Vhehn or others - are there other brokers who have a simple FA or separately managed account services competing with IB?
Don't be afraid to start a f&f account funded with familiar money. Do your homework, focus on your strategy, let your f&f clients fund their accounts and trade your strategy! There is good transparancy using the IB f&f account, every client can see the statements etc. Make sure you have a good advisor/client contract. When you think about trading other peoples money I asume that you have some confidance in your tradingstrategy. When you have, why be affraid to trade? I started a f&f advisor account (professional) recently with money from friends and family. They knew what I was doing and were all interested. In many countries (I heard) there are legislation-exempts for managing individual accounts funded with an initial euro 50.000,- All participants have sufficient money and they have come to where they are now by starting somewhere a long time ago. Now you're starting something and youmight need some help to build a record. Provide them with solid information and when they understand the risk they might see it as a good opportunity. I prefer to have entrepeneurs as my clients because they understand the risk of business and have all been at the same place where I was when starting up. Everyone has to start somewhere and by using a f&f account you'll have IB do your administration for free, everyone has acces to their accounts, no client/advisor funds get mixed up and you also (in my opinion) have a good broker too. I used to trade for my own account. But having a little nice family to support I wanted to scale out. Now I am trading my own account and other accounts using the same strategy. I started with just some people well known and as a result of good performance they started talking and that's all you need to grow.
What is considered small money? I think CFTC steps in if you manage more than 15 accounts with a total of over 400K in them total. Can we charge a fee for managing our family and friend's accounts? How much should we(CTA's) charge for managing accounts? What is the going rate?Does this money automatically get deposited into our account from their account?
First and foremost, you need to hire a securities attorney who is experienced with hedge funds and proprietary trading arrangements. Option 1 is not scalable in my opinion. Option 2 has a high start-up cost (>$20,000.00 USD), and high ongoing costs associated with compliance. The advantages include maximum liability protection, the ability to take on a large number of third party investors, and the ease of raising funds through existing channels. Option 3 would be a form of proprietary trading entity (LLC, partnership, or otherwise). This kind of vehicle is well-suited to developing an auditable track record, getting leverage through pooled assets if you have only a small number of partners, and affords some liability protection. Start-up costs are small to moderate, depending on the complexity of your operating agreements and number of partners ($5,000 - $10,000). Hedge funds often start this way with the initial partners' capital, and then run for a year or two before taking on third-party investors. Again, I will stress to you the importance of having experienced legal counsel. Beware of companies offering "turn-key" hedge fund or proprietary trading packages, as the agreements are often not worth the paper on which they are written. -segv
Beware of the "turn-key" vendor, because you are paying a maximum price for a minimal service. The "turn-key" vendor's business relies on high volume. When you show up to the sheep-shearing booth at the expo, you are going to get sheared. As another poster indicated, the "big firms" will not even talk to you unless you have $20,000,000.00 for them to stick their proboscis into. You cannot play at that table, yet. My suggestion to you is to go and find outher boutiques with reputable management who want your long-term business. Find an attorney or accountant who just left his or her "name brand" firm to strike out on their own. Find other entrepreneurs and meet them face to face. Work with them, offer them referrals, offer to be a case study. You can get a lot more done for a lot less when you work with motivated people. -segv
Vpimp, When U commin to chitown??? I'll introduce you to my guy. Show him yer shit, U might get a chance to actually pimp some vols. chitown beats yellojackettown any way happy 4th!!! Why did'nt u call me back Fri? tp
Ever been to a restaurant that you could tell aspired to be first-class, but that had bread crumbs or fingerprints all over the menu? Or the waiter stuttered or was nervous when reciting the specials? Starting a business with a subterfuge that is transparent or slipshod in appearance will cost you more in the long run (the entire business) that ponying up the extra dough to do it right initially. Everything in business FIRST about appearance and impression and, SECOND, execution. If you can't appear to be competent, very few people will ever give you a chance to actually prove it. So, I respectfully disagree with the below post.
Poor analogy. Haven't you ever been to a 5 star restaurant or hotel in name with great appearance but awful food and mediocre service. Smart people go for substance NOT fluff. Those who go for fluff, typically get in trouble. Using SRZ or Akin Gump as your law firm does not guarantee yoru hedge fund success. Using MS or GS as your prime broker also does not guarantee you success. If you can afford Akin Gump or GS ab intiio, wonderful, go for it. If you can't there are several other alternatives that will meet your needs without violating your fidicuary duty or jeopardizing your business. Also I am not advocating and I have said this before, that someone deliberately cut corners and avoid necessary business development tasks. All I counsel is to have a biz plan, a game plan and be creatve enough to boot strap or improvise when you need to while still mainataining a clear vision of success. There is a salient yet subtle point here. Some may see it, some may not. That is OK.