Targeting RIAs or HNW?

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Dec 27, 2010 10:34 pm

Hi folks, I run separately managed accounts based on a small hedge fund I manage that follows a specific, deep value investing approach (no leverage, long-only, micro-mid cap focus, ~12 month holding period, low turnover).  I have an RIA from a legal and compliance perspective which serves as the manager of the SMA and I'd like to build assets.  My main question is whether what I have would make sense to market directly to indie RIAs vs individuals?

My current SMA investors have on average, account sizes of $200k or so and my strategy requires a $100k min to be cost effective (I hold about 25 positions).  The problem is what I do tends to be a tough sell.  I buy a lot of poor businesses and take a very very deep, fundamental approach to investing and valuation and most people have neve heard of the stocks I'm investing in. 

As a result, I'm in a quandry where I'm not sure I want to cold call HNW because I suspect they generally tend to have all of their assets housed with a priv wealth mgr that doles out the assets to specific strategies and trying to get a good dialogue regarding deep/distressed value investing can be difficult.  In addition I don't have any interest in managing other strategies or doing things most RIAs do, I just want to build a business based on this specific approach to investing.

So would specific indie RIAs have an interest in this?  I live in CT and there are a lot of smal boutique RIAs.  Would it make sense to cold call those RIAs regarding my strategy and then offer some sort of fee split?  I charge 1.5% on my strategy and could split fees w/these RIAs.  That way the RIAs could generally self select clients of theirs that would be a good fit for what I'm doing.

Anyways, any input is appreciated.

Dec 29, 2010 11:57 am

Well, it might help if you list your level of experience, educational background, track record, etc.