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    3 Replies Latest reply on Sep 20, 2013 5:00 PM by aarnainc

    New Business Idea (Need Advice)

    aarnainc Wayfarer

      I had been working with many financial institutions around the world managing their portfolios and investments. Now am looking to start something of my own. The plan is to do the same but at an individual level not institutional level.


      The idea is not to take a single penny from the client for investment into the firm. This is how I plan to do it.


      - Ask the client to open an account with any regulated broker of his/her choice.

      - Fund the account.

      - Ask the client to provide me a limited power of attorney to trade the account.

      - Split profits at the end of the term as decided.

      - No Profit, No Charges


      I was wondering if I need any kind of license or register with any regulator?

        • Re: New Business Idea (Need Advice)
          Moderator Berta Guide

          Congratulations on a great idea, Bhavin! Thanks for sharing your thoughts with the community.


          I'm not an expert on this issue but I think that you would need to have some kind of a broker's license or something to be investing other people's money in the stock market. I could be mistaken since you are wanting the clients to set up their funds in an account with a regulated broker. You may just need to have a written contract with the client specifying what the parameters of your POA & liabilities will be.


          Can anyone in the community offer some advice to Bhavin?



          • Re: New Business Idea (Need Advice)
            koln123 Tracker

            There seems to be a good deal of merit to the basic concept.   You mentioned you have worked with many financial institutions around the world, just confirming, will be based out of the United States for this effort?    Since you managed the portfolios and investments for financial institutions, can you first re-review the regulations of any licenses you may have had during that time?    If that doesn't provide the answer, I suggest seeing if any of the contacts you have developed in the field who are brokers could provide an answer.   If not, what about contacting the securities and exchange commission and asking them?   I would also contact State Government in the state you are in and ask them what laws, guidelines, or restrictions they have. Good Luck

            • Re: New Business Idea (Need Advice)
              aarnainc Wayfarer

              There has been a great deal of confusion with this actually. The institutions which I have been working with take deposits from the client and hence were regulated by authorities like SEC, NFA, CFTC, FSA, etc. And when I told them about this they said since I am not taking any deposit from the client directly and since client has full control over the account you might not have to register with any regulator. But they were not certain about this. When asked a guy from compliance he said that many people actually do this kind of stuff but its either mutually between friend and families so there is no need of any regulator to step in but since I wanted to advertise this and make it a business it gets tricky. Also my brokers in their account application forms have an option for the client which asks them if his account will be traded by someone else. If yes, they are asked to sign a Limited Power of Attorney which gives people like me the authority to trade that account and receive compensation. Again these brokers don't ask for any kind of regulatory registration. But this is limited to a few brokers only and again since I want this to be a full time business and would want to advertise it, leaves me confused.