Strongly Looking into Starting up RIA

[Cswim63]

It's the investment world. There are so many variables and so many different goals people have that are invested. I think a lot of people have a lot more at risk than they might realize. It is not written in the Constitution that stocks must go up. A lot of people have done well for themselves in their own profession and should maybe not be exposing so much of their hard earned money in an arena like stocks, and instead focus on preserving wealth while having the chance to capitalize on good risk/reward propositions that are offered in alternative asset classes and certain equities.

I've already delineated my awareness of the difference between fiduciary with RIA vs. running a fund with big time clients. Certain tactical moves are prudent at different times, but I know that this is much more long term based.

I don't question my enthusiasm for this. I think it would come down to getting all the paper work type stuff done and being setup, and then getting a website going that has a summary of what I bring to the table contrasted to the status quo, and then hopefully attain some acquaintance type AUM and get what I could off reputation to at least talk to more people, and then have to inevitably do the pure salesman type stuff. On that note this is why Edawrd Jones type stuff would not be for me, because it'd be the same except not getting to keep everything and plus non-competes, and more limited asset strategies, while I also understand that they have the reputation. I think as I said there is a trend towards customization and smaller boutique in so many sectors of the economy, and investment mgmt maybe hasn't had as much of that. I think a lot of people even if they buy individual securities have essentially a high correlation to SPY, and then hope if things get rough, their TLT-type allocation will pick up the slack.

I think this is doable but would be a heck of an undertaking and require 18+ months of pure investment without reward in terms of income. I'm guessing few if any people here on ET have gone this indy route in this fashion, but am just seeing what people have to say and hopefully some specific advice from some.

As to the experience argument, I understand how that would work in terms of trust between people, but in terms of new ideas and enthusiasm for looking into different perspectives, not to mention arguably a whole new paradigm here as credit expansion is hitting the skids having arrived at ZIRP, I think there is plenty of benefit to 'newness'. And I have spent a lot of time day in day out watching the market and trading in it and have a good grasp of the kinds of things that truly matter vs intraday/week noise. And awareness of what contrarianism is; not stepping in front of a persistent trend but rather going with the flow often instead of trying to be a hero and pick tops/bottoms (although as a longer term investor if there is deep value believed to be there, then it's ok to at least initiate if it gets into a historically lower price level and things like maybe RSI perhaps line up if it should be hitting support, and maybe sell some on a likely pop or who knows).

I think a lot of people really don't grasp how the market operates, and what has propelled the market to these lofty levels, and it takes more than a subscription to a major financial paper to be able to discern what matters. Of course as a fiduciary you don't promise anything but you apply different approaches and integrate the client's profile like maybe not able to handle a big down turn so sell proactively instead of wait until crucial moments like has happened lately in SPY.

That's true, many people don't necessarily know how the markets operate. And many seem to like it that way. Remember, you have your own bias. The markets are different than what is in your head. I still get the feeling you don't want to sell, just open an office and have people stop by on their way somewhere. Even if its on the internet. Just because you look at things a little differently than the norm is not enough to open a business. So far there's little anyone can invest in. You can take an old car and completely redo it. It will take a thousand hours or more and money for materials. Are you going to sell it after that? Can you make a profit more than you would have made if you just got a job doing the same thing? I hate most jobs working for someone, so maybe that's the ultimate motivation. You really need to think about what it is you actually enjoy doing. It might be different than what you are thinking.

 

[DarthFader989]

I think being there for the long haul with a client and helping them navigate the ups and downs would be pretty satisfying. Even if the market does say go up a few % and a custom portfolio didn't fare as well, there is no proof to say on a risk adjusted basis the ideas were flawed. It is all very subjective according to objectives and risk tolerance.

I would differentiate myself a lot in terms of being able to and willing to personally relay what is going on and be fine with talking to people more, and to be open to some unconventional portfolio adjustments and allocations. And RIAs obviously also have to know all the tax rules and ways to maximize gains and that is all key. But within this space of financial advising I think there is a dearth in many cases of in-depth market awareness of the bigger picture and also understanding the more intricate nuances like technicals.

If it got to where I would ideally envision and I had my own RIA I know that would be a terrific career even if I weren't managing 20+ million. One that requires never being complacent, but that's how it should be in anything.

 

[ScalperJoe]

I'm very familiar with IB. We were introducing brokers to IB up to the end of last year, then we dropped the relationship.

Yes, the link for IB was meant for the op who wants to start his own RIA.

I'm sure you had a good reason to drop IB, I was just mentioning them as a possibility. There are other firms that will gladly accept his clients' funds. Schwab has its own separate division that just deals with advisors and their clients, for example.

 

[JB3]

Good luck competing with Wealthfront and Schwab Intelligent Portfolios. At the end of the day, can you outperform these robo-advisors on an annual basis? That's all the clients want to know.

 

[debitspread]

No, those aren't the people RIAs want as clients. A good RIA's value-add isn't in winning a short-term performance derby against this-or-that robo.

 

[Diamond Geezer]

RIA's want people who don't know how to measure investment performance because there is no way they can win business on that basis. Robo-advisers by definition outperform traditional shops because of lower fees and lower portfolio turnover plus their simple algo's which tailor asset allocation to the facts and circumstances of the client outperforms "discretionary" management.

Question: how closely did your expectations of success as a prop trader match your ultimate performance? So now you are going to take a flyer with OPM?

I too know many people in this industry including extended family, its not built on investment performance, its sales and its sleazy. Listen to Mav.