Anyone have a link to show which states do not require one to register as an RIA? I've been searching for about 30 min but to no avail. Best, Dan
With 1-2M you should go the easiest and most time and cost effective way; POA (Power of Attorney) in my opinion. Keep it simple.
+1 The OPs performance fee is hairy and is a poor risk for the manager. Either go mgmt and performance % or guarantee a fixed % and you keep all gains above that arbitrary high water, but I've only seen that fee structure in private REITs. I know a REIT manager that did 30% in 2006, paid out on the 10% guarantee and the 20% amounted to $60MM.
+1 Business, family and friends never mix... Quickest way to lose friends and destroy relationships... It's not always about the money... Not to mention the added pressure created by their anxiety's, worry's, concerns at the first sign of heat, draw down or realized loss... [make sure you get a second telephone line for important calls, because eventually you will turn your current phone off]
Check this link, it has a lot of info regarding the rules for an RIA: http://www.ria-compliance-consultants.com/faq_investment_advisor_registration.html
if your managing money for family & friends you would be better off to pay them a generous return on their investment guarantee the return of the investment with interest in some manner over a period of time If you lose their money the last thing they will care about is being connected with you any longer ! It is not worth it accept their money as a investment & pay them a generous return for it if you are a profitable trader then you can have the best of both worlds why work for free & take all the stress for nothing , you do the work so pay yourself & share with them protecting their money should be your first priority always they are not strangers remember , so a fund may not be a smart play most people like knowing they will get their money back with interest , that keeps everyone happy the structure can be done in various ways, keep things simple & legal for everyone don't give the farm away for capital. it needs to be a two way street
I agree 100%. Why would you want to trade friends and family?... They will no longer be friends and family for the right reasons. ES
In reference to a comment earlier in the thread about the challenges of IB's FFA structure, where you trade all accounts in lock-step and can end up with "stub" positions (2 shares long in one account, 2 shares short in another, flat in the third) if the IB machine screws up the allocation. I dealt with that reality for a year+ while managing just 3 accounts (I can't imagine how hard it'd be with 10 accts) but a helpful rep at IB taught me a trick. Define "Account Groups" (Config-> Advisor->Account Groups) that are of two types. The first is "Opening" and the second in "Closing". I actually have an Open_Long, Close_Long, Open_Short, and Close_Short because it's a L/S strategy. Set up the Opening group(s) to be "AvailableEquity" method, which will apportion the trades to the amount of buying power that exists in each account at the time you place the order. Set up the Closing group(s) to be "PctChange" which will allow you to trade out of a position shared across multiple accounts entirely by specifying a "-100" percent change in the portfolio page, or something less to reduce position. This will take whatever is on the books for each account and reduce the position by that percent, which for me is most often -100 just to close out all positions without risk of overshooting and ending up with 1 or 2 shares short when closing out a long position. You don't need to Open using AvailableEquity if you prefer a ratio or soemthing else, just an easy way to make sure all accounts are roughly the same percent invested/leveraged. Hope this helps someone, it's been a life-saver for me.