Not really knowing you or you capabilities, my advice would be to strongly consider joining a larger Broker Dealer that will provide regulatory support, research and guidance. Doing this on your own will be very difficult. Then, as you build a business over time, you can consider going out on your own or moving your client's assets. There is just no benefit in today's environment to do this on your own. Just the regulatory issues might be hard to master. Good luck...Bob
I understand the difficulty of it. One of the main things I would say is I would go this route and strike out on my own before I worked for an Edward Jones or other more conventional way, because it's the same salesmanship type gig there, and now only getting commission, and less flexibility in investment options as I'm guessing it's more top down. Undoubtedly having some connections to get some AUM going from the start would be crucial. I have good standing in my area and went to a good school and had what at the very least is a great prep having traded in the markets and probably just as importantly, been studying the broader markets very closely all the while. I do think there is value added in guiding people and having more 'gravitas' about how high up the market is vs. the lows of last decade, for example, and how there are a lot of indicators flashing red that SPX valuation is way high, namely crude, copper, HYG, etc. I understand how to implement options like selling puts to add income and worst case get allocated at a reasonable price, and know I would enjoy not being in a trading mentality, although obviously inevitably say a position in the money, take some profits along way at strategic junctures, and things where TA knowledge comes in handy, although there is a lot of arbitrariness to that. More important is positioning into value and truly diversifying and recognizing the risks and in terms of what is tolerable to the client. I'm still more so hoping for some advice about the nature of attaining AUM and selling one self given my background and how that would work. I don't think regulation is that big a deal if one has a custodian and utilized probably a firm with attys that specialize in this and prepare for random audits and what not. The bottom line is you formulate a plan and outline various strategies with the client, and ultimately put things into action, although yes sitting on one's hands is going to happen a lot because it's not active trading. There's nothing too complicated about allocating capital to stocks, bond funds and ETFs. Buying UVXY, for virtually any conceivable reason, yes, of course, is not acceptable. So again, to me the challenge seems to be selling oneself/differentiating myself and convincing people of my worth of that AUM fee in terms of what I would bring. I have no idea how much inertia there is with what people already have locked in with retirement accounts/planners. That sort of thing would be a big concern, because a lot of people probably are limited to funds in 401ks and can't get discretion without foregoing the 401k and taking the hit.
In my experience, the background that brings in the assets, without family connections, are the CFA and CPAs. Trading is not the best background for what you are describing. I'm just trying to help. I know more people doing asset management than any other business. The ones that do the best, work for the big firms. Every time they change firms, they get paid big dollars to move their AUM. One of my friends got $6mm in 2008 to move to another firm. He has to stay for 9 years, then he can do it again. 3 years earlier, he got paid $2mm to move. Keep in mind that even though they are registered with a large BD, they are basically running their own business within the BD, but they must follow the BD's rules. Crazy stuff....
I had an investment advisor send me a package with a "hundred reasons" for me to meet him. They were 100 $1 bills. That's one strategy you can use to try to get meetings with affluent investors. I never took a meeting with the advisor.
Here are my 2 cents after going down this route with a robo advisor startup/pseudo hedge fund: Mav is right. So is rmorse. I can break the math down for you as to why you need those kind of AUM size to be above the poverty line. Even getting to 10M isn't easy and you'd barely be feeding yourself. Can you charge 2%/AUM? Sure, try it and see how well it takes. My guess is you'll have to go 1% or less to get any traction. If you can get 2%/AUM right out the gate, you might a better salesman then you thought. You are clearly wanting to do this. So do it. You have gotten your feedback. Don't spend more time here trying to validate it. Don't overthink it.
I parsed over your post so forgive me if I miss some points. Sounds to me like you are more interested in being an independent RIA - if so then go for it! Nothing beats the freedom of being a one man independent shop. In fact, many reps working for big firms become fed up and plan to become independent at some point. I do not know your age or where you are in your career. But the best way to bootsrap is: 1. come up with a good (or sensible) investment system that you think will last through different market cycles and protect during bear markets. 2. register as an RIA 3. start trading your friends or family money with the strategy. If you don't have any friends or family just trade your own account. Your own money counts as 'regulatory assets'. You do not need to run a fund to build a track record - in the retail world you get a CPA to construct a composite track record based on the separately managed accounts in the strategy. That's going to be your marketing centerpiece. 4. After 2 or 3 years decide if your performance is marketable (during a bear market did you manage to make money or at least not get crushed? Are your drawdowns something investors could tolerate? is your CAROR roughly on par or better with the benchmark?) 5. Start to market your track record. There is no roadmap for this. I'm a lousy marketer and struggle with this part all the time. You've gotta do the usual stuff like approach contacts, give webinars or whatever. If your strategy translates well trading the futures markets then also get registered as a CTA and build out a futures-only track record. There is a robust infrastructure in the CTA space where even a one man shop can get Intro Brokers to raise assets if performance is good for 2 or 3 years. Just look at IASG.com or autumngold.com etc. There are many of these IB's out there. Of course, you will need to support yourself somehow for the first 2 or 3 years - a bootstrapped RIA will take a while to start generating steady income. Think about doing some computer consulting work or something not in the investment field. But just try to keep the side gig professional as you will need to list it in your ADV Part 2B.
Appreciate the feedback/ideas. If I were to go this route, I would go independent and my selling point would be that I am able to relay to people what is going on in the markets across the different sectors, what the key points are, and to be there when things get rocky and advise on the risks as certain levels get hit, like maybe looking to not buy the dip if we get below 1700 SPX because I see a lot of analysis that suggests that if that is breached then it's going down maybe even below '08 lows. So many people IMO just don't have any idea how the investment game works, and just sort of add their match into the 401k and trust the market will ultimately go up. But what if Japan happens, or if the market rises, but it's because the dollar is getting killed and it's the result of inflation, not intrinsic growth? I'm not a major veteran of the markets, but I've had jobs directly in the markets now, not i banking which is totally different, and beyond the actual job I had, I have been tracking very closely the different aspects of the market and where opps are and where dangers are, like obviously oil stuff. I don't know if that is sufficient to be able to garner AUM, without an actual track record. I personally would never give anybody a cent just because they say they have done such and such, because there is no robustness even if it is manipulated statistically to look like it.Humility IMO is as key as anything. Some people value just knowing the risks out there even if all seems well, as maybe more skeptical people are needed and not just market cheerleaders with things to sell and fees to take. What if the game is all new now that the 30 years of falling rates is done and sovereign defaults coming, including US ultimately? I believe there is sufficient value in being there as an advisor along the way as markets hit key junctures, and not just the SPX paying attention to, but also other areas that while under the radar could bolster returns idiosyncratically while at least adding diversification.