Becoming a fund manager?

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Old Nov 29, 2004, 10:47am   #1
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Joined Nov 2004
Becoming a fund manager?


Iíve just discovered this website, so this will be my first post. I hope Iíll be forgiven if itís not on the appropriate board.

Can anybody out there offer some pointers on the following?

What does it take, in terms of qualifications etc, to become licensed to be a fund manager considering my background?


I am 38 years old, have been a company director for 18 years and have a good track record. Unfortunately, having not attended university, I lack academic credentials.

Also, after having an interest in investing since my teen years, I enjoy managing my own stock portfolio (more than running my business!) and over the past 12 years or so have done consistently well.
I now feel confident enough in my investment strategy that I am now at the point where I have decided to sell my business and put the proceeds into a private fund and do something I enjoy.

Some of my friends and family have suggested that I should consider starting an investment management business and are prepared to commit funds.

Before I even consider being responsible for other peopleís money I would like some idea if first of all it is possible for someone without a degree and no background in professional money management etc to become licensed.

What steps would I need to take? What red tape is involved? What hoops do I have to jump through?

Thanks for any advice.
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Old Nov 29, 2004, 11:47am   #2
Joined Jan 2003

I am in Aust and type the following from experience. I believe my comments are relevent to the UK. You can basically do whatever you want as an individual. People can give you their portfolios to manage and you can do it on an employee/ employer basis.

If you want to pool monies i.e group client funds into a single account then you will probably need a license to operate onshore unless you operate in a company structure. However to issue shares and raise capital from the general public you need a prospectus or disclosure document. This can be expensive to produce but I have created over a dozen public companies through a compliant template prospectus that is only 30 pages long. However, the funds are only ever raised because of the people involved not the quality of the disclosure document!.

If you went overseas (say BVI) and set up a company you could then attract investors offshore but this is fraught with inadvertant breaches of local law and can preclude you from accepting money from family, friends and domestic people.

Basically, I say - set up a company (plc or ltd) and whack together a compliant disclosure and then source the funds. Even if you raise GBP1m it is a start and if the returns are good you will eventually receive more money than you can handle.

A good idea is to get an accountant and a lawyer onthe board and give them profit share or similar for their expertise and iput to keep costs low.

Please realise I have extremely limited knowledge of the UK FSA laws so please do not rely on anything above. But as your laws are a derivative of the Antipodean ones I figure you must have picked up a few common threads from us ;-)



P.S - I have one of these companies still open for anyone in Aust ;-)
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Old Nov 29, 2004, 12:02pm   #3
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The FSA will be more than happy to help you out here but make sure you have a large lorry to pick up the paperwork.
It is fine to invest your own money but as soon as you are trading for non-professional clients you need to get regulated. It is a fairly lengthy process, if you have any hair, you will likely not have by the end of it.
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Old Nov 29, 2004, 12:13pm   #4
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In order to manage other people's money, you will indeed need to be licensed.

This means that you, and your company, will need to be regulated by the FSA (Financial Services Authority).

In order for you to be personally licensed by the FSA you will need to satisfy a number of requirements.

Firstly, you will need to demonstrate that you have the necessary qualifications / experience to manage other peoples money. Don't worry , having a University degree is NOT a pre requisite.

You will howver need to pass a couple of exams in order to become a "registered representative". There are different categories and activities for which you can qualify. For investment management, you will need to be registered as "CF27" (This allows you to manage money. "CF21" allows you to offer advice).

The exams are fairly straightforward and consist of 2 multiple choice papers. One of those papers will cover Regulation, which everyone must take and pass (the pass rate is quite high, I think you have to achieve at least 80% correct answers or you fail). The second paper will require knowledge of your area of specialisation (securities /derivatives etc).

You will be required to learn and understand a huge amount of information, so don't get complacent in thinking that multiple choice is a walkover. If you don't learn all the detail, you won't pass. I know of a number of intelligent people with good degrees fail the exam a couple of times. I also know people without degrees who studied hard and passed first time.

You can get details about the exams from The Securities Institute in London. You can study by distance learning if you wish.

Once you pass the exam, that doesn't mean you are registered. You will need to send your pass certiificate to the FSA along with your CV and complete a questionnaire detailing all your qualifications / experience. Most importantly, they will check to see that you pass the "fit and proper person" test.

This means that you must demonstrate a sound financial background (no history of bankruptcies, good credit record, no criminal record, haven't been fired from previous employers for misconduct etc. etc.).

Once you have done this, you need to be employed by an FSA registered company to finally achieve registered status.

Getting your company FSA registered takes much longer and is quite tedious (it will cost you £5,000 non refundable ) just to complete the application form wheteher or not the company achieves regulated status. You will need to demonstarte that the company has sufficient capital adequacy requirements to operate in it area of chosen activity, meets reporting and compliance standards etc.

This may all sound complicated, but it it is achievable. It will take time and money however. Being 38 and without a University degree is not a barrier.

Be aware, that if you do manage people's money without being properly qualified and regulated
you can face 2 years in prison.
Long of hope, short of disaster.
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Old Dec 23, 2004, 11:50am   #5
Joined Dec 2002
Qualifications needed to become an investment banker


I'm just wondering what specific qualifications are needed to become an "investment banker". Are these different to "Fund Manager" requirements - or do the two job descriptions basically refer to the same role?

Would Accountancy qualifications such as CIMA or ACCA be of much help as a good starting point/prerequisite into investment banking?

I ask because a friend of a friend has just started training to be a CIMA qualified accountant. I heard that after 3 years of qualifying he wants to go and work in "The City" as an Investment Banker. I suppose that becoming a qualified Accountant is a good idea, because if the Investment Banking stuff doesn't work out, he can always work in Accountancy. But are Accountancy exams a prerequisite, or necessarily all that relevant to investment banking?

Thanks a lot


Last edited by jtrader; Dec 23, 2004 at 12:25pm. Reason: Spelling
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Old Dec 23, 2004, 12:21pm   #6
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Joined Jan 2004
ACCA has always a been a farily good way in as have Acturial qualifications. Lot depends on where you got qualified. I knoiw ACCA's working for the big 4 in the finance sector have always had good opportunities presented.
"I refuse to tiptoe quietly through life
only to arrive safely at death"
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Old Dec 23, 2004, 1:03pm   #7
Joined Nov 2003
hmm Jayesh Manek springs to mind, running the manek growth fund, he was a chemist and caught the eye by winning the telegraph investment comp (if memory serves correct) caught Templeton's eye, gave him 5 million to work with, used to follow him a bit years back when he launched the fund. Initially above his chemists shop. Did well for a while but that was at the market top and he was looking for growth stocks and value, ok long term i suspect using regular investments pound cost averaging for 20 years maybe.

maybe you can get power of attorney on your friends and families money to select the investments on their behalf, as long as they have a similiar risk profile which matches your fund. hmmm can you get power of attorney for Joe publics monies? operating outside the FSA ??

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Old Dec 23, 2004, 1:47pm   #8
Joined Jul 2004

>>Once you have done this, you need to be employed by an FSA registered company to finally achieve >>registered status.

can being employed by his own company suffice for this requirement ?
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