Trading for friends and family

[hitnrun]

keep it simple. all this talk about managing money is overkill. they are family & friends

they have some free cash & are looking to make some extra money

if you take money as a investment & people lose they will be pissed off no matter what

I would Only take investments from strangers. different story

not the way to go for family & friends. not worth the aggravation

no one likes to lose money no matter what they may say

you have to use common sense with accepting there money

 

[njrookie1]

For IB's Friend and family account, you do not need to be a RFA.

Under IB's guideline, you can only many manage 15 accounts, and less than 20 million combined.

Any comments on my tiered pricing schedule? Is it a worthy complication? 2 and 20 is not worth it if accounts involve intensive trading.

njrokie

 

[newwurldmn]

Quote from Maverick74:

State Registered Investment Advisers

In general, RIAs managing assets totaling less than $100 million must register with the state securities agency in the state where they have their principal place of business.[7]

Licensing Requirements

Agents of the RIA who are charged with providing investment advice are called an "Investment Adviser Representative" (IAR). These IARs must generally complete the FINRA (List of Securities Examinations) Series 66 in addition to the Series 7 or Series 65 Exams, or by meeting the exam waiver requirement by holding one or more of the following pre-qualifying designations; Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC); Personal Financial Specialist (PFS), Chartered Financial Analyst (CFA), or Chartered Investment Counselor (CIC).[10][11]

http://en.wikipedia.org/wiki/Registered_Investment_Advisor

I put in a call with my lawyer RE: what you said. Waiting for her to call me back.

 

[bone]

Quote from njrookie1:

For IB's Friend and family account, you do not need to be a RFA.

njrokie

Hopefully the relationship isn't terribly important, or that there might be some inheritance link.

Seriously.

 

[Sayid]

Some good feedback. I'm not trying to gather investors, just looking into trading an account for an individual or two. RIA is too restrictive.

 

[Sayid]

Quote from njrookie1:

For IB's Friend and family account, you do not need to be a RFA.

Under IB's guideline, you can only many manage 15 accounts, and less than 20 million combined.

Any comments on my tiered pricing schedule? Is it a worthy complication? 2 and 20 is not worth it if accounts involve intensive trading.

njrokie

IB's friend and family account is confusing to me, they will let you charge a fee, but you do not have to be a registered advisor.

Under the Investment Advisor Act of 1940: ‘‘Investment adviser’’ means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.....

If I am reading this correctly, any person who engages in trading accounts for others, for profit is required to register as an advisor. It would seem that IB has located a loophole somewhere. That is what I wish to know more about.

NJROKIE,

As for your pricing schedule, I find that simple is better.

 

[Maverick74]

Quote from Sayid:

IB's friend and family account is confusing to me, they will let you charge a fee, but you do not have to be a registered advisor.

Under the Investment Advisor Act of 1940: ‘‘Investment adviser’’ means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.....

If I am reading this correctly, any person who engages in trading accounts for others, for profit is required to register as an advisor. It would seem that IB has located a loophole somewhere. That is what I wish to know more about.

NJROKIE,

As for your pricing schedule, I find that simple is better.

No loop hole. You are exempt from registration provided you don't exceed to the max allowable investors or AUM in your given state.

 

[newwurldmn]

Quote from Maverick74:

No loop hole. You are exempt from registration provided you don't exceed to the max allowable investors or AUM in your given state.

Maverick, I got a call back from my lawyer. This is what she said:

In NY, to not have to register with the state the majic numbers are < 25MM AUM and < 6 clients. You do have to notify the state.

Regarding the exams: if you have a 7, you can take the 65; otherwise you have to take the 66. You can get exempted if you have certain professional designations: CFA or similar.

Her interpretation of the incentive fee is that you can charge it as an RIA as long as you also have a high water mark. There is no minimum on the account size.

 

[Maverick74]

Quote from newwurldmn:

Maverick, I got a call back from my lawyer. This is what she said:

In NY, to not have to register with the state the majic numbers are < 25MM AUM and < 6 clients. You do have to notify the state.

Regarding the exams: if you have a 7, you can take the 65; otherwise you have to take the 66. You can get exempted if you have certain professional designations: CFA or similar.

Her interpretation of the incentive fee is that you can charge it as an RIA as long as you also have a high water mark. There is no minimum on the account size.

I know some very big RIA's in Chicago and they all seem to be in agreement you cannot charge incentive fees unless the client has 750k in assets with you. I've asked this question a lot. You see, you need to speak directly with the broker that is going to hold your license. I've talked to TD Ameritrade, Schwab, Options Express, LPL, all them won't let you do it. So it doesn't really matter if your lawyer gives you the OK if your compliance officer won't let you.

 

[newwurldmn]

Quote from Maverick74:

I know some very big RIA's in Chicago and they all seem to be in agreement you cannot charge incentive fees unless the client has 750k in assets with you. I've asked this question a lot. You see, you need to speak directly with the broker that is going to hold your license. I've talked to TD Ameritrade, Schwab, Options Express, LPL, all them won't let you do it. So it doesn't really matter if your lawyer gives you the OK if your compliance officer won't let you.

I do believe you are more knowledgable than me. But I want to reconcile the different information as the contradicting information is coming from knowledgable sources.

Maybe it's a NY vs IL thing?
Personally I was surprized with what she said. I would have thought it would cut along client suitability: sophisticated vs qualified.

The broker that is willing to hold your license is not the one you have to trade with. (Though they generally require some kind of compensation but that is a side agreement). You can let these licenses expire.