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TestingTheWaters View Drop Down
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    Posted: May/31/2018 at 2:48pm

Full disclousure: I'm here to ask questions regarding how financial advisors manage their clients funds. Quick bits about me are that I have my masters in finance from a top 3 school in finance. My background includes spending years at Morgan Stanley (non-wealth management roles). I left MS a while back to build my investment management track record (trading) so that I can start my investment management company. My performance is great but my AUM is only 500k. I started with 10k two years ago and grew my account. Most of the funds are my personal funds and some were allocated to me by family and friends. I'm having the hardest time raising capital from investor (hedge funds/CTA/CPO etc.) I'm registered with the NFA for futures and foreign exchange related activities.

Question: As a financial advisor, who actually manages your funds?

My understanding is that, most financial advisor (if not all), never actually execute the trades on behalf of their clients but rather allocate those funds to mutual funds/etfs/SMA/hedge funds/CTAs? Am I correct? What's the best way for me to market myself to independent financial advisors? I was thinking of putting together small presentations and just walking into independent advisors in my area and trying to buy some time so that I can show them my performance etc. and hope that they allocate their funds to me? Given that my AUM is small, I'm only charging incentive fees and zero management fees. 

Please take my word for "my performance is great" as I am not selling anything on this forum. I'm just trying to understand the best way to approach this and don't want to waste anyones time trying to explain my performance etc. In short, I turned 10k to about 300k in two years. My worst drawdown was 8.9%. 300k + family friends allocations = 500k in AUM. My returns are negativily correlated with SP500, I trade foreign exchange (80%) and equity futures (20%).

Given that you guys would be my target client, what are your thoughts and advice? What should be the best approach that you'd take if you were in my shoes. I want to grow my AUM.

Thank you in advance.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Jagger Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 2:58pm
Hi my name is ilya. Beer
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Post Options Post Options   Thanks (0) Thanks(0)   Quote B24 Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 2:59pm
FWIW, no financial advisor is going to trust you with client money until you have a real track record, preferably GIPS compliant, that has some real length to it, is verifiable, and includes actual client accounts (not just your mom's money).

Oh, and nobody is really going to care about a masters degree and your years as an admin at a wirehouse. Literally EVERY 3rd party investment manager out there has better paper credentials than that.

Not trying to be flippant, just being real.

I would suggest getting a job with an existing investment advisor and creating a strategy for them that they don't currently offer.
"If Bellicheat pulls that rabbit out of his a$$ with this kid at quarterback, I'll personally kiss his ring." - Sporsfreak, 09/20/16

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Post Options Post Options   Thanks (0) Thanks(0)   Quote luvindy Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 3:05pm
Didn't read the OP, but I just use tips I get from Sportsfreak here on this board.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Moraen Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 3:17pm
The problem is any good financial advisor knows what you learned in your Master's program - that your returns are unsustainable net of fees, over the long-term, which is what advisors need to take into account.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Guests Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 3:32pm
Just PM me next years winners and I’ll PM my contact info so we can make this partnership official. My clients are already excited
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Post Options Post Options   Thanks (0) Thanks(0)   Quote TestingTheWaters Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 3:34pm
Originally posted by Jagger Jagger wrote:

Hi my name is ilya. Beer
Hi Tongue My name is ELi.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote TestingTheWaters Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 3:49pm
Originally posted by B24 B24 wrote:

FWIW, no financial advisor is going to trust you with client money until you have a real track record, preferably GIPS compliant, that has some real length to it, is verifiable, and includes actual client accounts (not just your mom's money).

Oh, and nobody is really going to care about a masters degree and your years as an admin at a wirehouse. Literally EVERY 3rd party investment manager out there has better paper credentials than that.

Not trying to be flippant, just being real.

I would suggest getting a job with an existing investment advisor and creating a strategy for them that they don't currently offer.
  
I actually have a lot to say about this but I won't say a lot but I will say a little: 

Fact: CTA and hedge fund index has under-performed buy&hold strategy in the past 2 decades. Most of these CTA/Hedge funds have horrible returns. Campbell and Company is local in Baltimore. They manage 5 billion. In 2016 they were down 6%, 2017 down 10% and this year I think they are down about 15%. Yet financial advisers "trust" their funds with hedge funds like those?

Obviously my account is verifiable and real. I wouldn't be here making this post otherwise. Compliance depends on which products you are trading.. my products fall under NFA and I'm complying with them. I have my statements verified by external auditors that are the BEST in this industry for providing performance audits to hedge funds/CTA. Nor would a client be "giving" me their funds, the funds are held under managed accounts, CTA for SMA accounts only have power of attorney to trade rather than withdrawal and run away with it.

I mean I'm on a financial advisor board so I hope I don't offend anyone but I can say the same about financial advisors? What actual investment management skills do financial advisors have? All they do is go long stocks and forget about it and collect fees from their clients? Their clients could actually do the same. Point in case is, when you started out.. unless your daddy and his friends forked over a billion dollar over to you so that you can "advise them" by buying random stocks.. and then praying we are in a bull market.. if that did not happen.. you did have to start somewhere? I'd imagine at that point your credentials were worst than mine?

Sure, Campbell and Company has better paper credentials than me because they've been in the business for 10+ years and have a few PHDs working for them. Masters/PHD or whatever someone would uses to market themselves will hardly help them actually make money in the market but that's a different topic.

I get it, my track record is short and my AUM is small, but I'm making money and I'm not charging fees that Campbell and Co is charging. I understand this is a tough challenge but I'm willing to pursue it. Raising funds is impossible but the white house did announce kim kardashian is going to be the lead advisor for prison reforms so there may be hope for people like me?


Edited by TestingTheWaters - May/31/2018 at 4:00pm
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Post Options Post Options   Thanks (0) Thanks(0)   Quote TestingTheWaters Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 3:55pm
Originally posted by Moraen Moraen wrote:

The problem is any good financial advisor knows what you learned in your Master's program - that your returns are unsustainable net of fees, over the long-term, which is what advisors need to take into account.


I absolutely learned nothing new during my masters. It was a complete waste. I spent 100k+ in tuition so I can use it as marketing purposes. That was the only purpose and use.

You are absolutely correct. Hence the reason most CTA/Hedge funds have under-performed the markets. As I said in my OP, I wouldn't be charging management fees (which 90% of funds charge). The only fee I would charge is if I made you money.

Well what are advisers doing now? They're holding mutual funds, ETFs, SMA. All returns are being eaten away by fees. Are you an advisor? Do you manage your funds in-house? I'm trying to understand what small/median size independent advisors are doing.
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TestingTheWaters...I just don't think anyone cares. It's like you're trying to be a will and estate lawyer for will and estate lawyers. Or an accountant for an accountant. I just don't think it's a fundamentally good target or niche to make a business out of. 

Also, your business model in terms of only charging if you make money I think is also a tough sell (presumably some form of profit share)...Who's gonna keep the lights on in down years for you? It's very hard for that type of structure to work no a days unless your Jim Simmons and your company is Renaissance Technologies. On top of that, it's known that profit sharing and management fees (like the 2/20 model) incentivise people in such ways that may not be best for your clients. 

Hedges funds still hold assets because there is just so much in there. It takes time for stuff to move out. Check morning star for yourself and look at the fund flows for the last 10 years or so. The majority of funds flows to 2-3 investment companies. Vanguard and Blackrock, maybe statestreet?

I don't think you have a viable business here, at least with your target demographic. Open it up to another niche and maybe just maybe you'll have a better chance. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote TestingTheWaters Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 4:18pm
Originally posted by TheStupidInvestor TheStupidInvestor wrote:

TestingTheWaters...I just don't think anyone cares. It's like you're trying to be a will and estate lawyer for will and estate lawyers. Or an accountant for an accountant. I just don't think it's a fundamentally good target or niche to make a business out of. 

Also, your business model in terms of only charging if you make money I think is also a tough sell (presumably some form of profit share)...Who's gonna keep the lights on in down years for you? It's very hard for that type of structure to work no a days unless your Jim Simmons and your company is Renaissance Technologies. On top of that, it's known that profit sharing and management fees (like the 2/20 model) incentivise people in such ways that may not be best for your clients. 

Hedges funds still hold assets because there is just so much in there. It takes time for stuff to move out. Check morning star for yourself and look at the fund flows for the last 10 years or so. The majority of funds flows to 2-3 investment companies. Vanguard and Blackrock, maybe statestreet?

I don't think you have a viable business here, at least with your target demographic. Open it up to another niche and maybe just maybe you'll have a better chance. 

Valid points. 

Forget about me and my performance and my shitty paper credentials. Pretend I'm the head of Renaissance Tech for a second and I'm doing a business survey because I'm still waiting on the answer to my original question: 

Who manages your funds? Is it you? Is it external? Or are you keeping it in-house and giving it to Charles swabb if that's the umbrella you operate under? And do you simply not care about if your client is making/losing money as long as they stay your client. I read a book years ago, it said, the number one thing clients ask from financial advisors is NOT returns but rather if they pick up the phone when they call them. So under that model.. do you guys even care about returns?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote TheStupidInvestor Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 4:26pm
Originally posted by TestingTheWaters TestingTheWaters wrote:

Originally posted by TheStupidInvestor TheStupidInvestor wrote:

TestingTheWaters...I just don't think anyone cares. It's like you're trying to be a will and estate lawyer for will and estate lawyers. Or an accountant for an accountant. I just don't think it's a fundamentally good target or niche to make a business out of. 

Also, your business model in terms of only charging if you make money I think is also a tough sell (presumably some form of profit share)...Who's gonna keep the lights on in down years for you? It's very hard for that type of structure to work no a days unless your Jim Simmons and your company is Renaissance Technologies. On top of that, it's known that profit sharing and management fees (like the 2/20 model) incentivise people in such ways that may not be best for your clients. 

Hedges funds still hold assets because there is just so much in there. It takes time for stuff to move out. Check morning star for yourself and look at the fund flows for the last 10 years or so. The majority of funds flows to 2-3 investment companies. Vanguard and Blackrock, maybe statestreet?

I don't think you have a viable business here, at least with your target demographic. Open it up to another niche and maybe just maybe you'll have a better chance. 

Valid points. 

Forget about me and my performance and my shitty paper credentials. Pretend I'm the head of Renaissance Tech for a second and I'm doing a business survey because I'm still waiting on the answer to my original question: 

Who manages your funds? Is it you? Is it external? Or are you keeping it in-house and giving it to Charles swabb if that's the umbrella you operate under? And do you simply not care about if your client is making/losing money as long as they stay your client. I read a book years ago, it said, the number one thing clients ask from financial advisors is NOT returns but rather if they pick up the phone when they call them. So under that model.. do you guys even care about returns?

I manage my own investments. As I am in the business, I would get very little value from someone else doing it for me.

Investment Returns are important to an extent but there are much more important things regarding a persons finances that have to be considered. Of course we care about a clients return, but we care about a lot of other things too. I feel you are under the assumption that investment management is the only thing we offer as a service. It is not. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote luvindy Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 4:42pm
I hate this thread very badly.
8/31/12,Sportsfreak:
"If Barak wins this election, or appears to be clearly winning, we are all fucked. Market will tank big time."
Dow 13,090 S&P 1406
5/23/13 UC:Dow 20k before 20% crrectn Dow 15,
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Post Options Post Options   Thanks (0) Thanks(0)   Quote TestingTheWaters Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 5:01pm
Originally posted by luvindy luvindy wrote:

Didn't read the OP, but I just use tips I get from Sportsfreak here on this board.
Originally posted by luvindy luvindy wrote:

I hate this thread very badly.

Thanks for providing your second by second analysis. Below is your transcript:

t+0.. luvndy saw a post and quickly opened it. did not read it but acknowledged that he has opened the post
t+1.. luvndy reads the post
t+2.. luvndy goes and drinks water
t+3.. luvndy reponds back to the post to let everyone know that he hates the post
t+4.. luvndy checks back to see what happened post his knowledgeable post


Edited by TestingTheWaters - May/31/2018 at 5:03pm
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Until you have real money to run your strategy no fund of fund or family office will talk to you. I too had a great track record and it took me 18 months to get seeded.

Most advisors do not use alternatives so you are wasting your time there. You need fund of funds, family offices, pensions, and big non-profits (that understand how to manage large pools of capital for an indefinable basis).
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Post Options Post Options   Thanks (0) Thanks(0)   Quote City1134 Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 8:10pm
Are you genuinely asking or just posting a vailed attempt at a pitch? There’s a guy here named APAC that may be looking for a partner. With his prospecting skills and your ability to deliver Alpha, the world is yours for the taking.
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I dont want some punkass kid managing my money.
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Originally posted by PEACH_cm PEACH_cm wrote:

Until you have real money to run your strategy no fund of fund or family office will talk to you. I too had a great track record and it took me 18 months to get seeded.

Most advisors do not use alternatives so you are wasting your time there. You need fund of funds, family offices, pensions, and big non-profits (that understand how to manage large pools of capital for an indefinable basis).


And he needs a down market to show his strength. 💪

Let’s be real for a minute. The returns he’s talking about could just have easily went to zero, but I’m probably still calling bullshit. 450% annualized.....I’d like to hear the winners. I guess the next Peter Lynch is probably on AH
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Post Options Post Options   Thanks (0) Thanks(0)   Quote PEACH_cm Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 8:36pm
Originally posted by bc2051 bc2051 wrote:

Originally posted by PEACH_cm PEACH_cm wrote:

Until you have real money to run your strategy no fund of fund or family office will talk to you. I too had a great track record and it took me 18 months to get seeded.

Most advisors do not use alternatives so you are wasting your time there. You need fund of funds, family offices, pensions, and big non-profits (that understand how to manage large pools of capital for an indefinable basis).


And he needs a down market to show his strength. 💪

Let’s be real for a minute. The returns he’s talking about could just have easily went to zero, but I’m probably still calling bullshit. 450% annualized.....I’d like to hear the winners. I guess the next Peter Lynch is probably on AH
trading futures can be very profitable, I don't doubt the returns. The problem is starting with 10k.... not much skin in the game. And if he is confident in his strategy why take on the burden of investor assets? Just keep ringing the register until you run it up to life changing money.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote LA Broker Quote  Post ReplyReply Direct Link To This Post Posted: May/31/2018 at 11:58pm
Originally posted by luvindy luvindy wrote:

I hate this thread very badly.


MILF.....feel better?
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