How to Start a Money Management Firm
Owning your own business has always been the American dream, but starting a money management business presents a special set of challenges. There are a number of decisions that must be made regarding your business model, method of compensation and other facets of your business. Licensing and regulation will also play a major role in how you structure your firm.
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Instructions
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Decide whether you want to be compensated by commission or on a fee-only basis. The commission route may pay you more, depending upon the type of business you do, but the financial media is training the public to look for fee-only advisers.
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Acquire the licensure you will need for your business. If you decide to charge commissions, you will need to get your Series 7 and 66 licenses as well as your life and health insurance licenses, if you plan to do anything with life or health insurance, annuities or long-term care. You will also need to get your Series 4 and 8 licenses and possibly the Series 24 if you are going to manage other employees (see Resources).
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Find a broker-dealer to sponsor you if you are going to charge commissions and become securities licensed. If you are going to do professional money management, you will probably need to find an independent broker-dealer that provides the trade execution services and back office support you will need to run your business effectively.
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Formulate a specific investment philosophy that you can explain to your clients. It may also be wise to find an area of money management to specialize in, such as derivatives or value investing. You may also want to target a specific type of client, such as speculators or retirees.
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