Hedge Funds And Financial Planning

  • If you should be an economic adviser and wish to begin using hedge funds within your financial planning practice the steps below might assist you to navigate this process. Note: While this short article was written for financial advisers, others may also find some useful tips and resources here.

     

    1. Speak together with your broker-dealer as applicable about available hedge funds through their organization and what the process would be to buy hedge fund through their compliance/reporting requirements. Make sure and get a definite understanding of what licenses the broker-dealer requires you to have as well.

     

    2. Become a continual learner of hedge funds, read 50-100 posts on my hedge fund blog , donate to newsletters by FinTag, Fierce Finance, and the Albourne Village. This organic education (vs. being spoon fed by consultants) can pay dividends in regards to evaluating fund managers and negotiating fees.

     

    3. Evaluate your current book of business. Who's an accredited investor? Who will soon become one? What number of assets or % of your total book is of people who would be considered accredited investors?

     

    4. Conduct some research on hedge fund consultants and explore the various options available to you. You could not have to utilize a consultant but it may help be connected to a strategy consulting firms that see hundreds of hedge funds a year and would very happy to introduce one to who they have selected as "best of breed" in the industry.

     

    5. Try to customize your portfolio allocation software or reports so that you can show your clients 3 typical asset allocation strategies. One might suggest a 5% allocation to hedge funds with others allocating say 11% and then 20-25% as more aggressive options. They're not hard and fast numbers but they could help start a conversation around their usage of hedge fund sin the near term.