My Dream Job
Jack in everything for two and twenty!
This is one of the reasons why I am trading my own account. Aside from a slip-up on Tuesday, I am doing reasonably well slowly growing my account with minimal drawdowns. I'd love to be a CTA / hedge fund manager / someone else who manages OPM.
You can get limited power of attorney to shuffle funds for family and friends. Providing you do not hold yourself out to the public as a financial advisor, the regulations appear to be pretty lax. What about IB? They have some sort of "advisor" facility which allows person A to give person B consent to trade on their account.
If you try this with a few thousand from people you know - once you make clear to them there is a 1% chance they'll ever see it again, but if you don't lose it you'll most likely double it - then consider actually starting a fund.
At that point, hire a good law firm, and a good accountant firm. Ideally some with offshore experience. Make sure you have a good idea about where you will raise the capital before you start generating expenses. Then there is plenty of outgoings from there on.
When recruiting clients, make sure your strategy is formalised and clear, let them see how the fund has performed in the past (even if it is your own account with the same rules - as long as it shows real trades which could scale well with more AUM). Be prepared for some very tricky questions.
There is a lot to do, and I don't know 1% of all what needs to be done yet. I think before you even consider managing someone else's money, you should have made at least 15% on your own account for 5 years, with a maximum 20% drawdown. Others may have more stringent requirements. If you can do that, consider asset management. If you can't do this with your own account, re-evaluate your performance. If you are asking for 2 and 20 on a £1m account, you need to beat a notional 10% return in the stockmarket / mutual funds. You are charging 20k management fees, and 20% of profits as an incentive.
If you make 15%, 150k in a year. You charge 30k in incentive fees, and 20k in basic management fees. That leaves your clients with 100k profit - which isn't that much better than buying and holding in a few indices. Its better, but not by much.
Assume you get £10m to start with. You better make sure you have _all_ your expenses covered out of the management fee of £200,000 - because you may not profit. Some investors will want high water marks etc, so be wary of risky stuff. If you can turn a small profit, then pay yourself the incentive fee. Ensure you have enough personal funds to live off for 2 years to take the pressure off.
Hope these suggestions help - but seek professional advice.
Good luck!
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The above comment is a statement of opinion and is not intended as financial or legal advice. If in doubt, seek professional advice.
