THIS IS MY 76TH BLOG ON UNDERSTANDING MONEY TOOLS
In this blog we are going to visit professional licenses
that may help you in your work. We will cover the licenses I have held in my
business life, and why they were needed.
Hopefully, through these illustrations you can relate to how these, or
others, may apply in your
profession and reaching your goals.
To give you a little background, I was in the real estate,
oil and gas and the investment/financial industry between 1971 and 1990 working
with bankers, investment bankers and to a large degree most of the large Wall
Street firms financing projects. Many of these firms and the people I worked
with are no longer in business.
Let us first discuss these licenses, especially in the area
of securities. At one point, I had my National Association of Securities
Dealers (NASD) licenses Series 1, 7, 22, and 63. Today, instead of being
regulated under the NASD these licenses come within the jurisdiction of the
“Financial Industry Regulatory Authority” (FINRA). Why would a person have so
many securities licenses and not be a stockbroker, like myself? Well, I had a purpose for all licenses
and needed them in my work; we will get to that later in this blog.
My Series 1 license was replaced by Series 7 in more recent
years. I was required to take this exam for licensing. Just as technology keeps changing
intricacies and strategies in securities have become more sophisticated, more
training and testing are required to obtain the Series 7 license. (Many
insurance agents get a Series 6 license that is abbreviated in scope to
accommodate selling of variable products.)
My Series 22 license was for partnerships and private
placements mainly dealing with real estate, oil/gas industries and structuring
private placements for small companies needing money for growth.
Series 63 exam and licensing. The exam is regulated by the
North American Securities Administrators and Association. It is a Uniform Securities Agent Sate Law requiring
licensees to know state security laws and regulations. This enabled me to do
business in all states.
The above securities licenses need to be held with a broker
dealer that has an employee who holds a Series 24 license, or principal’s
license. The person holding this license can manage licensees, and is
responsible for their professional activities.
Now, let’s take the above and make sense out of the
licensing and how you can make a profession out of it as I did. Prior to obtaining the above securities
licenses, I got my real estate sales license in Colorado, subsequent to that I
got my real estate broker’s license.
When I started in real estate I was in Vail, Colorado, and three people
I knew including my real estate broker were planning a large development called
Eagle Vail. This was a large planned community with mixed usage. Development
money was needed, and it was decided to “register” the project with the
Securities and Exchange Commission and raise money with a public stock
offering. That is when I decided to get my first “securities” licenses as I
could then receive commissions from bringing in investors, and make additional
money selling land, lots and homes off as a real estate agent.
Our real estate brokerage went on to represent other
“registered” real estate projects, including condominium projects. Many wealthy
people who bought the initial stock also bought real estate for
appreciation. In those days
appreciation was very good!
In 1977, there was a recession in the mountains of Colorado
as many homes were not primary but second or third home ownership for people,
and that market got hit badly. I
moved to Denver and a real estate brokerage offered me a position as broker
manager of their company. Today, we refer to it as “designated broker”. In
those days we received a salary, bonus based upon net production in each
office, a company car, and expense account for entertainment.
If you have read my prior blogs you learned that I lucked
out and was offered a position in 1979 with a very successful oil and gas
company in Denver called Energetics, Inc. I witnessed the growth of the company
from 18 employees to about 300 when we went public with Rothschild, Inc. My background in management, finance
and holding security licenses helped me get the job. My role was to start a
corporate finance department, be the intermediary between the law firms,
banks/investment banks, and our accounting firm, Peat Marwick. We structured
both joint ventures and limited partnerships. My Series 22 license knowledge in
partnership structuring came in handy. When the company went public in March
1983 we had about 900 limited partners, all structured into Reg D Exempt
partnerships. (I won’t get into that explanation but limit it to wealthy people
with assets in excess of $1 million excluding home and cars.) The need arose for an investor
relations department and I started that. My prior management experiences helped
me lay forth the business structure, including department needs and hiring of
employees.
After Energetics, Inc. went public I started my own investment
firm in Denver, L.R. Nicholson and Co.
The company specialized in, real estate, oil and gas and small company
funding; my licenses and experience were used daily.
Denver, Houston, Phoenix and other major cities were
severely hurt with the economic downturn in real estate and oil and gas
starting in 1985-6. I was forced to close my company and an accounting firm
took over my lease and furniture, not a happy time. A bank trust company in the
Denver area by the name Trust Company of America offered me a position as
Senior VP, mainly in the area of corporate pensions. I was married, needed the
work and took the job. In this capacity the company wanted me to be on a
regular speaker series in the Rocky Mountain Area. To embellish my background
and authority to speak on various topics, I added a couple more licenses to the
ones I already held. These licenses were life, health and disability
licenses. So, here I am all
licensed up, not for commissions but credibility and basic knowledge in various
fields.
In 1990, a very wealthy family in the US who I had consulted
for in real estate over 20 years asked if I would be part of a 6 man team to
purchase $100 million in mortgage derivatives from ailing Savings and Loans. I
left the trust company and took the consulting arrangement in New York City and
Greenwich, Connecticut. Here my licensing knowledge and background in real
estate and mortgages helped me. As I wasn’t familiar with derivatives I had to
be schooled with the same training that Solomon Bros. brokers go through. With
that knowledge the group had me write a presentation for what the family
intended to accomplish with the money, and the basic understanding of mortgage
derivatives. (When I say basic, I mean basic; only a specialist with very good
computer software can understand the economics of a derivative package!)
In conclusion, obtaining licenses needs to have a purpose.
The classes you need to prep for to take the exams are like college classes, in
this case mostly law and regulations. It gives a good basis to work from,
however your real learning comes when you get in the business and hopefully
select a mentor or two to learn from.
Once out of the business you retire your licenses. There is too much liability for you and
the firm that holds your licenses.
Holding licenses does keep you on par with your business peers.
I hope this chronology has given you insight as how you can
further your career using licenses and experience. I described quite a bit of
my work life, and you can see that life has a lot of ups and downs. Few people
get through life and their professions without setbacks.
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