Questions regarding being an OPM person

My responses are delayed due to starting a ID, which is fine with me. I told the people that I would be willing to do this based on my fee schedule only and wouldn't be open to negotiation. I said if I lose money for the year, I take nothing, we all lose since the majority of funds are still mine. I maybe too generous in that I said below a 5% return I would still not charge beyond cost to administer this crap. Over 10% I expect to see something for my time, and if I have a great year I charge more, ie over 25%, at least to me that seems fair. No where near hedge fund rates, but if I have to go through regulatory hoops I am inclined to say forget it. I have no issue writing up agreements, but I want to limit my costs beyond having to possibly forming a corp of some form for litigation issues.
I am talking myself out of it all the time, but I still think I can do some good, but I am not willing to deal with enormous headaches, and I won't sell a fantasy to people. I may lose people just telling them to get a life and do some work, and that would be fine.
Thanks again for the thoughts and ideas.
 
SMA = separately managed accounts - each investor has their $$$ segregated in an account registered in their name. They have sole access to deposit and withdraw funds, and they authorize the adviser to make investment decisions for the funds within it. There are many advantages, with the main drawback being that it's possible for an investor to put a small sum of money in, and then copy your trades with another account containing much more money, in essence paying a fee only on a small percent of the benefit they get. For friends/family, the likelihood of anyone going to this trouble is slim. In other cases, it could be a risk.
 
sf, again thank you. If they want to copy me they need to sit there all day, for the most part, and it probably still wouldn't work. That is another point for me. THey say can you tell me what you are doing and we copy it? No, I may make a change in the course of a day and they can't do it becuase they another job. Well you could twitter me, NO!!!!!!!!! It won't work, but I get they want easy money. I lost my ass chasing easy money for years, until I realized this is a job. A job I enjoy, but no to the point of dealing with questions daily, other than the wife.:D I think/ know I have something to offer, but I am content with my money, but I can see more money and hopefully help others. At the same time I have an issue with dealing with others who don't know what I am doing, but will certianly be calling daily with questions why they aren't millionaires. My response has always been why aren't you a millionaire all ready if you know everything? Not always poplular with this answer and the few left who bug me seem to get this concept. And for the most part they actually are millionaires, but refuse to admit it. I love that! I hesitate to screw them more than most as I know none of them were handed the money they have, and I don't want to be the pile of crap that loses a dime of it.
I am overthinking this, but isn't that what the internet is for?
Sh**
 
Quote from sf631:



* Administratively, the most simple way is thru SMAs. I use IB and they make it easy to create a master account where you can control investments but not have custody of the funds. This is far preferable to a pooled structure (unless you're paranoid about your friends reverse engineering your trading strategies, but I'm guessing not based on your post). With a pooled structure, you need to (a) comply with all sorts of audits and record-keeping, (b) set up more entities, and (c) stress more that your friends are going to feel suckered if things go badly. If SMA, they can always log into their account, close out positions, etc... so I know I'd sleep better at night.
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I am somewhat familiar with IB F&F or Adviser accounts, but let me ask you two questions: First, I thought the client CANNOT do any trading in the account once the adviser is overseeing this...yes or no? And, do clients actually see orders, limits, etc with IB? I thot it is all done via the master account and then allocated to the sub accounts, but the actual sub accounts (SMA's) don't see orders or pending orders, maybe just fills (per the allocation algorithm with IB).
 
Again, not a lawyer, but...

I'm pretty sure if you live in a state where IA registration is required for anyone charging fees for acting as a fiduciary (ie managing OPM) this will leave you legally exposed.

I've known of others who do something with a non-official one page contract or handshake, and probably 99/100 times it's just fine, but be clear that if anything goes bad it's not the investor who is in trouble. IMHO, this leaves you in a pretty bad spot and I'd only consider that with direct blood relatives, personally.

Quote from newalias:

My responses are delayed due to starting a ID, which is fine with me. I told the people that I would be willing to do this based on my fee schedule only and wouldn't be open to negotiation. I said if I lose money for the year, I take nothing, we all lose since the majority of funds are still mine. I maybe too generous in that I said below a 5% return I would still not charge beyond cost to administer this crap. Over 10% I expect to see something for my time, and if I have a great year I charge more, ie over 25%, at least to me that seems fair. No where near hedge fund rates, but if I have to go through regulatory hoops I am inclined to say forget it. I have no issue writing up agreements, but I want to limit my costs beyond having to possibly forming a corp of some form for litigation issues.
I am talking myself out of it all the time, but I still think I can do some good, but I am not willing to deal with enormous headaches, and I won't sell a fantasy to people. I may lose people just telling them to get a life and do some work, and that would be fine.
Thanks again for the thoughts and ideas.
More...
 
Quote from Stok:

I am somewhat familiar with IB F&F or Adviser accounts, but let me ask you two questions: First, I thought the client CANNOT do any trading in the account once the adviser is overseeing this...yes or no? And, do clients actually see orders, limits, etc with IB? I thot it is all done via the master account and then allocated to the sub accounts, but the actual sub accounts (SMA's) don't see orders or pending orders, maybe just fills (per the allocation algorithm with IB).
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They can trade. It's their account. It's akin to them giving you their login.

My broker allows them to see pending orders. I don't know about IB.
 
Quote from Stok:

I am somewhat familiar with IB F&F or Adviser accounts, but let me ask you two questions: First, I thought the client CANNOT do any trading in the account once the adviser is overseeing this...yes or no? And, do clients actually see orders, limits, etc with IB? I thot it is all done via the master account and then allocated to the sub accounts, but the actual sub accounts (SMA's) don't see orders or pending orders, maybe just fills (per the allocation algorithm with IB).
More...

I'm not certain about this - I will try to check and report back. I had always assumed it was possible to log into TWS and make/close trades, but not personally tried it.

As for unfilled orders, I'm pretty sure you're right that they're at the "F" account and not in the sub accounts, so they wouldn't appear, but fills are absolutely visible at the sub account level, as are currently open positions, of course.
 
Quote from sf631:

I'm not certain about this - I will try to check and report back. I had always assumed it was possible to log into TWS and make/close trades, but not personally tried it.

As for unfilled orders, I'm pretty sure you're right that they're at the "F" account and not in the sub accounts, so they wouldn't appear, but fills are absolutely visible at the sub account level, as are currently open positions, of course.
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Thanks sf. Let me know what you find out.
 
to the op, i can understand your motivation for making money obviously but helping others? you may want to help others (a good goal in and of itself) but the investors don't give a rat's ass re you. just like a relationship, it must be a two way street otherwise you'll be left out to dry. what happens when you have a bad day/week/month/year in the mkt and all of the people you want to help all liquidate everything in one day which they can do in an sma.

my advice, trade your own money and if anyone ever asks for a tip, tell them not to run w/ scissors.
 
I've tried this a few different ways, and for me the only thing that worked (and still does work) is a 50/50 partnership. Typically, they loan the partnership the startup money. You manage it and the profits are split 50/50 and they always have a claim on 100% of the original loan. Since the trader usually needs the money more than the investor does (especially to cover taxes) when you need money you withdraw whatever you need down to the original loan and split it with them 50/50. If they get pissed and say they don't need it, you just say, "Yeah, but I do."
 
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