Career Change Opportunity - Protege to RIA and become an Advisor

J

JBM

For those that had a drastic career change to be an Advisor or Planner what is the trigger that made you do that? I recently got out of the Navy after 7.5 years, secured at the time I thought was a great gig with a F500 company (100K but 60-70 hour work weeks), and now I am looking at an opportunity that would have me be a protégé for an RIA who is planning to retire in 5 years and wants to train me to takeover his books which as of now he has 40 million under management. He has been in the game for 30 years and left a Big Bank after 20 years due to the MBS crap that was going on.

With that what was the defining moment that made you realize that you wanted to get into the game?
 
1st you should know that $40mm AUM for an advisor after many years in the business is on the low side. With that said, there are many firms out there that would be happy to have an Vet working for them. The RIA business is very entrepreneurial. The have to decide if you are ready to be an employee or run a small business.

Good luck,

1245
 
I know that the $40MM is on the low side but that is what he gave me on the range being low when he was at the bank he had 10x that but just wanted something different. He limits himself on clients because he is a one man show under a partnership if that makes sense, and doesn't want to dilute his service. He is old school guy but has managed great returns.

I like the entrepreneurial aspect of the RIA side of the house. I would probably look into setting up my own business and then "contract" out to him to help on his side of the house and allow me to active trade and invest for monthly income. I have about $200K in capital that I can use to allow with conservative trading strategies replace my current income. I have other sources of income that make this not a painful move in income replacement.

My goal is not to make six figures overnight or have $100 million under management. It is to have a better life work balance and to have greater satisfaction with my work and help others out. One reason I would like to do the RIA vice a Big Firm is because I want to answer solely to my clients vice someone above me if that make sense. I guess its just seeing family members and friends being burned by the Big 5 when it comes to "advisement".

Appreciate the reply and I will be in here more frequently!
 
If you going to be in the asset management business, you might have to give up the trading aspect for yourself. Many firms have compliance rules that make you wait a few days before you can do trades after you did them for your clients.

I would say the asset management business is a safer way to go than trading. However, if you can build a decent track record and put together a hedge fund in the future there are many allocations for vets. There is money set-aside for minorities owned firms, women owned firms and Vet owned firms. To be honest, this can often be a longshot to be successful that way.
 
I understand on that aspect. I am conservative in my trading and I have done the minute trading, day trading, forex, options, and all combined. I have moved to more trend trading but I understand.

The asset management that I would like to setup would be a business that would offer estate planning, trust setups, and etc. This would be a one stop shop with the tax services contracted out for compliance issues.

I am about 30, have bought 3 homes, deployed 5 times, lived in 3 different countries, and have a father who got Alz at 54 and godfather who is fighting cancer and feel that I am experienced in that area.

My guy wants to ensure that I am not "tainted/corrupted" by big banks and learn the "right" way. I have to chuckle at that. What is the best way to be independent and grow and yet not lose sight of the clients?
 
1245 said:
1st you should know that $40mm AUM for an advisor after many years in the business is on the low side. With that said, there are many firms out there that would be happy to have an Vet working for them. The RIA business is very entrepreneurial. The have to decide if you are ready to be an employee or run a small business.

Good luck,

1245
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$40 million is on the low side for a private small RIA business? Why is that even relevant? it is way more money than he will ever manage in his lifetime and a huge amount for one person. If he makes just 1% fees of AUM he makes way more money than he did in his professional life.
 
JBM said:
For those that had a drastic career change to be an Advisor or Planner what is the trigger that made you do that? I recently got out of the Navy after 7.5 years, secured at the time I thought was a great gig with a F500 company (100K but 60-70 hour work weeks), and now I am looking at an opportunity that would have me be a protégé for an RIA who is planning to retire in 5 years and wants to train me to takeover his books which as of now he has 40 million under management. He has been in the game for 30 years and left a Big Bank after 20 years due to the MBS crap that was going on.

With that what was the defining moment that made you realize that you wanted to get into the game?
More...

My advice is to take it, not because of the trading aspect but because you are being handed a business to run that is already running successfuly... All the top traders you hear about are making millions not as traders now but running their own company. Running a business is the best route to wealth and if he is willing to sponsor you for your licenses and train you and hand it over then go for it. Even if you eventually earn only 1% of AUM you will be rewarded nicely...
 
optioncoach said:
$40 million is on the low side for a private small RIA business? Why is that even relevant? it is way more money than he will ever manage in his lifetime and a huge amount for one person. If he makes just 1% fees of AUM he makes way more money than he did in his professional life.
More...

The one thing I like and is attractive is that he is flat fee of 1-1.5% based on account. No commissions, offers trusts and tax advise and the whole thing. He mentions that the extras helps him down the road as a lot of clients do trusts that "locks" the money in and minimizes distributions to keep it under management.
 
I assume there is some sort of trailing divestment for the founder? Like where you pay him a share of profits until he passes away? Otherwise I don't see what's in it for him. Most retiring independent RIAs end up selling their practice to a bigger firm.
 
You are all correct, $40mm AUM can be profitable at 1% to 1.5% management fees. However, you don't get to keep it all. If you go through any Broker Dealer, they get a percentage. You might need to hire an assistant and pay her salary and benefits. You might have to pay for office space. All depends on where you set up. If you do this as an independent RIA, you will need to also pay for an compliance person. Not all as simple as it seems. Compliance and record keeping is a bitch.

For young managers just starting out, setting up at one of the big banks provides you a great name behind you and their infrastructure and compliance in place. Then in the future, you can decide if you are better off on your own.
 
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