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Sales Fees per AUM

  #7 (permalink)

New York, NY
Trading Experience: Beginner
Platform: Vanguard 401k
Broker/Data: Yahoo Finance
Favorite Futures: Mutual funds
Posts: 1,039 since Jul 2012
Thanks: 713 given, 2,129 received

If your goal is to make money through introducing capital, it's a very efficient business and hard to beat these brokers.

Most fund capital is concentrated in the U.S.

Only about 3% of the U.S. can invest in 3(c)1 funds, yet this portion represents a very small % of the total AUM.

For you to make money from this, you need to know the investors who can focus on serious CPOs or hedge funds. (For example, you'll need to find someone who can invest in chunks of $1M so that at best you're aiming for $50k with 1 closed lead which makes it comparable to a upper middle-class real estate brokerage job.) These are often broadly called 'institutional investors' but we're generally referring to those who meet QP or QEP definitions. They compose a majority chunk of the AUM but the actual people you can talk to here are less by a factor of about 100. So there's not many investors who you can make a sales commission from.

Then realize that the large GSAM/JPMAMs know nearly all of the active investors in this group and most of the exciting, upcoming fund managers that these investors are matched with. (My firm was relatively unknown and wasn't even in the fund space but it took them 1 year to discover us.)

To differentiate yourself from GSAM/JPMAM you almost definitely need an amazing network and conversion rate (convince a tech entrepreneur to invest in his first hedge fund) and should offer some other kinds of brokerage services. When I was in high school, I could probably count the number of QPs I knew by 2nd degree with 1 hand.

Last edited by artemiso; July 12th, 2017 at 02:08 AM.
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