Managing book for Family Office or high networth individual, possible?

[ZZ Trader]

Been pondering the idea for a while to manage money remotely for an Family Office, CTA or HF as a independent contractor/consultant getting paid by performance purely. Anyone done that setup?

Avoid launch my own CTA due to the hassle handling the legal, business, regulation, backoffice, etc.

bln, of course you can do it, but the problem is: where is the AUM you trade coming from? Do you have clients that can bring their AUM to the firm you want to work for? so you can trade that AUM for them from within the firm and share profits with the firm? In that case you may find some doors open to this setup. Possibly even First Loss Capital setups may be worth for you, if you have very skewed strategies... if you need some names please PM privately, I am not here to advertise third party services.

On the other hand, if you want a firm to hire you to trade THEIR CLIENTS' AUM, then it's a completely different story: you are basically asking to be hired as a PM for a firm or a Family Office to trade their money and unless you have already done that for someone, have a multi-year track records trading >1M USD, it's going to be really difficult, not impossible but really very difficult.

And a lot of PMs are out there to compete with you, so believe me it's not that easy for a newcomer to break in.

I have set up a startup CTA/CPO with a partner in the US in 2019 and I know how hard it can be, so you are right you probably don't want to handle the hassle but as a minimum I would say: assuming you have a Series .... license and are legally able to raise money from clients, just set up an LLC in Delaware or any other state of your liking (they are not all the same when it comes to regulations and what happens to you if your clients sue you, so be careful which state you choose...), then open an account with a broker and trade your clients money as "managed accounts", your costs will be minimal and this is as close as is gets to running your own operation and you can scale it later into a proper CTA or fund if you have the necessary AUM (I'd say 3M USD minimum but better would be 5M USD).

I am happy to answer as many questions as you want, if I can be of help...

 

[Clark Bruno]

The biggest issue with a lot of people on this board who want to dream big is that they don't want to do the legwork or be patient to build a reliable track record. Everything has to be hush hush, hurried. The biggest hurdle of managing outside funding is that they cannot even manage their own funding with a respectable return over more than 5 years. Some guys here jump all the basics and want to swim right away with the sharks. How about learning to swim first. In finance parlance this means build your friggin track record, period.

 

[RedSun]

Push that fictitious trader's annual return up to 20 or 22 percent and that guy can easily attract capital. 5 to 7 years of consistent, audited returns above 20% on 1mln aum and you will definitely attract capital whether you are a nobody or not.

No sir. 20% makes no difference. He is not Bill Ackman. Even if Bill's performance is 12%, Ackman can still runs his fund. But OP still looking for his chance.

This world is never fair.

 

[RedSun]

The biggest issue with a lot of people on this board who want to dream big is that they don't want to do the legwork or be patient to build a reliable track record. Everything has to be hush hush, hurried. The biggest hurdle of managing outside funding is that they cannot even manage their own funding with a respectable return over more than 5 years. Some guys here jump all the basics and want to swim right away with the sharks. How about learning to swim first. In finance parlance this means build your friggin track record, period.

That is completely not the case. I've worked for some of the Wall Street firms for many years. My son is a recently minted Wall Street banker and his office is in midtown.

No one wants to stay at the same job for 15 or 20 years. Making $$$ is interesting to some people, at some time. But over time, we get family, we get tired working long hours. I hate commuting. Some of my fellow NYMEX traders have left the floor and have their own offices in NJ.

For most of the people, when we get all the success, $$$ does not really mean anything. They are just numbers. I do not even need to proof anything to anyone. Trading is just for sun. If I give back 10% of my 30% gain YTD, I do not swat any.

 

[RedSun]

A good example is Cathie Wood. I do not want to comment on her fund management style and performance.

But the door of fund management on Wall Street was pretty much shut for Cathie. Many reasons. She got old and it looked like she would never get the opportunity.

Then Cathie got funded by Billy Hwang and other people. So she got the opportunity a lot of other people did not have. If Carl Icahn in London or somewhere gave OP $100MM to start, OP can be as successful or even more successful than Cathie has done. But OP needs the connection or the fame to get funded and started. This is what everyone at ET has been looking for.

But 99% of the people never get the opportunity. Some of those people have had excellent track record, like 20%+ for 10 years or so. That is just not enough. You need the capital and become known to the outside world.

 

[Clark Bruno]

Well, I disagree from own experience and the one of others.

No sir. 20% makes no difference. He is not Bill Ackman. Even if Bill's performance is 12%, Ackman can still runs his fund. But OP still looking for his chance.

This world is never fair.

 

[Clark Bruno]

You speak of the same people I have seen wash out in the past 25 years of my career. Many who started with me at my first bank junior trader position came from top schools. They almost all were only in it for some quick buck. And a quick buck they made because almost everyone left after 2,3,4, or 5 years. None ever became a PM at a hedge fund or MD at any of the banks. The few who make MD or PM are almost all in it for life. They breath probabilities, trading, risk management and investing. Their family lives suffer but their wives and kids usually put up (or divorce) because they live very good lives. I guess you speak of the people who have never been paid a million dollar bonus or more. Which PM or MD complains day in day out about the commute. Lol. They either put up or move into town or change to a shop closer to where they want to live... Point being, they solve their problems not moan about it. I don't think you really know what you are talking about.

That is completely not the case. I've worked for some of the Wall Street firms for many years. My son is a recently minted Wall Street banker and his office is in midtown.

No one wants to stay at the same job for 15 or 20 years. Making $$$ is interesting to some people, at some time. But over time, we get family, we get tired working long hours. I hate commuting. Some of my fellow NYMEX traders have left the floor and have their own offices in NJ.

For most of the people, when we get all the success, $$$ does not really mean anything. They are just numbers. I do not even need to proof anything to anyone. Trading is just for sun. If I give back 10% of my 30% gain YTD, I do not swat any.

 

[Clark Bruno]

So what was her track record like before she ever got into investing for her own firm? Right, she was mentored by Arthur Laffer, worked at Jenisson Associate for 18 years as portfolio manager and managing director. Then as CIO for Bernstein for 12 years overseeing 5 billion in aum.

That happened before she ever founded Ark. That's almost 3 decades before ever running her own shop or making sole management decisions over major external funding.

You are talking out of your ass, at least get your stories straight. You are totally wrong on this one and you sound exactly like someone who only cares about the quick buck. You don't get to make major decisions over billion dollar investments unless finance and risk management and probability theory is running through your veins.

A good example is Cathie Wood. I do not want to comment on her fund management style and performance.

But the door of fund management on Wall Street was pretty much shut for Cathie. Many reasons. She got old and it looked like she would never get the opportunity.

Then Cathie got funded by Billy Hwang and other people. So she got the opportunity a lot of other people did not have. If Carl Icahn in London or somewhere gave OP $100MM to start, OP can be as successful or even more successful than Cathie has done. But OP needs the connection or the fame to get funded and started. This is what everyone at ET has been looking for.

But 99% of the people never get the opportunity. Some of those people have had excellent track record, like 20%+ for 10 years or so. That is just not enough. You need the capital and become known to the outside world.

 

[RedSun]

You speak of the same people I have seen wash out in the past 25 years of my careers. Many who started with me at my first bank junior trader position came from top schools. They almost all were only in it for some quick buck. And a quick buck they made because almost everyone left after 2,3,4, or 5 years. None ever became a PM at a hedge fund or MD at any of the banks. The few who make MD or PM are almost all in it for life. They breath probabilities, trading, risk management and investing. Their family lives suffer but their wives and kids usually put up (or divorce) because they live very good lives. I guess you speak of the people who have never been paid a million dollar bonus or more. Which PM or MD complains day dlin day out about the commute. Lol. They either put up or move into town or change to a shop closer to where they want to live... Point being, they Solve their problems not moan about it. I don't think you really know what you are talking about.

Hope you know dot com bubble #1, LTCM, housing crisis, Lehman, Bear Sterns, Kidder Peabody, Traveler Group, First Boston etc. Wall Street is always fluid. Almost no one stays at the same firm, same group, or doing the same over 15 years, or 10 years. Wall Street firms are like revolving doors. Hundreds of hedge funds shut doors each year. I get friends who made fortune in their late 30s. They quit regular jobs, found some wives and bought farms in CT, NJ etc. Then they trade their own money. Why do they care about the track record?

So you want to say they are Wall Street wash-outs? Sure you can if you want.

They are certainly some Wall Street people in their 50s and 60s. I do not want to make comments on them. I can only say that they love their jobs. They are jobs. Some need the $$ and some just love to work and feel important.

 

[RedSun]

So what was her track record like before she ever got into investing for her own firm? Right, she was mentored by Arthur Laffer, worked at Jenisson Associate for 18 years as portfolio manager and managing director. Then as CIO for Bernstein for 12 years overseeing 5 billion in aum.

That happened before she ever founded Ark. That's almost 3 decades before ever running her own shop or making sole management decisions over major external funding.

You are talking out of your ass, at least get your stories straight. You are totally wrong on this one and you sound exactly like someone who only cares about the quick buck.

As I said, I do not want to comment on Cathie's record and management style. I'm only talking how Wall Street works.

Cathie had no opportunity. But she never gave up. Then she seized the opportunity. Or opportunity found her. Now she is richer and more successful than most of the Wall Street people with 15 year track record.