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I would think that as long as the contract is designed as terms of the sale, rather than you actually providing advice, registration wouldn't be neessary
you'd just be a passoive investor
Is that the nobjective?
sorry for the typos "passive" "objective"
I will take the series 65 after this agreement is made...will be a consultant prior
what % of interest? AND what'e the business entity going to be?
the 65 would just make you a rep... Seems that if you are less that 50% you'd have a case that you are not THE firm
it's an 8 year old LLC, 2 money managers (50-50 ownership), provide investment advice to clients with securities / funds held by third party custodians of the client's choice
i can provide an initial cap contribution for a percent of the business...that will determine the percent I get from AUM...I would bring new AUM and provide investment advice for the new and existing AUM
or depending on what i think is best, XXXXX XXXXX cap contribution at all and rely for renumeration solely on aum%
how do i value the company? how and when would i see renumeration?
Valuation? Capitalize profits (their AUM less office lease licensing entertainment other expensews)
I thinbk I would look at it from a return on your investment perspective
Then what you bring in, should be ncremental to yo only
Doesn't that make sense? You value what the company's worth now based on the income it's throwing after expenses ... They give you soe portion of that based on your addition to equitey ... the you get a reasonable advisory fee on top of that for what YOU bring in?
when money managers say they are paid by %aum, when are they actually paid (quarterly?) and do they often simply reinvest their payment into the aum (presuming the funds are invested together)?
yes you your question
Quarterly IS the most common, but that's by contract... I bill my 401(k) clients monthly ... most institutional platforms will let you do it however you like
Typicall the fees are NOT commingled with the maganed accounts however
MAYBE, that's a business decision
IF so, they are broken outby account
haha - i knew that commingling issue would resonate
:) yes, worked in compliance for TOO many years ... but again ,ost of these folks use a service that breaks it all back ou ... If they're usng an omnibus account through a large trust company, the dollars ARE physically pooled for lower trading costs BUT broket back out by accountint and statement
is it typical for a money manager of these sorts (state ria, 30M AUM) to be paid solely on fees based on $aum? what other source of renumeration other that %aum and %ownership if the ria sells exists (these two also provide research reports)...
Well now you're getting into the business mode/potential conflict of interest part of things ... Regardless of size if they are FEE-ONLY (not registered reps of a broker dealer... brokers) then EVERYTHING is probably AUM and then if they do financial planning fees for the plans as well OR sometimes they will do a yearly plan as part of the package (for charging, say 1 to 15.% on AUM)
Now nI get to giv e MY opinion.... IF they're working from commissions from a broker dealer or by selling uinsurance they're not managers, they're comission sales people ... part of a distribution system for financial products
When advising individual I slways say make them tell you whether they're nfee-BASED or fee-ONLY
Fee-based means they've retained sales licenses (series 7, etc( and are charging commissions
Sounds like these guys are probably fee-only
Do you know what they have under management?
YOu have a feel for what they charge clients?
i know they charge 1%aum but am not sure of any other fees. doesnt seem like that much money
I was gonna say that 300,000 gross
BUT 1% is reasonale and in today's market the folks that charge 1.5 and 2 are losing clients
it's a fairly strong base for 2 people and the overheaa's pretty low
Might be a good starting place... tell you one thing, the busines is moving more every day to that model
In MY opinion ... go for the 401(k) and other pensions market
Now you're adding 10 mil at a time
No harder to manage
and thats going to be the place where people will cntinue to npay advisers
pensions as opposed to hnws?
high net worth individ
tow very different markets
might depend on your propersity, natural market, etc
The high net worth market is VERY competitive, has shrunk in the last several years and everybody want them
Here's an idea, go after the hnws that own businesses and capture the 401(k)s involved as well
ok - to be continued.
I just did a yearly education session for a 45 participant 401(k) and the sales guys now love me because I got 43 of 45 people to sign up ... in looking at the numbers, now we won't be top heavy and the sales guys making all the money can really contribute (pre-tax) Now thay all want to work with me individually