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Redshark View Drop Down
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    Posted: Sep/03/2014 at 8:07pm
My name is James and I am an alcoholic.

Just kidding.  I have been in the industry since 2000.  Most recently, I have been in a warehouse gig for the past four years (7/66).  It hasn't been the greatest experience, but to be fair, I have learned a lot that I do not know that I would have any where else.  I am exploring my options right now.  I have a pretty extensive trading and portfolio management background.  I traded over $100 million, mostly in equities, before I started as an advisor.  So I am pretty knowledgable about various trading platforms and portfolio management.  I am doing my research on RIA and hybrid models.  If anyone would like to give me some free advice, my ears are open.  My existing business model is fee based portfolio management.  I enjoy all aspects of it, so I am looking for a place to land that will translate well with my business model.  My portfolios are scalable and easy to replicate, and they 100% belong to me. One of my biggest 'must haves' is the ability to rebalance/trade all of my clients portfolios seamlessly.  

Thank you in advance for your insights, and I look forward to hearing back from you!
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RIA or hedge fund. Only think of hybrid if you want to sell the occasional annuity on the side. Or you need a new TV and just talked to a UIT wholesaler.
“We are all Antifa” - Hacksaw 9/12/2025
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Redshark View Drop Down
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Are you kidding me?  Annuities are the only reason to consider a hybrid?  Serious question and I hate annuities.
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Originally posted by Redshark Redshark wrote:

My name is James and I am an alcoholic.

!


Oh yeah, yer in the right place.
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RIArules View Drop Down
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I suppose individual bonds on a commissioned basis also need hybrid status. A lot of hybrids also use it for small DCA accounts if they decide to take them.
“We are all Antifa” - Hacksaw 9/12/2025
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Guests Quote  Post ReplyReply Direct Link To This Post Posted: Sep/04/2014 at 1:15am
Who let Ken Fisher in here?
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RipRock View Drop Down
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Originally posted by Redshark Redshark wrote:

My name is James and I am an alcoholic.

Just kidding.  I have been in the industry since 2000.  Most recently, I have been in a warehouse gig for the past four years (7/66).  It hasn't been the greatest experience, but to be fair, I have learned a lot that I do not know that I would have any where else.  I am exploring my options right now.  I have a pretty extensive trading and portfolio management background.  I traded over $100 million, mostly in equities, before I started as an advisor.  So I am pretty knowledgable about various trading platforms and portfolio management.  I am doing my research on RIA and hybrid models.  If anyone would like to give me some free advice, my ears are open.  My existing business model is fee based portfolio management.  I enjoy all aspects of it, so I am looking for a place to land that will translate well with my business model.  My portfolios are scalable and easy to replicate, and they 100% belong to me. One of my biggest 'must haves' is the ability to rebalance/trade all of my clients portfolios seamlessly.  

Thank you in advance for your insights, and I look forward to hearing back from you!

Why is the Wire "Not the greatest experience"
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Redshark View Drop Down
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I am happy enough to provide a detailed insight into the pros and cons with specific details as well as the direction of the business model after I make the jump as a primer for people wanting to go into the business.

Generally speaking, you have to ask yourself if you believe that the 50-60% of your production is a fair price to pay for what you get. I think it honestly is for most of my colleagues and I don't mean that as an insult to them. Many are comfortable selling wire house products, and have no desire to really be investment managers. However, my experience is that the top producers and asset gatherers at the firm are themselves or their team is an investment manager, and I believe the firm wants to adopt this model for all of the producers. However, they are having a hard time selling the concept to most producers.

My second point, I believe is under appreciated and not well understood. Most of the bonus comp is paid as deferred comp with long vesting schedules. It's a catch 22. It's meant as an incentive to stay and it makes it harder to break away. So if you have a greater vision, you have to ask yourself, how long do you want to fuck around with having your comp deferred and potentially losing it. Do you really like the bonus enough to stick around to see it? The longer you stick around, the more incentive you have to never leave. It's a good and bad thing.
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Originally posted by Redshark Redshark wrote:

I am happy enough to provide a detailed insight into the pros and cons with specific details as well as the direction of the business model after I make the jump as a primer for people wanting to go into the business.

Generally speaking, you have to ask yourself if you believe that the 50-60% of your production is a fair price to pay for what you get. I think it honestly is for most of my colleagues and I don't mean that as an insult to them. Many are comfortable selling wire house products, and have no desire to really be investment managers. However, my experience is that the top producers and asset gatherers at the firm are themselves or their team is an investment manager, and I believe the firm wants to adopt this model for all of the producers. However, they are having a hard time selling the concept to most producers.

My second point, I believe is under appreciated and not well understood. Most of the bonus comp is paid as deferred comp with long vesting schedules. It's a catch 22. It's meant as an incentive to stay and it makes it harder to break away. So if you have a greater vision, you have to ask yourself, how long do you want to fuck around with having your comp deferred and potentially losing it. Do you really like the bonus enough to stick around to see it? The longer you stick around, the more incentive you have to never leave. It's a good and bad thing.

If you are expecting a true 80%-92% revenue you may be surprised that equity trading business and fee business at RIA/Hybrid can be much lower if you are active and dependent on platform fees, rent, assistant expense, BS line items for compliance, etc etc

They are great for Non Traded Reit/ VA / C Share business, but I have found its SHITTY for managing portfolios with discretion and a fee.
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Mike Damone View Drop Down
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Originally posted by helado helado wrote:

Who let Ken Fisher in here?

B / B+.  
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Redshark View Drop Down
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Can you elaborate? I don't understand how the fee structure works for RIA. Aside from the cost of doing business part. If I have discretionary accounts for clients and make trades for them, what does the cost and billing look like from the clearing firm? Do they charge me a commission to make a trade? How do I pay a clearing firm for trades?

Do you think an independent b/d model is better suited?
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If you do zero commissionable business, then I would go with a pure RIA.  The custodian doesn't charge you anything (unless you pay the ticket charges instead of the client).  You get 100% of your advisory fee, then just pay your costs out of that.  If you do Hybrid, depending on the B/D they may try to haircut your advisory business and supervise it.

Hedge funds have a high start up cost and it sounds like you are working with individual investors - so probably doesn't make sense.
The true 🤡 was the Biden voter all along.
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So that means, the custodian charges a fee for the trade to the client, plus I charge my fee? That doesn't seem very investor friendly.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Guests Quote  Post ReplyReply Direct Link To This Post Posted: Sep/04/2014 at 12:23pm
Originally posted by Redshark Redshark wrote:

So that means, the custodian charges a fee for the trade to the client, plus I charge my fee? That doesn't seem very investor friendly.


So, who should get paid then?

If they are merely an "investor", they don't need you.
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Originally posted by Redshark Redshark wrote:

So that means, the custodian charges a fee for the trade to the client, plus I charge my fee? That doesn't seem very investor friendly.
You are selling advice, not securities.  Clients cover ticket charges, find a custodian that has reasonable rates.  If you paid the ticket charges, then you would have a financial incentive to not trade the account.
The true 🤡 was the Biden voter all along.
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Or negotiate unlimited traded for a flat aum based fee with the custodian.
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Redshark View Drop Down
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Interesting points. Thanks for your inputs. I try to think like my clients. I feel like they enjoy paying an asset fee that encompasses trading cost and advice. I suppose it comes back to how you sell your service. In my experience, I might only have 25% turnover. That happened last year. But some years I could have over 100% turnover. Anyone have any thoughts considering that scenario? Not trying to be combative, genuinely curious about the behind the scenes cost associated. Thanks again guys.
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Originally posted by helado helado wrote:

Or negotiate unlimited traded for a flat aum based fee with the custodian.

I am too active (mainly stocks) to absorb ticket charges and I do not want to pass that on to the client. At the Wires there are no ticket charges and no flat .20bs platform fee that I now pay making my margins very similar in either Hybrid RIA or Wire. 

Be aware of it,
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Guests Quote  Post ReplyReply Direct Link To This Post Posted: Sep/04/2014 at 1:24pm
Originally posted by Redshark Redshark wrote:

Interesting points. Thanks for your inputs. I try to think like my clients. I feel like they enjoy paying an asset fee that encompasses trading cost and advice. I suppose it comes back to how you sell your service. In my experience, I might only have 25% turnover. That happened last year. But some years I could have over 100% turnover. Anyone have any thoughts considering that scenario? Not trying to be combative, genuinely curious about the behind the scenes cost associated. Thanks again guys.


Also not trying to be combative, but your clients "enjoy paying an asset fee...".  I'm not sure anybody enjoys paying a fee.  Trading costs are simply what they would pay elsewhere.  If your service includes trading costs, then I think you are in the wrong business. 


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What I meant is that paying one flat fee for trading and advise is something that I think people are comfortable with. Obviously, I don't have experience otherwise.
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