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11 Replies Latest reply: Oct 13, 2012 9:20 AM by Moderator Melinda RSS

Starting a Wealth Management Business

ICM_LLC Newbie
Currently Being Moderated
Hello All,

I first would just like to thank all that contribute to this amazing forum. I joined less than a week ago and have really enjoyed the great information and experiences shared on this website. In reading what this forum has to offer I am fully confident that I can find the help and guidance I need to make my startup project successful.

I am a recent college graduate with a B.S. in Finance and I would like to start my own wealth management firm. The business would be owned and operated by myself and a friend. Wealth management businesses are plentiful but after interning with a major NYC wealth management firm I realized that they all do the same thing and have rather similar performance. I would like to change this by creating a wealth management business that caters to upper middle class individuals that are seeking alternative invest opportunities. My company would provide this through investing the clients funds in the Forex market.

I have developed proprietary software with a friend that assists me in trading the Forex market. In addition to this, my friend has a Profit and Loss statement from Sept 08 to January 09 that show returns made through utilizing some of the benefits of my software. I realize that almost everyone that comes here or on other message boards that trade forex aim for astronomic returns. Having traded forex and been involved with the forex market for 2 years, I realize that astronomical returns are possible. More importantly, those returns are not sustainable. My company will provide clients with consistant results.

Currently, my partner and I have a partial business plan completed. We are still working on 5-year financial projections as well as a marketing plan. I have posted here for a few different reasons. The first and most important is that we need funding since we are each recent college graduates. We each only have about $1-2K to our names. My friend has 2 clients that he manages Forex accounts for. Our goal is to start and LLC and take on more client accounts. How do you feel we can most effectively get our name out and get more clients? We figure we need at least one year of solid results for clients in order to really push and advertise our business. Even still, we need some clients now so that we can provide results and also stay afloat. Our dream right now is to get about $150k - $300k to trade in our conservative strategy to start and get a serious return statement going for 2009. In addition to this we each would like to get Series 3 certified although it is not a requirement to do managed Forex accounts for individuals.

I would really appreciate ideas and comments from the community, especially those with experience in wealth management or the finacial industry in general.
  • Re: Starting a Wealth Management Business
    GrowthCurve Novice
    Currently Being Moderated
    Take it from a guy who was a CPO, CTA, and had a Series 3 over 20 years ago -- when I was 21.

    There's nothing new about what you're suggesting. Everyone thinks that futures trading is easy and that they can make money doing it. And there is no shortage of guys who think that they can just put together a couple million dollars, make 100% a year on the money, then keep 20% of the profit for themselves.

    This has been done to death.

    The only thing you can do is to just start doing it. Scrape together $5,000 and start trading -- real money, not on paper.

    If you can't scrape together $5,000 of your own money, it's going to be hard to position yourself as a financial genius who should be managing other people's money. I know this sounds harsh, but it's the real world.

    If you have some success with that, then you'll talk to people about it. If you have statements they will probably get interested. Everyone loves to make money. After all, this is how Bernie Madoff marketed his $50 billion scheme. People wanted in so badly because they heard all this talk about big money being made.

    If you can really make money with this program, other money will follow. People are greedy.

    As you know, though, there's a huge difference between trading $5,000 and trading $5 million. Don't expect the same results.

    Start trading.
    • Re: Starting a Wealth Management Business
      ICM_LLC Newbie
      Currently Being Moderated
      Thank you for your thoughts. At the moment we have a profitable statement from trading a $5k account for a client as well as a profitable statement statement from trading a $10k account. My personal trading has taken place over the last year but I have very limited statements since I would get $1k and trade it for a month or so before I had to pay tuition and rent.

      I appreciate your comments and want to know your thoughts on how to be different from all of those that have come before me since you seem to have experience with seeing similar types of businesses as I am proposing rise and fall.

      Thank you.
      • Re: Starting a Wealth Management Business
        ICM_LLC Newbie
        Currently Being Moderated
        I think it is worth mentioning a little more about our proprietary software. We do not have some Trading Robot, Expert Advisor, or Technical Analysis system that we define as "proprietary software". Our proprietary software is based on a large database that we have created. We are able to search this database through algorithms that we have created on our own for high probability trade opportunities. We have spoke with one investor that wanted us to sell our proprietary software for a few hundred dollars as he explained that our trading software is "priceless".

        I know some very wealthy individuals (assets in excess of $150 million) but I am not sure of the best way to approach them with my startup business idea. The problem is getting people around the uneasiness of dealing in Forex.
        • Re: Starting a Wealth Management Business
          DomainDiva Master
          Currently Being Moderated
          .....uneasiness of dealing with the Forex....

          Yes but numbers are just numbers....and the people that get it...will not be looking at WHAT you are trading they will be looking at numbers.
          • Re: Starting a Wealth Management Business
            GrowthCurve Novice
            Currently Being Moderated
            Also, you're not starting a "wealth management business" as this implies that someone would give you a good chunk or all of their assets to manage their overall investments and finances.

            You don't want anyone investing more than 1-2% of their net worth with you because what you're doing is speculation. Your investors should be able to take a complete loss of their capital with you and brush it off. You're what's called an "alternative investment."

            I agree that the lower-cost way to get this started would be to provide an information service. There are publishers who sell this kind of trading advice for hundreds or even thousands of dollars a year. And as an "educator," you're not always bound by the laws and regulations of a true manager or adviser.

            Of course, the upside is better for managing actual money. If you managed only $5 million (a pittance in this game) and could really earn a 30% return for your investors, your cut would be about $300,000. Not bad. And of course, if you get to $20 million and make "only" 20%, your take is about $800,000. Not bad, either.

            I think the idea that you start a blog is a good one. Put up some of your trades and get people interested in what you do, then start a paid information service and an active management program.

            Like I said, if you are for real and can make money in this business, investors will be very easy to find.
            • Re: Starting a Wealth Management Business
              ICM_LLC Newbie
              Currently Being Moderated
              I was part of a free educational forex website that did very very well in the markets. Following that I worked for and called trades for a subscription forex site for about 4 months. After calling thousands of pips in profitable trades we have not found it easy to gain accounts. My friend takes a less formal approach to offering managed accounts he has one large account of $100k and a few small ones of $10-30k. He is an amazing trader and has a successful PnL that is more than 1 year long and it has not really helped him get clients. I am try to take a more formal approach and act as a small alternative investment boutique. Please let me hear your ideas, I really want to make this idea happen. I realize it may take 1-2 years to develope into something that can support me but I want to have everything ready so that when the ball gets rolling it doesnt stop.
  • Re: Starting a Wealth Management Business
    ilyab0dner Novice
    Currently Being Moderated
    Perhaps right now is not the best time to do wealth-management. Too many people are scared and trust is going to be very tough to gain. On the other hand, as a small business owner you will have a tough time raising funds to open doors. Banks are tightening up and personal credit is very ineffective regardless of your score and/or collateral. More and more business owners are turning to alternative financing and developing a business credit score. I would recommend you do a little bit of research online for strong business credit. Try to type into google "strong business credit" (just like that in quotes) and see what companies pop up. The process of building business credit is not too lengthy and is definately worth the investment.

     

    Sincerely,

     

    Ilya Bodner
    Small Business Owner
    Initial Underwriting Group
  • Re: Starting a Wealth Management Business
    DomainDiva Master
    Currently Being Moderated
    I am with Growth Curve on this one but with a twist....start a website and make public what you do, post your trades and start a blog and get people involved. Post your pictures and credentials. Make sure you post information about yourselves that can be verified. Be transparent.

    Maybe start on FaceBook or Linkd In. Start trading and go public with what you are doing. There are people out there managing information for people to help them manage wealth. Start there, then if it grows, it grows into something else as well. Don't force it, start trading.

    PS..thanks for the disclaimer that astronomical returns are not sustainable....you stressed consistency, good for you.
  • Re: Starting a Wealth Management Business
    hzram Newbie
    Currently Being Moderated

    Hello,

     

    Now over two and a half years later, I was wondering, how did the story end? Were you able to launch a successful wealth management/alternative financing business?

     

    I'd like to learn from your experience.

     

    Thanks!

  • Re: Starting a Wealth Management Business
    Moderator Melinda Master
    Currently Being Moderated

    Hi ICM_LLC,

     

    You received lots of valuable information. Please let us know what you have decided. Best of luck to you!

     

    Melinda

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