Becoming an Independant broker while at the same time remain an independant trader

Discussion in 'Professional Trading' started by millydog, Jun 2, 2007.

  1. I am looking for some information about wheather it is possible to become a stock broker while at the same time continue to trade my own accounts and what firms might be good for something like this.

    Currently a lease a seat on the CME and trade index futures and am very happy with my results so far and am able to hammer out a modest living.

    I would also like to get into the brokerage side of the buisness as well and start trying to build up a book and sell mutual funds, insurance, and manage some money.

    I am not looking to become a CTA or start a hedge fund or anything like that. But I have my series 7 and family, friends, and other contacts have expressed an interest in having me handle some of there accounts for them.

    The problem is I am not going to give up my own trading and go to work for full time for some firm and cold call all day.

    I want to work from home and don't even require a salary. If I bring in money then that is good for both the firm and me.

    Is anyone doing this or know how to go about it. I saw that a lot of brokers like Raymond james and the like already want you to have a book of buisness and I will be starting from scratch. At the same time I will need to continue trading my own account because that is what is paying the bills for now.

    Any suggestions would be appreciated.
  2. Take it for what it's worth, but a friend of mine has been a stockbroker for over twenty years, has a substantial book of business, and has done well enough to enjoy a $2+ million dollar home in a ritzy Chicago suburb, and to contemplate retirement in his mid-40's. Not too long ago he and I were discussing what it's like for new brokers in his office -- a large UBS office (formerly Paine Webber) in the city.

    He reports a washout at least as high as that for new traders -- he estimates it's higher -- and that includes brokers who inherit existing books of business from family or friends. Struggle is the name of the game, and those without exceptional sales skills or extraordinary contacts cannot survive. Commissions have shrunk dramatically from the beginning of his career, requiring ever-increasing money under management in order to maintain a steady income, let alone growth, and the information explosion has made money managers out of many people who would have been potential clients in years past.

    When asked for advice about how to get started in his end of the business he flatly recommends that people don't. He says your energies are almost always better directed elsewhere, unless you're lucky enough to form a partnership very early on with someone who has already developed a solid book of business. Even then, he says, that may not be enough.

    The picture he paints of current conditions for new stockbrokers is grim indeed.

    Best of luck.
  3. Having been a broker myself and transitioning to trading, I can say that it will be VERY VERY hard to find a firm that will allow you to trade actively and then manage client assets. As a broker, your job is to sell. And sell some more. And a little more if time allows. Your job is to accumulate assets and there's no time for trading in that mix. You'll be selling buy and hold mutual funds, yet actively trading (incl shorting I assume) for yourself. That doesn't bode well for the firm and the firm's compliance department should there by any problems later.

    Once you are in the position as the above post's friend, then it's different. You can start to call your shots when you have a multi, multi million dollar book. But by that time, odds are you won't be thinking of trading then...

    I suggest to pick one and be really good at it vs. trying to do both. Perhaps you can keep the trading going and the broker/sales part with a hedge fund, private management (CTA), etc. It could be the best of both worlds but you'll more than likely start this on your own. Well worth the time if it takes off.
  4. One idea that *might* work or at least be worth pursuing - don't bother with the UBS and Merrill Lynches of the world. If you bring up wanting to actively trade, you'll be red flagged instantly.

    What could be worth looking into is finding a pure independent firm (LPL, Raymond James are the 2 biggest) and contact local offices to see if you can set up some arrangement. You might even need to find the smaller independent guys. But since you can make money from your trading, you can stress to them that you won't need any salary support (most of the inde's don't offer anyways), but they know you won't be in the manager's office every other week trying to get an advance or anything.

    And who knows, maybe if your trading goes well, they can do something to share your ideas and reco's with their clients. I have no idea what would go into making that work, but just an idea.

    Good luck!

  5. Yes, that is exactly what I was thinking was the independant route like raymond james and what not. I don't need a salary because I am doing pretty good in the market for a while now but don't have a 3 year track record yet. So the CTA hedge fund route is not something I could do now. Plus it is expensive to set up I would imagine with all the legal work and all.

    I am 35 yrs old and have a lot of contacts who have expressed an interest in having me manage some money for them. Family, friends, ect... some even have big accounts that I would like to try and get.

    I think there is still good money to be made just plain old selling insurance, mutual funds, and what not. I am at my desk all day long staring at 4 21 inch monitors watching the market like a hawk. There is also a lot of down time where I can be making calls and setting up appointments for after market hours.

    I am going to call some firms this week and let you guys know how I make out.
  6. segv


    Why not just set up your own broker-dealer?
  7. I think I am a few million shy of that?

    Or can it be done cheaply, I doubt it.
  8. stussy


    segv: why don't you set up an investment bank while you are at it.
  9. segv


    Hardly. The start-up and net capital requirements vary based on the type of business you want to run, so you should look in to it. The largest expense is the operating cost when you take on customer accounts. Also, I should note that the requirements are not all the different from a hedge fund, even though you said that is not what you want to do. I think it would be far easier for you to set up a CTA, CPO, or hedge fund in the current climate.
  10. segv


    Yes indeed setting up a broker-dealer is an insurmountable task. That is why no one does it. Oh, wait...
    #10     Jun 4, 2007