By Kristie Lorette Updated March 16, 2019
Starting your own investment company requires a lot of planning and forethought. You will need to incorporate your new business and register with the appropriate agencies and the state government. Not only do you need a plan for your investors, you need a business plan for your company if you want to see it successfully launch.
Pick a Good Name
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Choose a name for your business that conveys to potential clients that you can help them with their investment and financial planning needs. For example, you may choose a name such as “Miami Investment Advisers” or something similar. Conduct an online search to see if another company is already using the name you are thinking of, and check with the secretary of state for your state to see if a business has registered the name already.
Write a Business Plan
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Your business plan should include a complete marketing plan. Decide which types of clients you plan to target: business owners, high net worth individuals, middle- income households or some other target group. Discuss the goals and objectives for your business, including short- and long-term goals. Write out detailed marketing strategies on how you intend to reach your target audience and convince people to become your clients.
Incorporate Your Business
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Incorporate the investment firm. Contact the office of the secretary of state for the state where you are opening the business and obtain the application you need.
Register Your Company With the State
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Write the articles of incorporation for the investment company and submit it along with the incorporation paperwork to the secretary of state. Pay the fee for incorporation, which varies by the state but is included on the instructions the secretary of state provides to you.
Register with the SEC
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Register with the Securities and Exchange Commission (SEC). Investment companies are required to register with the SEC.
Register With the IARD
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Register with the Investment Advisor Registration Depository (IARD), an electronic filing system for investment advisers. Every investment firm is required to register on the federal level with the SEC and must also file on the state level with a self-regulatory organization (SRO), a private entity that operates in a government-regulated industry and oversees its users or members. The Financial Industry Regulatory Authority offers state registration through its FINRA Entitlement Program. You can submit your application online (see Resources).
Prepare Your Marketing Material
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Obtain marketing and information packets from the funds and investment companies you will be representing to clients. Contact the different funds and companies you will be recommending to clients to request marketing materials and information packages, to register as a representative for their products and to obtain any applications or forms you need to complete for clients.
Market Your Company
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Create marketing material to promote your own business. Create a brochure, website, business cards, advertisem*nts and other marketing materials you need to promote your business and reach potential clients. Social media could prove to be a goldmine: Share quality content regarding investments and personal finance from your accounts. Over time, you can develop a relationship with current and prospective clients.
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Another option is to offer to give seminars to community groups. You could even offer to purchase snacks or sandwiches for attendees: They can enjoy their meal or snack while you give a presentation on investment options.
FAQs
Starting your own investment company requires a lot of planning and forethought. You will need to incorporate your new business and register with the appropriate agencies and the state government.
Can anyone start an investment company? ›
Starting your own investment company requires a lot of planning and forethought. You will need to incorporate your new business and register with the appropriate agencies and the state government.
How can I start my own investment firm? ›
First, you need to determine the type of firm you want to start and the type of investments you want to focus on. Second, you need to obtain the necessary licenses and registrations. And third, you need to market your firm to potential clients.
Can I start my own investment fund? ›
Starting an investment fund of your own can be a profitable, useful step in building an investment business. However, an investment manager has many issues to consider up front before beginning the marketing and fundraising process.
How does an investment company make money? ›
Investment companies can be privately or publicly owned, and they engage in the management, sale, and marketing of investment products to the public. Investment companies make profits by buying and selling shares, property, bonds, cash, other funds and other assets.
How much does it cost to start an investment company? ›
Depending on the specific nature of your investment company, you may also incur additional costs such as legal fees, accounting fees, and software licensing fees. Typically, starting an investment company costs $50,000 to $100,000.
Can I use an LLC to invest in stocks? ›
Just like an individual, an LLC can invest in the stock market. Unlike using an LLC to invest in real estate, opening a brokerage account for investing in stocks, bonds, ETFs (exchange-traded funds) and mutual funds comes with significantly less risk to your personal assets.
Do investment firms make money? ›
How do investment management firms make money? The more profit they make for their clients, the more money investment management firms make. They charge their clients a management fee and take a percentage of the profits from the investments.
How much money do you need to start a private equity firm? ›
The minimum investment in private equity funds is relatively high—typically $25 million, although some are as low as $250,000. Investors should plan to hold their private equity investment for at least 10 years.
How do private investment firms make money? ›
Private equity firms invest the money they collect on behalf of the fund's investors, usually by taking controlling stakes in companies. The private equity firm then works with company executives to make the businesses — called portfolio companies — more valuable so they can sell them later at a profit.
In terms of $10,000 being enough money to start investing, the answer is absolutely. Even if you're able to invest only a small amount initially, it's an important step toward achieving your financial goals.
Is $5,000 enough to start investing? ›
Do you think you need a lot of money to invest — like $50,000 or even $100,000? If so, think again. The reality is that you can begin investing with as little as $5,000. In fact, this is all you need to start building a nest egg that serves your future sell quite well.
How much money do you need to start a fund? ›
With respect to establishing a U.S. hedge fund, average hedge fund startup costs range from $50,000 to $100,000, and first- year operational costs usually total $75,000 to $150,000.
What are the three types of investment companies? ›
The three types of investment companies are mutual funds, closed-end funds, and unit investment trusts.
What is the biggest investment company in the world? ›
BlackRock
BlackRock (BLK) is the largest investment firm in the world. It manages $8.6 trillion in assets as of Dec. 31, 2022.
How do investment managers get paid? ›
A management fee for investment management services is frequently a percentage of the assets they're managing on your behalf. So if a financial advisor is managing $1 million worth of investments for you, and they charge a 1.5% management fee, you'd pay $15,000 on the year.
What are the qualifications for an investment company? ›
An RIC must derive a minimum of 90% of its income from capital gains, interest, or dividends earned on investments. To qualify, at least 50% of a company's total assets must be in the form of cash, cash equivalents, or securities.
Why setup an LLC for investing? ›
Setting up an LLC for investing is a safe way to build a group of investors and take advantage of the liability protection and tax benefits given to LLCs. Investing as an individual brings added risks to your personal finances and leaves you solely responsible for raising the money to invest.
Can I start a hedge fund with my own money? ›
Starting a hedge fund is not for just anyone with a good hedging strategy. It's likely you'll need startup capital in the tens or hundreds of thousands of dollars, plus a hedge fund attorney. Also, your strategy and how it performs in the current market conditions may determine the success of your hedge fund.
