The 10 Facts of Alternative Investment Brokerage
In the world of alternative investment brokerage, there are tales of great success and immense frustration. After hearing thousands of stories, I realized there were 10 basic fundamentals which predicted a broker’s success rate. Though these concepts may seem like common sense, when the time comes, many brokers choose dreams over realism.
In this article, we’ll outline the facts of alternative investment brokerage, while providing great tips for aspiring brokers. This will help you grasp the facts of the industry, and adapt to future circumstances as an alternative investment broker. What are you waiting for? Scroll down and take a look!
The 10 Facts of Alternative Investment Brokerage
1. Brokering Alternative Investments is Not Very Easy: Even though you can be very successful brokering alternative investments, it takes a lot of effort. First, you have to define the market you’re going to broker. In most cases, this will either be the forex, futures, private placement, or hedge fund markets. After you choose the market to broker, the next step is finding a good alternative investment opportunity. Though it seems like this would be the toughest part, you haven’t heard the next step yet. Once you have completed the two prior stages, you then need to do the hardest thing of all, raise equity. As you can see, brokering alternative investments is hard, BUT thousands of self-made millionaires make it look easy.
2. Alternative Investment Brokers Need the Right Personality: Everyone is NOT born to be an investment broker. It takes an aggressive person who is willing to speak to thousands of people to find that one big opportunity. If your AMBITION and VISION don’t set you apart from others, you will NEVER succeed as an alternative investment broker. In addition, when brokering volatile investments, it can take you on an emotional roller coaster. All you need is one bad trade to devastate an investor’s account, and at that point, you’ll know if you’re right for the position. Be honest with yourself, if it doesn’t feel exciting to broker large investment deals, don’t waste your time.
3. It’s Tough to Find Good Alternative Investments to Broker: If you choose to broker alternative investments and find your niche, the next step is locating a good opportunity. Though there are GREAT alternative investments around, they’re also hard to find. To be honest, you MUST get creative via the Internet, unless you’re well-connected elsewhere. If you are working in the managed FX or futures markets, look for traders with high yields and infrequent draw-downs. Also, if you want to pad your pocket, look for traders who place a large amount of trades. This will allow you to earn far more commission, which is your goal, right? The one thing to remember is, don’t broker deals until you’re experienced. If you’re not 100% sure of the opportunity you’re offering, don’t present it to investors.
4. Private Alternative Investments are Hit or Miss: Brokers who focus on private alternative investments can get rich far quicker than any other market. Despite this fact, the drawback is, they also have the HIGHEST rate of failure. Depending on the market you’re brokering, legitimacy is always a problem you run into. If you’re working with a private FX or futures trader, you can make a killing, as long as you find the needle in the haystack. On the other hand, if you’re brokering private placement investments, your chances of success are far slimmer. The SECRET to private placement is found in one concept, “ratios”. If you educate yourself and then speak with thousands in the PPP market, you’ll finally have a chance to close a deal.
5. Managed FX and Futures are the Fastest Growing Markets: If you’re wondering which alternative investments are best for brokers, it’s managed FX and futures. Though there are great opportunities in other markets, if you’re working with the right trader, NOTHING can compare. In FX and futures markets, commissions are far greater than any other investment niche. On top of that, interest is growing faster than ever for these high yield investments. With hedge funds, private equity, and real estate ALL recovering from the financial crisis, why not look elsewhere? The truth is, if you found a good futures trader, and gradually acquired 5M of investors, you could retire immediately.
6. Some Alternative Investments Require Licenses for Brokers: When you choose to work as an alternative investment broker, you also need to decide if you want to get a license or not. If you choose to broker transactions unlicensed, you can only work in private placement, real estate, or certain types of FX investments. Though this severely limits your options, it also removes the hassle and cost of licensing. If you’re someone who wants to “swing for the fences”, it’s best for you to get licensed. By getting a Series 3 license and registering with the National Futures Association (NFA), you can legally broker FX and futures investments. Even though this process can be arduous at times, if you want to make the big money, you should just suck it up. At that point, you can solicit institutional or retail investors, and in all reality, the world’s in the palm of your hands.
7. The Amount of Equity Measures Success for Brokers: If you choose to become an investment broker, don’t think you’ll close one big deal and walk away forever. Though this can happen, REMEMBER, relationships fade when you don’t nurture them. You may think you’ve closed the one private deal that will pay you forever, just to see it fall apart months later. If you do choose to step it up and become a licensed broker, things become very interesting. Before you can become an independent broker, you must work at a licensed firm for 1-2 years. If you choose to do so, you open yourself up to account “quotas” and a lot more. In many firms, you have to meet their quotas every month, or you’ll lose your job. The truth is, raising equity isn’t that hard, you just need a steady lead stream and a good product. The real test comes when you have to generate leads out of thin air, and you no longer have lists to call.
8. Beware of Broker Circumvention in Alternative Investments: Unfortunately, in the alternative investment business, greed can show up out of nowhere. With so much money on the table, the truth is, some people change for the worse. By sharing your network with brokers or investors, you could be jeopardizing your commission and contacts. Unless you have a GREAT relationship with the fund manager or investor, you can get cut right out of the deal. Though this isn’t very common in licensed investments, if you’re brokering a private deal, you should ALWAYS beware. In fact, it could be the difference between a Million Dollar check, and tales of “another deal gone wrong”.
9. Integrity and Realism Attracts Investors, Not Sales Pitches: It’s great to have clients as an alternative investment broker, but ONLY if you’ve obtained them the right way. If you’re honest and empathetic with your investors, you’ll build life-long relationships. On the other hand, if you overemphasize the benefits and fail to explain the risks, you’re likely headed to disaster. Even if you find a few investors who fall for your “slick” sales pitch, remember, it will ALWAYS come back to you in the end. Be real with your investors, and remember the Golden Rule: “treat others how you’d like to be treated”. If you follow this basic principle, you’ll be more successful and a lot safer if things go sour.
10. Alternative Investment Brokers Earn Great Commission: If you’re a successful alternative investment broker, you can get filthy rich in very little time. Lawyers work day and night for $250K per year when all it takes is one big investor, and you’re instantly retired. For example, if you had a 100M client book spread amongst a few commodity traders, you’d be making over 2M per month. The great part is, all you have to do is make sure the relationship remains stable, and you get residual payments until the account closes. As you can see, if you’d like to become rich in the shortest time possible, alternative investment brokerage is the ticket!
In summary, every occupation has facts which must be acknowledged and understood. As we mentioned, the 10 facts listed above will ALWAYS determine your level of success. Remember, you CAN make a TON of money as a broker, but ONLY if you find investors. Hopefully this article has helped, because if you work hard, there’s ALWAYS gold at the end of the rainbow…
InsideTrade LLC StaffPhone: