The following are the top ten considerations to make for starting an investment adviser:
1. You will want to develop and complete your firm’s business plan. You will need to decide on your resignation date and begin to develop your vision and strategy. It may be helpful to consider your existing clients, your strengths, your desired future, and competitive market demographics.
2. You will want to review your current employment agreements to determine whether you are subject to any non-compete or non-solicit provisions. You may want to consider engaging employment lawyers that are well versed in this area of law and familiar with Broker Protocol compliant transitions and non-Broker Protocol transitions.
3. You will need to decide on your firm’s business entity structure (for example, corporation (Corp.), S-Corporation (S-Corp), limited liability company (LLC), etc.) and domicile. You may want to consider engaging legal counsel and tax experts to advise on the business formation requirements and tax implications of varying business entities across jurisdictions.
4. You may want to engage the assistance of legal counsel or compliance experts to assist with licensing and registration requirements at the state or federal level. As part of this process, you will want to evaluate your firm’s initial regulatory assets under management to determine whether your firm will require registration with the U.S. Securities and Exchange Commission or with similar state regulatory authorities.
5. You will want to develop your firm’s business operations and select your firm’s physical office location and move-in date. In setting up your business, you may want to consider engaging an insurance carrier to ensure you have the appropriate insurance policies in place such as an errors and omission policy (E&O) policy.
6. You may want to hire an external information technology vendor to evaluate, assess, and implement your firm’s technological needs for services and software including, but not limited to, Customer Relationship Management (CRM), reporting, billing, and archiving.
7. In preparing client agreements, you may want to consider enlisting the services of legal counsel.
8. You will need to create and implement your firm’s compliance program. You may want to consider engaging legal counsel or compliance consultants to assist in drafting your firm’s legal and compliance documentation including, but not limited to, your firm’s policies and procedures manual and code of ethics.
9. You will need to enter into a custodial agreement and set-up your firm’s custodial platform. You will need to prepare documentation for the transfer of client accounts with the custodian. You will also need to assess what assets that will be converted onto the custodian platform. Once you have entered into proper arrangement with your custodian, you may want to consider employee training in an effort to bolster your firm’s familiarity with custodial operations and compliance issues.
10. You will need to announce your formal resignation. Once you are officially resigned, you will need to complete your transition in by transferring your clients’ assets and continuing to provide ongoing management of your clients’ assets at your new business.