Quote from BostonKiller:
I was basically just wondering what kind of credentials are needed to take other people's (private person's) money and trade/invest?
Any sort of a license? Is Series 7 it? Or am I way off mark here?
Any help is appreciated!
Thank you.
I am going throught this right now and it has taken me a long time and alot of effort just to find what I need to do.
I trade through Interactive Brokers and have a few clients setup on their Friends and Family Accounts. It makes things very easy to trade. I highly suggest checking them out.
Here is a link that you should read and study. It tells you who to contact when you are an advisor.
http://www.interactivebrokers.com/en/accounts/advisors/regulatroyRegistration.php?ib_entity=llc
You haven't said what you will be trading.
For futures if you have less than 15 clients and less than $400k you do not have to register with the NFA. You do have to notify NFA that you are claiming an exemption from registering though. Once you go over $400k or more than 15 clients then you have to register. In order to register you must take the series 3 exam and pass it. Then you must do a butt load of paperwork. Do Disclosure Documents, contracts, and financial statements.
For stocks it is a little bit tricky. If you are managing less than $25 million then you don't have to register with the SEC. If less than $25 million then you need to check with your state Administrator. Each state will have different rules. For example, I live in WV and it says that if I have a place of business in the state then I must register. However, once I am registered then I can manage money from people in the state or in other states that allow de minimus exemptions. The exemptions are normally 5 people or less in other states. If I go over 5 then I have to register in that state. You should call your state Administrator to get more information. There are some states who don't require you to register if you have less than X number of clients, even if you have a place of business in their state, you are lucky if you live in one of those states.
Here is the problem you will run into though. In order to register you must become a Registered Investment Advisor or a Registered Investment Advisor Representative.
Registered Investment Advisor
In order to register as RIA then you must pass the Series 7 exam and you must be sponsored to even sit for the exam. In order for someone to sponsor you they will want you to work/clear for them. So you will be in a catch 22 if you want to be independent. If you find out how to do this let me know. After you pass your exam then there are tons of other regulatory stuff you need to do.
RIA Representative
You must pass a Series 65 exam and you don't have to be sponsored to take it. However, in order to be a RIA rep you must work for a firm/advisor and trying to find one that will let you be independent is next to impossible. Of course there are other regulatory stuff you must do after you pass your test.
You should probably just call your state's administrator and find out exactly what you need to do. I called the one in my state and told him what I wanted to do and asked him what I needed. Surprisingly, he told me that all I needed to do was take the RIA rep route. I was surprised because I do not work for any firms and not affiliated with any advisors. That is what he told me and now i am studying for the 65 now.
Eric
