Hi All,
I am contemplating opening up an investment company where I would manage people's money. I am most serious about this endeavor, if for any other reason I think people are fed up with the slick talking financial advisors and would appreciate an honest investment advisor/manager whose motto will be;
"I promise you nothing."
Besides which I can certainly do better than Bernie Madoff or any of those other now-bankrupt Wall Street morons.
Regardless, I would very much appreciate all my readers' advice before I commit the resources, time and energy into setting this up, primarily whether or not any of you would even consider using me as an advisor (as this blog would be the initial and primary means by which I would advertise such services).
Thoughts, opinions, advice, commentary?
23 comments:
I'd definitely let you handle my investments. Do it!
I think it's a great idea. And if I had any terrestrial money left after the depredations of Wall Street and Obama, you would be a great person to give it to.
Here's and article for you Capt'
http://www.financialpost.com/executive/story.html?id=1655272
Captain,
I'm a fan of your blog, but I must implore you to approach this with caution. The regulators have missed Madoff and Stanford and a slew of other scams, but one thing they are very good at is making things difficult for the little guys trying to do the right thing. Don't underestimate the time and expense necessary to evidence that you are following all of the rules. In the current environment, that cost is only going up. If you do decide to move forward, please feel free to contact me (or someone) for assistance.
I'd be interested.
However:
1)Would being in another country (Canada) complicate it?
2)I can only invest a small amount (a few hundred)monthly.
3)Would it consist of advice only or would you handle investing the money for us?
I think you should do it, but, provided you understand one thing:
You have to be a little crazy to try and start a new business in this country, and you have to be willing to get crazier to keep it running.
Aside from that, I second ScottH's questions - it is something I would seriously consider.
Cap't:
Advice is only worth what you pay for it, and this advice is free.
Before you decide to jump into this endeavor, realize the overwhelming majority of the people out there are not interested in hearing the facts, or the truth. For every faithful reader who thinks you really have the smarts to wind your way through the financial labyrinth that is the global investment market, there are a thousand people that just want to hear that you will provide 10-20% returns.
These big investment banks are not that size because the investors want to be educated. They are that way because they believe Vince when he says the ShamWow will make them more attractive to the opposite sex, or whatever it is he says.
You are going after a very limited market segment there. That strategy could backfire, or work out incredibly successfully.
If you're doing this for money, just get a real corporate job. I can't imagine someone with your background, major, and gpa would have a hard time getting a job.
my advice, OFFSHORE IT! Better yet, help people legally move assets offshore and help manage them, including giving advice on tax issues.
Me personally would never ever buy US based assets again. NEVER!
Keep us posted, always looking for a "new adventure"! Maybe a investment seminar on some exotic island or in a far off country.......
If you do this with a very good, very experienced business lawyer (and preferably a law firm) on retainer then you are less dumb than I think you are.
Yeah, Captain, I think the poster above me hit it on the head. It reminds me of Jerry Maguire-- the idea of having an honest man as a financial advisor seems like a fantasy too good to be true.
That being said, I would most definitely employ your services. But I've never started a business and I have no idea how difficult it is in the current environment (ok, I have an idea).
Cap,
I read your blog daily and I agree with 90% of your comments.
Your Macro views are concise and on the money.
I disagree with the micro. When I saw you were offering "investment courses" I must admit I put you in the same pot as most of the other economists I have met over the years. (An economist is someone who knows 100 ways to make love, but doesn't know any women...) Old joke but you must admit it fits.
The only way to know if you will be good at managing money is to do it.
Take $50,000 of your hard earned money, put it in an account where you withdraw 1% per month. Then invest the money as you see fit, for a minimum of 5 years. Document your trades and track record on the various websites available for mutual fund tracking.
If after 5 years you can show the investing public a record that stands equal to Ken Fisher (or any other good money manager), go for it.
As Harry said, the Madoff et al scandals are on the front page of the paper, but their are many very good money managers available to the average investor. I think you should prove you are in proficient before you accept to risk someone's hard earned money.
JMHO
The sad thing is, even with no experience, you're probably better than 90% of dolts out there who try to manage our money. If you're going to do it, now is a good time to get started. After every crash will come a subsequent rebuilding of the market...unless our civilization collapses, and then printed money will probably be useless.
Everyone else is saying to lawyer up...and I bet that's a VERY good idea.
I would not let you handle my investments directly. I don't know you (though you seem a decent sort of fellow), and you're in a country with a crazed socialist government that might down the road put currency controls or confiscatory taxes in place the way Britain did for a very long time.
Also, I just don't want the headaches of having anything whatsoever to do with the IRS (I'm Canadian) which seems worse than Revenue Canada.
I would, however, seriously consider subscribing to a newsletter of yours.
I'd want to know your general investment strategies (I have a partial inkling from lurking on your blog for some time).
Ideally a centrepiece of the newsletter would be a model portfolio, along with monthly suggested buys/accumulates/sells. If in a given month you urge standing pat, I'm fine with that, but then you should at the very least urge which element of the portfolio you'd put NEW money into for that month.
(or weekly. Most newsletters seem to be weekly; I care more about quality research and measured moves than frenzied buy, sell, churn approaches).
I'd put quite a small amount initially into my replication of such a portfolio; say about $10,000.
$100 as a first year subscription for something at least monthly would be fine by me; that would represent about 1% management fees.
The nice thing about a newsletter (especially if it's electronic) is that the margins are very good.
It also takes advantage of your writing skill. You could quite easily continue to blog much of the broad theory of what you write in the newsletter; just let newsletter subscribers get it (say) 2 weeks in advance. (I'd steer clear of any specific recommendations in the blog)
The not so nice thing... well, until you start getting broader recognition, you're probably not going to have huge subscriptions.
I'd suggest a renewal price of $20/mo or $200 a year after the first year.
This is on par with other newsletters that get offered to me (and I subscribe to one or two out of the dozens I get sent via dead-tree mail).
Having this newsletter wouldn't prevent you from actively managing money either.
You could offer your various subscription tiers
-introductory $100
-silver $200
-gold $300
-platinum $500
with the differences being 1-2 guaranteed answered questions a year (via email) for the first couple of tiers and perhaps 5 questions a year for gold and unlimited for platinum, plus a complimentary inspection of existing portfolio and extending advice in the case of platinum.
As someone else said, though, free advice is worth what you pay for.
I'll also echo the advice: get the advice of a lawyer, especially if you're going to accept Canadian clients as well as USAians. Offering a newsletter with a very carefully worded disclaimer might be the safest way of dealing with Canadian clients.
-Chris
Financial advice, yes. Advice on women, no :)
My take on this would be to try to hook on with a rapidly expanding but small financial services business such as the "Mutual Fund Store" or "Wealth Enhancement Group" or similar outfit and eventually run one of the new locations. An alternative would be to find a small, one person company that is ready to expand.
I think that you'd have to get some certifications, training and licenses to be able to get the credibility to start your own advisory service.
Another thought would be to develop an advisory newsletter with a hefty annual subscription fee. That could be done in conjunction with your business.
Last, being an advisor to pension funds or endowment funds is another option.
Good luck.
My advice, as someone who spent a good bit of time working in finance: find a really good lawyer who specializes in securities law. Finance is the second most regulated industry in the country (the most regulated being nuclear power), and you really want to make sure you're on the right side of the law. A little Googling on "Investment Advisors" and "Investment Advisors Act" will at least give you some resources on the law.
Take the law seriously: there's nothing an ambitious DA likes better than the headline "Prosecutor Busts Crooked Investment Advisor!"
It's a good idea to find a reputable brokerage to handle custody and trade execution (Charles Schwab has a good reputation, but I'm sure most of the larger firms are capable of handling this). The record keeping requirements for investment advisors are substantial because--duh!--you're handling other people's money.
If you're going to do this, do it because you want to spend the next 20 years managing money. This is a field where you will assume serious responsibility for your clients' assets, and like other professions with similar responsibility (airline pilot, doctor, etc.) should not be entered on a whim.
Ever considered publishing an investment newsletter (like the Motley Fool)?
That bypasses all the cost and liability issues with money management, lets non-US citizens (also known as Small Dead Animals readers) play along.
I'd be interested in how you would approach this market based on some of the scenarios you have described here(high inflation, depreciation of the US $)
I've been contemplating the same thing. I'm working on a CFA charter. After that I'll get a Series 7 and 63 license. My goal is to find one filthy rich guy or fund who wants a no BS fund manager.
If honesty were a winning strategy, I think it would be used more often. When I interviewed with Merrill Lynch it was clear they were more interested in salesmanship than ability to manage an account. But look where they are now.
Yes, I think you could succeed. I hope you could. The problem is selling yourself. Most independent FAs have years of experience with an institutional money management firm before they make their own brand. You usually need a track record. Most of these Indies take their book of business with them from the Big Name.
Sadly, most people are not interested in managing their finances, not even if some other person does it for them. So I don't see much potential beyond the regular readers of your blog.
However, perhaps you could convince some of the guys and gals who you know personally in Minneapolis. Don't underestimate word-of-mouth advertising!
I know you won't make promises, but I need you to convince me that you can achieve a yearly 30% RoR if you want to handle my money.
I would be interested in a subscription newsletter along the lines of Chris's comments. I don't mind doing some investment work, but I anticipate problems in figuring out where to park my money with the upcoming investment environment. I have become a believer in stock analysis after taking one of your courses, but realize that it is a lot of work/time, something I have in short supply. Subscription fee to cover your recommendations would be worth it. Also, you seem to have a handle on some of the important short- mid-term issues such as markets don't always recover (Japanese), and GDP depression due to governmental restraints (no coal or oil production, cost of capital for businesses, etc. Help would be appreciated as to stocks/bonds/commodities and other investment vehicles to avoid inflationary devaluation. Insights into other potential imminent market disruptions (9/11, now NK nukes, pandemics,etc.) would also be worth paying for.
I would recommend against it! As someone with some experience in the investment management industry (Portfolio manager, Hvd MBA, CFA, Series 7, head of mktng/sales for several investment management firms) I believe that you may be under-estimating the difficulties you would face in such a venture. Investors of all stripes are looking for real-time investment results. I'm not sure how your life experiences translate into a reason for someone to hire you to manage their assets.
Best of luck
Hey. Slightly late to the discussion, I know. An anonymous poster above said that you should start with your own money, and I agree. Jim Cramer once said "don't invest with anyone who hasn't already made $10 million of his own money".
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