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For those that are passionate about investing, starting an investment firm can be a great business opportunity. You’ll get to immerse yourself in the world of investing while helping to secure and build the wealth of clients. Below are a few tips for starting a successful investment firm.

Get industry experience

Before starting your own firm, it’s a good idea to experience working for another investment firm or a bank as an employee. This will help you to understand how such companies are run, offering inside knowledge on how to structure an investment firm, how to market it and how to collaborate with colleagues. On top of experience in the industry, it could also be worth getting a formal education.

Know your target audience

There are many different types of investment firm – each with different audiences. Will you be handling small investments or large investments? What types of securities will you be investing in? Will you be dealing with mutual funds, close-ended funds or unit investment trusts? Each option can make a difference on the type of clients you will be targeting and therefore the type of marketing and branding that you will need to adopt. It’s important that your marketing strategies are aimed at the right types of customer. There are marketing companies that specialize in promoting companies within the financial sector – it could be worth outsourcing some help from one of these companies to make sure that your marketing is effective. 

Lawyer up

Investing always carries risks. When an investment doesn’t pay off, some clients may want to sue. In fact, lawsuits against investment firms are pretty common. Having a lawyer at your side will help you to stay protected. Lawyers may also be able to offer legal advice on aspects such as compliance or writing up contracts, which could help to minimize the risk of being sued. Make sure to hire a lawyer that specializes in finance – specifically investment if possible. 

Consider GIPS verification

GIPS (Global Investment Performance Standards) is a set of worldwide guidelines that are put in place for investment firms to follow. It is not mandatory that you adhere to these guidelines, however you may find it easier to attract clients by considering GIPS verification – this certification proves to the world that your practices are honest and fair. To become GIPS verified you need to keep clear records of your policies and procedures. There are professional advisors who can help you to accumulate the necessary documentation. 

Keep up with accounting

It’s important for any business to correctly file its taxes. When it comes to investment firms, tax can often be quite complicated – especially if you are investing in multiple different types of instruments or dealing with investments in other currencies. You should consider hiring an accountant to help calculate your taxes. Investment firms can face a lot of scrutiny compared to many other businesses – it’s much easier to get caught out for not declaring all your tax.