Young, great opportunity, considering starting one-man RIA

7 replies [Last post]
celcius's picture
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Joined: 2011-11-04

Hello all,Found this forum via search; actually led me to the post at the bottom of this page here - http://forums.registeredrep.com/forums/rias-independents/my-mid-20s-and-starting-ria-firmCouldn't help but find myself in a similar situation, hope the nice and wise people here can help. History - I'm in my mid-20s and have been at an insurance company for about 2 years now as a financial planner - series 7, 66, 87, 86, life & health, property & casualty licensed.What prompted all of this was my late grandmothers' passing, which left my father with a rather large trust (just shy of $10M) that he will need help managing. I *could* just take it with my firm now but... there is something about my family's money hitting "the grid" that inexplicably irks me. Also, knowing how this business works behind the curtain has me wary of anyone but myself touching this money. I don't trust our analysts because our firm has a strong relationship with BlackRock, and guess where 90% of advisor's clients' money is in... great company, but not for everyone.In college, I studied with a former colleague of David Swensen's over at Yale, whom has established an invincible track record as their endowment's CIO. As that has always been my dream field of work, I am well-adversed in endowment philosophy and intend to manage the trust in this manner. My father understands that this is not his retirement money (he has his own money, and lives frugally anyway) but rather our family's to exist in perpetuity.So I'm now strongly considering setting up an RIA to manage our family trust full-time. I would probably set up an LLC, hire an RIA setup firm to help me register with the state and deal with compliance, and appoint myself as sole IAR. Haven't yet decided how I'll do the brokerage end - either myself or just use another broker. I have already established the base portfolio and have a fantastic accountant that I'll hire to file each year as a business expense.I'm hoping the advisory fee will provide decent income but I'm mostly looking forward to the free time to study for my CFA (or rather PhD if funds/time allows), rekindle my love of jazz, and get more involved in the community. I love networking, and so with more time and patience to do so, I should be able to slowly gain more endowment accounts and AUM over time.What I'm asking you all is..... is my head in the clouds? Am I high? My thought is - I've been blessed with a great opportunity that I'd be a fool not to take advantage of, given my skills, licenses and available resources. Am I missing something huge here? Thank you all so much in advance for your wisdom. I look forward to your thoughts with great interest and consideration.

FVDA_Trade-PMR's picture
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Joined: 2008-09-24

Dear Celcius,Starting an RIA firm with $10mm Assets-Under-Management is wonderful from the get-go.  The question would become, would the expenses you incur operating an RIA firm justify the advisory fee income you might earn (do you plan on charging the account an advisory fee to begin with considering this is a family account perhaps just lowering your standard fee?)My answer to you -- no, your head is not in the clouds.  To start any new firm already with such an account I feel is a blessing.  What a way to hit the ground running plus if the income you generate is sufficient for you to pursue your other ambitions (i.e. CFA, Jazz) why not.  As an independent entrepreneur that is completely your choice and the reason why some Advisors move away from the traditional brokerage firms so they can have the flexibility of their own time.Perhaps, if you really want maximum time flexibility here, you can even hire a separate account manager who you trust and admire and let them manage your Grandfathers Portfolio while keeping you informed of what is going on.  That way, you can collect your advisory fee and have another firm handle the daily tasks of rebalancing and reporting.  There are so many options here.  I say GO FOR IT!!!

golf clap's picture
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Joined: 2011-12-02

Fredrick-I'm in a somewhat similar situation as celcius and I was greatly interested in your advice. Please elaborate more on what you mean by "hiring a separate account manager". Where would be a good place to look for this type of manager? Would they expect their standard fee for managing such an account? And if Celcius just wanted to set the overall investment strategy, stay informed of what is going on, and then pursue jazz, would he still need to start an RIA? That is, assuming he's advising only for his Grandfathers Portfolio. Thanks!

flyboy26's picture
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Joined: 2008-08-10

I would love to talk pm me contact info  flyboy

FVDA_Trade-PMR's picture
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Joined: 2008-09-24

I believe if you are not looking to receive compensation and publicly announce your services as an Investment Advisor, I believe you can establish and account with a brokerage firm of your choosing and have your Grandfather sign the necessary account paperwork allowing you limited authorization on the account (think Limited Power of Attorney).From there depending on the Brokerage Firm you could determine what, if any Separate Account Managers they provide.  The fee can vary depending on the style and the manager.  Some of them also have minimum account sizes too.  It can be all across the board.  I've seen Separate Account Managers go for as low as 25 basis points all the way to 2%.  Again, it is all across the board.For the Wikipedia Defination check out:  http://en.wikipedia.org/wiki/Separately_managed_account

polariscompliance's picture
Joined: 2012-02-22

Hi celcius,If you do decide to start your own RIA, I'm a compliance consultant that asssits advisors in getting registered and establishing their compliance programs in accordance with SEC/State regulations.  Being a former regulator, I know what the regulators want and require to get approved, and I assist advisors with the registration process so they can concentrate on getting their practices set up to get going immediately subsequent to approval.  Please feel free to contact me if you have any questions with the set-up process.Good luck!  Regards,Tiffany ChamberlainManaging Director, Polaris Compliance Consulting, LLCwww.polariscompliance.comtchamberlain@polariscompliance.com

Amber_M's picture
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Joined: 2011-12-26

This has family lawsuit written all over it.  

aeromaks's picture
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Joined: 2007-01-13

polariscompliance wrote:Hi celcius,If you do decide to start your own RIA, I'm a compliance consultant that asssits advisors in getting registered and establishing their compliance programs in accordance with SEC/State regulations.  Being a former regulator, I know what the regulators want and require to get approved, and I assist advisors with the registration process so they can concentrate on getting their practices set up to get going immediately subsequent to approval.  Please feel free to contact me if you have any questions with the set-up process.Good luck! Regards,Tiffany ChamberlainManaging Director, Polaris Compliance Consulting, LLCwww.polariscompliance.comtchamberlain@polariscompliance.comTiffany, this has nothing to do with the original post, but does every one of your posts have to be spamming your compliance business?  Having a signature is enough.  Consider sponsoring the forum if you want to spam for business. =)

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