Career Change Opportunity - Protege to RIA and become an Advisor

[El OchoCinco]

Nobody gets to keep it all....every business has overhead ... duh. But he is being trained to take over someone's business with $40 million which he can grow as well.

"You might need to hire an assistant..." wow.... amazing insight.

 

[RRY16]

Nobody gets to keep it all....every business has overhead ... duh. But he is being trained to take over someone's business with $40 million which he can grow as well.

"You might need to hire an assistant..." wow.... amazing insight.

This is click bait garbage!!! Why would anyone come to a trading forum for advise on becoming a RIA? Stop the madness!

 

[ScalperJoe]

...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.

..."and wants to train me to takeover his books which as of now he has 40 million under management."

That's all I had to read to come to the conclusion that you are sitting on a GOLDMINE, and quite frankly, it would make a very wise decision to take the offer, provided of course you are certain about going the RIA route.

Remember, the most difficult part is to get others to trust YOU with THEIR money! From what you've stated, there's an opportunity to manage an already established client base and you'll have five full years to transition into the business.

At 1%, you're looking at $400k annually, minus overhead and compliance costs. If he's splitting any fees, perhaps that annual override is lower, however it's likely that your net income is still far greater than the $100k at your prior Fortune 500 job, and without a corporate boss to deal with!

Regarding your own trading, like the OP said, it's tricky. Some attorneys will warn you not to trade personal accounts while managing money for others. There are LOTS of disclosures to follow, and you will face more scrutiny with compliance audits. A relative of mine chose the independent RIA route, and he was advised against having any personal trading accounts. I also know of an individual that worked at a large bank for around 20 years, then took a select group of clients with $1 million or more, and only serviced those accounts. He had Schwab as the custodian, which also provided compliance and operational support for his investment advisory business.

Also, ask the manager what license(s) he currently holds (or find it with the link below). You may only require the Series 65, or perhaps you'll have to get the Series 66, Series 7 and an insurance license (Series 6).

You can ask him about compliance costs. If he's running a "one man show" then you can outsource a lot of it. Here's a link that provides some guidance as to costs. It's not overwhelming as one may think. Many RIA's are "one man show" operators, and are running their own shops with FAR LESS than $40 million. Since you're moving into a turnkey business, you won't have many of the upfront and marketing costs vs. any new RIA.

http://www.ria-compliance-consultants.com/annual_compliance_program_investment_advisor.html

As mentioned, you can look up his CRD# and find his current licenses with this link.

http://financial-advisors.credio.com/

Best of luck!

 

[1245]

As mentioned, you can look up his CRD# and find his current licenses with this link.

http://financial-advisors.credio.com/

I would use this to check every broker you want to do business with.

http://brokercheck.finra.org/Search...okercheck&utm_content=Finra BrokerCheck_Exact

 

[ScalperJoe]

I would use this to check every broker you want to do business with.

http://brokercheck.finra.org/Search/Search?utm_source=bing&utm_medium=cpc&utm_campaign=BrokerCheck_PS_Branded_BR&utm_term=finra Brokercheck&utm_content=Finra BrokerCheck_Exact

Yes, that's a better link. Go direct to the source!

 

[JBM]

Thanks guys. I appreciate the feedback. The reasoning behind the career change is that I have "awakened" to see that the finance runs the world. From the electricity to the planes overhead.

He has a broker/dealer that he falls under for 20% of profits for all the back office/compliance/audits/legal requirements which from what I am have been reading is reasonable. He works through Schwab as the broker if that makes sense. This allows his clients to have real time access to their accounts but they also have access to him.

The trading on individual accounts can definitely be seen as conflict if I am active trading a stock that my clients have long. My history with advisors has been rocky as I had an advisor take my dads life insurance plan (he died) and swindle it taking it from 150K to 50K during the Dot Com bubble, and then just leave it in Treasuries after the market started coming back. They were charging management fees even though they didn't do anything on the account for years. I took over the account later and I have built it to a considerable amount.

Anyways on that note want to be something different without the headache of working with a Big Bank. I know some want that backing but I would like to do things differently. I will use the Big Banks for the services but I will be directly with the Clients needs first and not pushing a product on them. I have friends who have transitioned into Big Banks and say it is sometimes cringe worthy what they have to do because they answer to somebody above. Not trying to get on a high horse if that reads like it.

I am an engineer by trade and while I have some background in the markets, as an aspiring advisor what would be good resources for reading material, and build my knowledge. I plan on taking the exams once/if I take this opportunity.

When it comes down to it is CFP the goal or the CFA? I understand the experience time to take the exam and how one can be a CFP and yet be a horrible advisor, but still.

Appreciate it and will keep the thread updated if/as I make the transition. Thank you.

V/r

JBM

 

[1245]

That set up is typical. For the asset management role, keep in mind that your job will be to bring in assets, help your clients plan their financial future, not focus on trading. The CFP will be better vs CFA and much easier. You will also at a minimum need your series 7, 66 and whatever insurance exams that are required because annuities are a typical investment. There are Asset managers that only trade their clients portfolio, but that business is typically commission based or % of profits vs yearly fees.

Good luck

 

[ScalperJoe]

He has a broker/dealer that he falls under for 20% of profits for all the back office/compliance/audits/legal requirements which from what I am have been reading is reasonable. He works through Schwab as the broker if that makes sense. This allows his clients to have real time access to their accounts but they also have access to him.

So he's paying Schwab around $80k annually for their service (20% of the $400k he's generating if he gets 1% on his total $40 million in AUM).

Has he thought about going independent? He can still have Schwab as the custodian and broker. They still handle a lot of the compliance, or he can outsource it. Since he's under $100 million in AUM, he only needs state registration, unless he has lots of clients all over the U.S.

Obviously, the best model is to keep 100% of the AUM fees and just pay for out of pocket expenses to run the business (rent, office equipment, etc).