Starting an Asset Management Company

Question

I want to get your opinion about how I can quit my job asap. I read the book “Rich Dad Poor Dad” long time ago and agree that the way to have freedom is to have tangible assets working for you.

I am a stock broker (Investment Advisor) in Canada and am pretty happy about my job. The problem is income would stop if I am not in my office. I want to be away from work and still make money.

I think one of the ways is to start my own Asset Management Company. This way I can generate funds that could pay me money even if I am not there to manage it.

What do you think? Do you have similar thoughts? Do you know where I can get a blue print/business plan of an Asset Management company?

Barriers:

I have a market neutral trading strategy that works already. The problem is I need to be a licensed portfolio manager to start an Asset Management Company in Canada. I need the securities commission to approve my trading strategy and I need initial start up fund to start it. I think I am looking at around 3 million USD for start up fund.

Answer 1

You have two issues to solve here.  

First, you must acquire the appropriate license.  If your company will sponsor your acquisition of the license, that will work in your favor.

The other obstacle you face is that you need to establish a client base that will trust you with $3MM in invested capital.  If you try to do this while working at your current firm, with the intention of luring your clients away when you leave, you could be setting yourself up for real problems.

I would suggest that you get your license first.  Then, find some other people with similar mindsets to yours, and see if you can partner together for this.  If they already have enough investment capital to meet your $3MM hurdle, perhaps they can add your new fund as a family option to their portfolio.  That way, you are separate, but able to manage your own fund.

Where things go from that point will depend on your ability to grow the investments and your ability to market your fund, which you could also do through others, under selling agreements.

Either way, I wish you luck!