firm that has a good record that is repeatable. However, you can be successful at a firm with poor performance if you have the tools, authority, and support from seniors to fix it. Otherwise, you may find yourself with a mess, working with a group of people who are all very unhappy and possibly playing the blame game. That will make you unhappy as well and probably regretting the decision to take or stay in the job.
.
If you are at an underperforming firm, then work to find that repeatable process with your colleagues that can be your competitive advantage. If it is not there, learn from the role (possibly find a mentor), contribute (and hopefully be correctly paid for those contributions), find meaning in helping others (be a mentor, do your best for clients and customers), enjoy the place (geography) if it is where you want to be, and spend time on other things in life (friends and family) as you continue to work there and perhaps look for a new role. Maybe being at this role teaches you something in life that you will carry on that will help you later. Maybe, if you are like me for one of my prior roles, you leave and find something better that would not have opened up to you if the role would have been good and you stayed. Again, work hard, have good character, be nice to people, and have some faith. If you do so you can be happy with yourself and I expect things will work out.
.
I wish all of you the best!
.
[1] https://www.linkedin.com/pulse/do-you-have-jerk-problem-jack-welch
[4] https://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action?language=en
[5] http://www.decisionsciencenews.com/2012/08/18/benjamin-franklins-rule-for-decision-making/