Advice for managing money professionally

[ValueArb]

Today I just filed my first management fee invoice to my client through Interactive Brokers. I have been managing her account for about a year and a half under a profit sharing agreement, because of my job I was too busy to figure out how to do it last year so I'm billing her all at once. 

 

She is a relative, and I also have some other friends and family interested in having me manage their accounts. I'm planning to quit my job this year in order to do investing full time for them.  So some questions for any professionals out here.

 

1. Do I have to become an RIA? If so do I need to do it now, or can it wait until I am ready to take on clients outside of friends/family?

2. How hard is the Series 65 exam?

3. How hard is it to register in your state (I'm in Arizona). 

4. Is there anything else I need to be doing while running money for friends and family?

5. How much money should I be running before it makes sense to start an investment partnership (hedge fund)?

 

And any general advice or warnings are always appreciated, thanks!

[Dinar]

Make sure that you have enough money to pay the bills assuming the business does not make any money for three to five years.

[ValueArb]

20 minutes ago, Dinar said:

Make sure that you have enough money to pay the bills assuming the business does not make any money for three to five years.

 

Thanks, my personal portfolio is large enough to pay my bills as long as I continue my historical performance and don't have a down year. Last time I invested full time I went 7 years before my first down year. 

 

But if I do have a down year I can always go back to software development, salaries are ridiculous now. 

Edited January 3, 2023 by ValueArb

[flesh]

Work another year or two and save like crazy, or three if necessary. Be in a position you can cover your bills and have your liquidity grow assuming moderate returns before you quit. It can be hard to go back to skilled work. Industry changes and you change. It's difficult to see what it took to get to a high paying job because some of it was probably luck that your not aware of. I was in a industry that paid me well for 10 years, took 5 years off, came back for 1.5 years with a difficult learning curve, left when a kid came.... now it's gone and there's nothing else I know how to do that pays six figures working 20 hours a week. 

 

The older you get the more difficult it is to grind it out. Do it now not later. Personally, I became a better investor incrementally as my psychology changed as a result of my portfolio growth. You should never be in a position where you need returns this year. You should be in a position of abundance ideally. 

 

 

[Gregmal]

14 hours ago, ValueArb said:

1. Do I have to become an RIA? If so do I need to do it now, or can it wait until I am ready to take on clients outside of friends/family?

2. How hard is the Series 65 exam?

3. How hard is it to register in your state (I'm in Arizona). 

4. Is there anything else I need to be doing while running money for friends and family?

5. How much money should I be running before it makes sense to start an investment partnership (hedge fund)?

 

1. IBKR offers a loophole with friends and family, IIRC up to 15 accounts

2. a doorknob can pass it

3. can you right click a mouse? That and like $45

4. breathe

5. If you have enough of your own money to be comfortable and are any good at investment you shouldn't "need" anything. Even a few hundred K if you can do 20-30% thats generating multiples of the average persons annual salary in little time. The real question is whether you want to deal with lawyers, paperwork and regulation. Ive preferred to just stick to LLCs or SPVs if folks Im comfortable with want to partner up on one off basis. Otherwise whats the point? I dont charge friends and family for my opinion or some help. So it would be all downside and headache. 

 

Edited January 3, 2023 by Gregmal

[ValueArb]

31 minutes ago, Gregmal said:

1. IBKR offers a loophole with friends and family, IIRC up to 15 accounts

2. a doorknob can pass it

3. can you right click a mouse? That and like $45

4. breathe

5. If you have enough of your own money to be comfortable and are any good at investment you shouldn't "need" anything. Even a few hundred K if you can do 20-30% thats generating multiples of the average persons annual salary in little time. The real question is whether you want to deal with lawyers, paperwork and regulation. Ive preferred to just stick to LLCs or SPVs if folks Im comfortable with want to partner up on one off basis. Otherwise whats the point? I dont charge friends and family for my opinion or some help. So it would be all downside and headache. 

 

 

Thanks Greg!