Trader with side business of managing seperate accounts

Hi Sagacity,

lindq is right, as you know--you must get an attorney who is experienced in these matters. You can get killed by not knowing what you don't know. The rules don't always make intuitive sense.

I don't know about exams, state and federal rules, or any of that, but I am an old dog and have been around the block a few times.

The best way to find any professional who is going to be on your team and help you, not just give you incompetent advice and take your money, is to get a recommendation from another professional who knows them and has worked with them--preferably more than one recommendation, from different people who don't know each other. If I were you, I would hunt around the nearest large city for attorneys who know securities law, and I would ask them, or their administrative staff, if they would be willing to contact a couple of their clients and ask them if they will talk to you about their investment business (they can't tell you who their clients are, of course--the client would have to 'opt in'). Simultaneously, I would hunt around for investment professionals who are already doing what you want to do (professional associations are one way to find some) and I would ask them about their thoughts about types of exams and also about attorneys they have used. Most people will be willing to talk to you if you let them think that you are a kid still wet behind the ears, and not a serious competitor. If they don't have answers to your questions, ask them if they have a colleague you can talk to and request an e-mail introduction to that person. By calling a lot of people who are investment professionals in the same area, you will find that a few of the same attorneys' names crop up. These are likely to be the respected individuals that you might want to be contacting. And by asking the same questions of everyone, you'll get an idea of where you ought to be heading education and credentials-wise. Just talk to a lot of people, and eventually the picture will start to come together.

Make sure any attorney you use is personally recommended by others who are involved in this area of business. Just because they are on a list provided by the state bar does not mean anything--nobody vets those lists very much, and anyone can be on them. Then have a conversation with the ones you think you may be interested in, and evaluate whether they can communicate with you effectively (my experience has been that some attorneys aren't skilled at this). They should be able to explain issues relevant to you in a way that you, a non-attorney, can understand.

I have used this method many times, for many purposes. As a mundane example: to buy a house in a strange town I once moved to. I kept calling lenders and agents and asking them to recommend each other. Eventually just by asking a lot of questions you start to hear the same names and find out where the cream is. Needless to say, there are plenty of lenders and agents who are crooks or just careless, and the other lenders and agents know damn well who they are. They won't outright tell you who they are--but you also won't find many people recommending them.

Most people choose others to help them for silly reasons--they like the person, or their friend or neighbor likes them or recommends them. You can come up with something more concrete than that. My personal experience has been that my friends and neighbors don't usually have a clue, but just choose people for emotional reasons.

Best of luck to you.
 
Quote from drcha:


By calling a lot of people who are investment professionals in the same area, you will find that a few of the same attorneys' names crop up. These are likely to be the respected individuals that you might want to be contacting. And by asking the same questions of everyone, you'll get an idea of where you ought to be heading education and credentials-wise. Just talk to a lot of people, and eventually the picture will start to come together.




Good strategy on seeking out attorney.
I will definately keep that in mind.
 
Quote from lindq:

I'll make this as clear as possible for you.

If you are providing ANY advice and being paid for it, you need to immediately seek the advice of an attorney who specializes in securities law. There are very specific state and federal regulations that will apply to you. And take it from my experience that they can be very confusing, and if not properly handled can put you in a world of trouble if one of your 'clients' loses money and decides to take action against you. This is especially true in today's environment.

A qualified attorney may advise that under very specific and limited circumstances you can 'advise' without registration. But you need to get that clear, and in writing, and not via a chat room.

At the very least, you will probably be advised to set up a simple corporate structure (LLC) and put all clients under contract with that entity. Under no circumstances do you ever want to do business without some protection, no matter who you are dealing with.

Regarding a series 65 and registering as an RIA, once you take that step you are putting yourself under state and federal regulations. Again, this is why you need to get serious advice before you take any actions.

And finally, IMHO, from reading your posts you are a long way from the point where you should be providing financial advice for a fee.


Agreed up to last sentence of post. Again, like I did for someone else in an earlier clarification, this is not "financial advice" as much as it is "market" or "stock/eft individual stock investing advice". Meaning that I am serving a narrow niche of investors portfolios. Not necessarily giving advice on entire current investment porfolio. Furthermore, if you can make money for your clients first and foremost (without breaking the law), that is what counts. And just because I do not "sound" familiar with the rules and regulations and how to go about this does not mean I do not know and do not have any acumen on giving advice about future good/bad individual investment selections. After all, that is why I am on here in the first place - to gain more input on certain steps to take. One does not necessarily have anything directly to do with the other. I will not make this clarification again.
 
Quote from Now is Now:

Lets call a spade a spade....

Since this is going to be "side business" we have to assume you are already trading. Therefore, it is reasonable to ask what your trading performance is to date.

Nearly all the time , it generally goes that it isn't what you say ,but how you say it that will tweek the interest of the reader.

In this particular instance, you seem to be very nieve as to what it is you are trying to achieve.

So , to start with , tell us us a bit about your trading performance to date that would warrant you being considered good enough to be an "advisor". It will really help.

NiN

Good point. I will be sure to do that when marketing myself to outside future clients. Interestingly, if setting up an advisory firm, can and do you even provide that data in contrast to setting up future hedge/mutual funds?

Technically, setting up a fund would need past performance data. Does an advisory firm need this?

I guess the above is just another question for a securities lawyer.

As far as what I am trying to achieve, please see first post of thread again.
 
Quote from bwolinsky:

Covestor.com is rolling out this feature, and will be governed as an RIA for licensed professionals, of which I intend to be a part of it.

I recently checked this website out. It seems intriguing. However, they do not go into specifics on how much in fees or income you can earn depending upon success rate. Is it fee or percentage per number of followers, per profit on trade etc..??

Anyone know more on that?
 
Quote from Sagacity1:

I recently checked this website out. It seems intriguing. However, they do not go into specifics on how much in fees or income you can earn depending upon success rate. Is it fee or percentage per number of followers, per profit on trade etc..??

Anyone know more on that?

http://www.covestor.com/how/fees

Individual managed accounts , if they use your picks, you are paid a 'data fee'
 
Quote from wenzi:

http://www.covestor.com/how/fees

Individual managed accounts , if they use your picks, you are paid a 'data fee'

Yep, I got that. But, they do not mention any numbers or percentages though. Also, they do not specify what their cut or rake out of successful, consistent members are.

Anyhow, for now the site may not be applicable to me until some months pass because their faq's explain that they do not link currently with derivative instruments such as options or futures.
 
Wonder how long before one of the "advisors" blow up and these guys get sued. Last time I checked, investing with a sub advisor on the merit of a just a weeks/months/years on performance alone without any other due diligence doesn't satisfy reasonable care and the prudent investor rule; I can see ground for a suit

Quote from wenzi:

http://www.covestor.com/how/fees

Individual managed accounts , if they use your picks, you are paid a 'data fee'
 
Quote from Sagacity1:

How the heck do you know if I am not qualified and/or have the experience to do so? How is stock market experience and knowing about investments the same as knowing about regulations for them??? That is the whole point why I am asking that which with I am not familiar, duh!!!!!!!!!

I think your attitude answered the question rather well. You are not qualified.

Secondly, you are trolling for free, legal advice from anonymous people on the web, rather than spending the money necessary to get solid advice from others who may actually have a clue.

I hope you don't get any victims (oops, customers)...
 
Quote from Sagacity1:

Yep, I got that. But, they do not mention any numbers or percentages though. Also, they do not specify what their cut or rake out of successful, consistent members are.

Anyhow, for now the site may not be applicable to me until some months pass because their faq's explain that they do not link currently with derivative instruments such as options or futures.

The RIA is probably the only one that is going to take a percentage. The average member is not an RIA, and they need to be paid a fee not based on percentages or assets under management. ( Insert relevant legal exceptions here )

So it will have to be some sort of 'data fee', such as a monthly amount for each follower.
 
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