What exactly is a Registered Investment Advisor? I know they get a 1% AUM fee. Is there any prestige in this field? Also, it seems like its a 1% percent fee for doing absolutely nothing? How hard is it to start one? Any thoughts about this topic would be appreciated.
Thanks
Becoming a Registered Investment Advisor (RIA) (Originally Posted: 11/20/2014)
RIA's can exercise discretionary investment authority over assets under management. Which almost makes them "mini-mutual funds" or "mini-hedge funds". Though, I know there are differences like you can manage non-accredited investor money as an RIA, etc... Still, investing other people's money for a living, while it may not be a hedge fund, sounds sexy.
Has anyone had any experiences starting a one person RIA shop that you'd like to share?
How fast did you build assets under management (and qualify that with how many years of related experience you've had)? I would imagine the less relevant work experience you've had, the harder it is to acquire clients and build AUM.
Given enough accredited investors, can you later convert it to a hedge fund?
Did anyone get an MBA either before or after doing this?
Most RIAs, discretionary or non-discretionary, allocate their clients' capital to mutual funds and in some cases private equity/hedge funds. RIAs these days are typically picking money managers, not individual securities, so they are not like mini hedge funds.
Not always true. I have several friends who left the wirehouse world to start an RIA and I've seen some work with money managers and others that only pick individual securities. More often than not they simply duplicate the business model that they were working with before the formation of the RIA.
My experience has been with advisors that already had a build book of business and then left to go form an RIA. That being said the ones that I know have been very sucessful in adding AUM but these were experienced pros that could have done the same regardless of where they worked.
Never have known anyone convert an RIA to a hedgefund....why would you want to?
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