I'm only in my 20s and am seriously looking into the idea of going the RIA route, take the 65, and find a way to get the setup done as far as legalities, LLC or whatever is needed (hopefully not astronomical, but this is why RIA more intriguing than other route, not to mention lack of major experience) I am interested in simply managing funds on a 2/20 or maybe tilt it towards more stability on my end. What I'd like to do is get the RIA but not get involved with other financial planning much, but rather investments. I don't want one single fund, as I am not looking to announce 'will earn major % beyond SP500'. I am looking to carve a niche in helping people preserve wealth aka return of, not 'on', capital, GIVEN that we are so lofty (I am not saying this market won't go 20% higher, but to put it broadly, I expect ES 1k before 3k). I think there are people sitting on gains and while a lot of that is locked in their company plans, surely many have separate funds much more able to control and direct, and maybe they give so much % of their overall portfolio under my mgmt whose part will be about hedging and taking opportunities when they are there even in random things like more obscure commodities. Not futures, stocks (but there are commodity ETFs). Stocks is what this is all about so no CTA. I would do a personalized approach as obviously younger people my age should start allocating to the dividend stalwarts, although certainly probably not load the boat time. Not everybody just has their money in company funds I am anticipating, and I think I can help people stay in the stalwarts, and if they want, take some chances on say a commodity like coffee a year or so ago as it got so low that at very least RSI trade and it rocketed up stayed on upper bollinger so kept you in if played right, to a 1/lb to 2/lb price. Commodities not the integral part of this, but things like RSI come to mind and other patterns in TA, and also good hedge. Can't say for instance right now 'buying high' in grains or most other commodities. I feel like a lot of people don't understand that bonds and stocks can and will sell off simultaneously. Last I checked SPY has done great for a long while, but TLT ain't bad either, especially 'risk adjusted'. Maybe a good idea to throw in an inverse 1x (no VIX stuff) etf to stocks or whatever as a hedge and it's obviously pretty likely at very least will test the last Oct lows, and let it run if works out. And older people I know for income monthly or quarterly obviously sectors for that with nice dividends, and find a way to hedge a bit the principal as these REITS get hit hard on rate hike drama. But still like an annuity, and as long as don't get carried away and diversify should be ok. There are different objectives out there, and I think preserving not looking to get aggressive, right here, is good mentality for many sitting on great gains. Buy and hold stalwarts yes in passive funds and what not through company, but have some way of neutralizing this find ways to sell a call or sell puts on things wanted but can wait. W/regards to the legalities of the RIA, what are my limitations on advertising like say in the local paper with a message about good idea to preserve wealth or whatever? Do I basically have to go word of mouth and friend knows someone, etc? Or can I do some advertising? And then with regards to fund custodianship, can people with more knowledge and experience explain how that has to work? I am not so familiar with this as I just know I want to manage individual portfolios, not one pooled fund, and I know it can get expensive to have a custodian b/d although if need be, then whatever. I feel like if I can find ways to get to talk to people for even a few minutes about my plan in managing money, I don't see how I couldn't get some clients. Obviously acquaintances and whatnot easier but not necessarily. I'm not aiming to do leverage or anything like that. Value and preserve wealth oriented. Maybe some spread trades like recently short SPY long USO as the stock/oil ratio had gotten out of hand, and it hedges itself to a nice degree (although ship may have sailed on that for now). And I'd be fine recommending holding physical gold and getting some alternative investments, which brings me to commissions. I assume I can only get the 2% fee or whatever, and can I get performance then? So if make 10% on 100k portfolio then is it I make 10% or is it just the AUM goes up and so the fixed part goes up anyway? I need help on the math there. And would I be able to manage everything myself or have a lot of input from the people based on what they want? I'm an RIA not a hedge fund, after all. Will appreciate any and all help on this. I know it could take awhile to build a book but living at home and for now passing the needed exams, and then get going, I don't see why not. I think a lot of highly certified folks have not a great idea about how the market can correlate on and off, and how the 30/70 stock to bond type stuff can backfire. I'm not saying it goes to the 1970s all of a sudden, but it should be kept in mind. And probably meaningful cash and long end bonds and high grade stuff to at least beat cash, would be holdings at this point. Lot of people don't realize if purely want more money in 10 years than do now, can buy a bond, assuming it's IG, get principal at end and then get the interest along the way. Bond funds involve mkt risk, but that brings me to can I buy the bonds themselves or am I stuck with TLT, HYG, JNK, etc? I have traded at prop firms and interned at them and think I'd like the stability relatively more of wealth mgmt and actually helping people win the marathon as these folks made their money or are at least starting out, and don't need or want leverage to gain much more. I am an econ major from good school, and have a lot of real world mkt experience in liquidity, depth of mkts, and a lot of this could be key as float shrinks thanks to LBO essentially by central banks of so many assets. I feel like I have a skill in this. Thanks again. Not in any big hurry on this. Just looking for advice.
From just a cursory overview of your post, there are several flaws: 1. You cannot collect performance fees unless your investors are 'accredited'. 2. You cannot go short SPY if you manage an IRA account, since you cannot short sell in an IRA, and many retirees who provide you with capital are going to have IRA's. 3. USO is a master limited partnership that sends out K-1 statements, EVEN for IRA accounts, which makes it a nuisance during tax time and will cause more accounting hassles. 4. Inverse funds (even the 1x) are meant for short term trading, not investing, unless your timing is perfect for the hedge. 5. You mention trading coffee, but that's a futures contract, and requires a Series 3 license if you're going to manage money. I think you have some good ideas. My suggestion is this: Take a prep course for the Series 65, and then study for the exam. You do not need a sponsoring broker to sit for the 65 (unlike the Series 7 and other exams), you just need to fill out a U10 form from the FINRA site. Once you pass, then search firms in your area that are looking for an investment advisor representative (IAR), and try to get in with an established firm that can show you the ropes as you build your client base. Ok, hope that helps.
Here are a few links you may find useful: http://www.investopedia.com/articles/financialcareers/07/securities_licenses.asp http://www.ria-compliance.com/ http://www.ria-compliance-consultants.com/faq_investment_advisor_registration.html