Trading the funds of others

[Craglet]

Hi

I'm a part-time currency trader, I've been trading for roughly 8 years and have been turning a modest profit for a few years now. I have had interest from a few friends and family about trading some of their funds. I realise this is a tricky thing to do legally, but, I thought it may be possible to do this without requiring a ASFL via a trust structure with a corporate trustee of which all beneficiaries are directors and shareholders of the company.

Of course I'd like to charge a fee for my work, and I was thinking this could be done through using the discretionary trust. Does anyone here know if such a thing would be possible? It would only be for about 5 people at most and I would not be advertising my services to anyone else.

Perhaps someone here has experience with this sort of thing or maybe an accountant or lawyer can help. If it's not possible to do legally I won't do it at all.

Thanks

 

[Gringotts Bank]

Hi

I'm a part-time currency trader, I've been trading for roughly 8 years and have been turning a modest profit for a few years now. I have had interest from a few friends and family about trading some of their funds. I realise this is a tricky thing to do legally, but, I thought it may be possible to do this without requiring a ASFL via a trust structure with a corporate trustee of which all beneficiaries are directors and shareholders of the company.

Of course I'd like to charge a fee for my work, and I was thinking this could be done through using the discretionary trust. Does anyone here know if such a thing would be possible? It would only be for about 5 people at most and I would not be advertising my services to anyone else.

Perhaps someone here has experience with this sort of thing or maybe an accountant or lawyer can help. If it's not possible to do legally I won't do it at all.

Thanks

There's been quite a few threads on this in the past. Try searching Google ASF (ASF's search doesn't work too well... not sure why).

 

[Craglet]

There's been quite a few threads on this in the past. Try searching Google ASF (ASF's search doesn't work too well... not sure why).

Thank you, I will give that a try. Hopefully I can come up with something.

 

[luutzu]

Hi

I'm a part-time currency trader, I've been trading for roughly 8 years and have been turning a modest profit for a few years now. I have had interest from a few friends and family about trading some of their funds. I realise this is a tricky thing to do legally, but, I thought it may be possible to do this without requiring a ASFL via a trust structure with a corporate trustee of which all beneficiaries are directors and shareholders of the company.

Of course I'd like to charge a fee for my work, and I was thinking this could be done through using the discretionary trust. Does anyone here know if such a thing would be possible? It would only be for about 5 people at most and I would not be advertising my services to anyone else.

Perhaps someone here has experience with this sort of thing or maybe an accountant or lawyer can help. If it's not possible to do legally I won't do it at all.

Thanks

Look into setting up a partnership.

Write up your own partnership deed, get the partners details, sign the dotted lines... register for ABN and off yo go.

 

[Craglet]

Look into setting up a partnership.

Write up your own partnership deed, get the partners details, sign the dotted lines... register for ABN and off yo go.

Aren't partnerships a bit of concern due to personal liability affecting the other partners? One of persons interested for instance has their own business, if it went south I wouldn't want affecting my funds or anyone else.

 

[luutzu]

Aren't partnerships a bit of concern due to personal liability affecting the other partners? One of persons interested for instance has their own business, if it went south I wouldn't want affecting my funds or anyone else.

From what I know, you and partners set up a partnership agreement - with the details and conditions and liabilities, responsibilities, obligations... who the general partners are etc.

Then the funds are pooled into that partnership's account and you as the general partner do with it as stated in the deed. Get your cut and divvy up the profit among the partners as per their shareholding.

So I don't think the partners other businesses or liabilities will affect this particular partnership, at least not the other partners' holdings of it.

But see an accountant or a lawyer and have it set up properly if there are concerns.

That or you can set up a pty.ltd company with the others as directors, you being the managing director.

These would mean there is no need for financial services license as it's a private company and all involves are considered partner in the venture. AFSL would apply to when you advise or invest money for clients. Make them partners and that should solve it.

But again, see lawyer and accountant. I had only done it once a while back and all through BusinessLink or whatever it was called.

 

[lusk]

Hi

I'm a part-time currency trader, I've been trading for roughly 8 years and have been turning a modest profit for a few years now. I have had interest from a few friends and family about trading some of their funds. I realise this is a tricky thing to do legally, but, I thought it may be possible to do this without requiring a ASFL via a trust structure with a corporate trustee of which all beneficiaries are directors and shareholders of the company.

Of course I'd like to charge a fee for my work, and I was thinking this could be done through using the discretionary trust. Does anyone here know if such a thing would be possible? It would only be for about 5 people at most and I would not be advertising my services to anyone else.

Perhaps someone here has experience with this sort of thing or maybe an accountant or lawyer can help. If it's not possible to do legally I won't do it at all.

Thanks

Your risking more than money doing this for family/friends they will expect upside without any downside.

I've done it before, if l could get more than bank interest they would be happy, then you make a heap for them and its not enough they want more. Its really not worth the drama.

 

[Craglet]

From what I know, you and partners set up a partnership agreement - with the details and conditions and liabilities, responsibilities, obligations... who the general partners are etc.

Then the funds are pooled into that partnership's account and you as the general partner do with it as stated in the deed. Get your cut and divvy up the profit among the partners as per their shareholding.

So I don't think the partners other businesses or liabilities will affect this particular partnership, at least not the other partners' holdings of it.

But see an accountant or a lawyer and have it set up properly if there are concerns.

That or you can set up a pty.ltd company with the others as directors, you being the managing director.

These would mean there is no need for financial services license as it's a private company and all involves are considered partner in the venture. AFSL would apply to when you advise or invest money for clients. Make them partners and that should solve it.

But again, see lawyer and accountant. I had only done it once a while back and all through BusinessLink or whatever it was called.

Thank you very much luutzu. This is exactly the kind of information I've been looking for, I will be seeing an accountand and lawyer in the near future to discuss this. I'm glad that there is a very good chance that it can be done this way legally.

Your risking more than money doing this for family/friends they will expect upside without any downside.

I've done it before, if l could get more than bank interest they would be happy, then you make a heap for them and its not enough they want more. Its really not worth the drama.

Thank you for your concern lusk, it is valid. I'll look into various ways of reducing this kind of outcome.

 

[Wysiwyg]

Some issues I see are :-
1) the psychological pressure to succeed where losing your own money was not as big deal.
2) being able to continuously adhere to a strategy through the worst drawdown.
3) sleep deprivation due to worry or what is happening in the market right now, Especially the 24 hour FX market.
4) modest recent past success doesn't invoke confidence
5) Deductions = tax, commissions, holding (IRS) costs, your fees, fund distributions

"It's not as easy as it seems", she wrote.

 

[Craglet]

Some issues I see are :-
1) the psychological pressure to succeed where losing your own money was not as big deal.
2) being able to continuously adhere to a strategy through the worst drawdown.
3) sleep deprivation due to worry or what is happening in the market right now, Especially the 24 hour FX market.
4) modest recent past success doesn't invoke confidence
5) Deductions = tax, commissions, holding (IRS) costs, your fees, fund distributions

"It's not as easy as it seems", she wrote.

These are certainly some potential risks that need to be minimized, even before commencing to trade with you own funds yet alone someone else's.