Discussion:Getting Involved with Financial Services

i.e. you could have 500 clients who each invest $1,000

or you could have 1 client who invests $500,000

which do you want?

Now, imagine that you have 10 clients who invest $500,000

I agree with Kevinh5

Adding financial services would be a selling point for income tax clients who:

1) are near retirement 2) have young children who intend on going to college 3) are leaving one job for another (roll over 401k to an IRA or annuity) 4) can use tax saving advise

I am studying for my Series 6 and 63 license hope to be ready before the start of next tax season...

I am a CFP, CPA and without 2 to 3 years of testing the waters under a good mentor I would still be selling mutual funds in a transaction basis. The business model I followed is a 1 percent fee in assets, use GOOD, low cost funds and if you have say 10 mil under management, you net about 75 to 80K after feesannually.

It takes a while and is MUCH MUCH more time consuming than you realize.

10 mil under management, you make at least $100 Gs before getting out of bed in the morning. Sounds good to me!

GrizzlyCPA - When the market falls, that is the time you call your clients and rebalance their portfolio to keep their investmemt goals on track. They will love you for it. If you pick the correct funds to match their objectives, you should be fine.

Over 30 hours of my quality time so far, no revenue.

Is a license necessary to close 1st idea?

Outsourcing to India and avoiding side effects: two ideas that seem like good bets to me.

These are two pre IPO possibilities.

I understand first is for an angel investor, very much too early for a venture capitalist. But $ needed are too small for them. One investment broker says minimum is $5 million, prefer 15-50 million. So I thot you or someone you know might want to make a good bet. Cash is not required, client has found out that his company's credit and an American with middle credit score of 780 is more than enough, 748 is not quite enough at Citibank. My credit and client's credit scores are not that high now, so client is willing to pay well. I do hope to invest 4k cash myself.

Commissions to you:

Client volunteered a promissory note for 25k (when raising 100K).

I insisted on 4k of it in cash, he said 5k.  If raising 50k or more, I'd recommend more cash to you at closing.

More on commissions at bottom.

Comments:

One friend calls me several times most months for financial and emotional stress relief. I figured she needed the profit most. Also I thot her credit score was about to go bad. So I suggested this to her first. She said yes. But her middle credit score was already down to 708, she and client company combined were only approved for 10k Citibank line of credit.

Second I thot of woman who has done me many favors, including facilitating the healing of several flus over the phone and working with me and my mother just after mom died Feb 2006. This friend's middle credit score was 748. She said yes, but was only approved for 25k by Citibank.

Can be structured as you wish. For example, if choose to be 100% owner, can elect S immediately, terminate once taxable income goes positive. Get tax losses from date begin doing business till termination of S election, most likely 80% to 100% of cash invested.

Over thirty years clients have asked me about investments.

Usually it’s annuities sold by insurance companies.

Recently two interesting ideas have been brought to me.

One is 'Marketing BPO, business process outsourcing to India'

. The Big Four CPA firms are all using this, I read.

A Pakistani client (husband and wife) in Fremont I have worked with for fifteen years has successfully sold several things, most recently mortgages 2005-2007. 2006 and 2007 were well after the top of the market. Client still netted enough to pay his own mortgage, etc. totaling 8k a month, and remodel the family home for about 40k. [1980 - 2000 couple was making more than twice this much most years,] They were buying leads from firm east of Bombay (Mumbai).

 They are now finalizing negotiations with two groups, one in Bombay, and one 80 miles east of Bombay.   My clients will be US presence marketing the South Asian's services.  The Bombay group is profitably selling low tech Business Processes, such as Help Desk, Auto Loans, and Debt Consolidation business leads.

With a million and a half USD in cash and cash equivalents, they are ready to expand into legal process outsourcing and other knowledge based and high tech business processes, which are now being outsourced to India.  News story describes one such process, Remote Infra-structure Management Services (RIMS) or Network Management Services (NMS.)  Also available are other descriptive materials  which explain the business strategy.     Much more is available, including  two powerpoint files.

"According to industry body Nasscom, different estimates put the global IT infrastructure management services market between $86 billion and $150 billion; and since up to 60 per cent of the overall IMS pie may be delivered through the "global delivery" offshore model, the current market potential for RIM translates to no less than $55 billion. Last year, IMS-related IT exports from India were worth approximately $300 million, which means less than 1 per cent penetration - that's huge potential, indeed."

Client would like to raise 100k; He offers 300k back and his guarantee. Different structuring is available at your option. [June 23, 2008: investment banker says another client will be ready to place a 20k+ order by late August, paying cash. And same broker June 25 signed a 10 million dollar deal which is likely to generate 250k commission for my clients in September or sooner. Client's son will now be able to contribute 3k+ a month beginning August 1. I'd like to invest 1k a month. So it now looks like 10k July 1 and 7k August 1, 7k or less Sept 1 and maybe Oct 1 is all that will be necessary, tho more would be safer.]

Seems like 90+% chance his guarantee would give investor 100k back after October  2008.

History: Why client no longer has 500k of his own to fund this new business.

Client couple was selling Microsoft educational software in the late 1990’s, invested about half a million in Fremont and Pleasanton real estate in their son’s name.

  Some of client's customers were wholesalers who apparently sold to non educational buyers.  And wholesalers were convicted of selling pirated software.   Microsoft got government to  prosecute, won.   So son’s assets are blocked.   Now over 100k net proceeds of Pleasanton land, and a nice home in Fremont worth about $1,150,000 with debt of 550k.

A June 2008 United States Supreme  Court decision, Santos,  affirming the Appeals Court, makes it clear that client should win.  UNITED STATES, PETITIONER v. EFRAIN SANTOS AND BENEDICTO DIAZ, No. 06-1005, SUPREME COURT OF THE UNITED STATES, 2008 U.S. LEXIS 4699. June 2, 2008, Decided.

 Client’s attorney estimates assets will be unblocked after August 2008, and before April 2009.   This is another source of repaying up to  100k investment.

== Amount to be raised: ==

Client's son, a year out of UC Davis law school, licensed about Feb 08, just got a job which will let him contribute 3k+ a month. I'd like to invest 4k. Commission of 250k coming in August or September would mean 24k or less is all that is necessary. A reserve is always wise.

== More full discussion on commissions: Commissions to you: ==

Client volunteered a promissory note for 25k (when raising 100K).

I insisted on 4k of it in cash, he said 5k. If raising 50k or more, I'd recommend more cash to you at closing.

[If you do the work on investor you find, you can get all of this amount of commission, maybe a higher percent. Client has offered a 200% profit, you can divide up however you wish. Maybe negotiable for better terms to you. Especially as it seems 40k or less total would work, so I would recommend three times amount invested profit. to investor and whoever finds investor. If I do much of the selling, I'd still be delighted for you to get 80% or more of what would otherwise go to me.]

Of course you could get the commission on your own investment, if that made sense to you.

I've thot client deserved help, as discussed in History at bottom. So I let him run up a receivable over 40k 2002-2004. If client makes $ again, expect he will do what he has said he will, pay me back accounting fees.. This is motivating for me.

== Problem: ==

No monopoly on this idea, very competitive business.

Response:

Some niches may have few suppliers now, even low tech businesses seem very profitable.  My client just spent six months negotiating with leading Network Management Services firm, knows more than most.  And client is "partner" with investment broker (packager) who closed $10 million deal June 25, 2008 and has other deals closing soon.  All need services, some of which are most efficiently outsourced to India, promised to deal with my client.

Second idea Other idea, quite different, is a new pharmaceutical company with patented delivery system that bypasses the blood stream, thus avoiding almost all side effects. Only applies to head lice, toenail fungus, and similar skin issues. But that's tens of billions of current sales. And much less liver damage for millions of people. And animals.

== Problem: == Merck could easily put a half billion into this business, soon catch up at FDA.

Response: Yes. In a year or three or more. But firm has consultants formerly heads of FDA dermatology and toenail fungus departments, one of which is author of the leading textbook on Dermatology. So might still be more profitable than Merck.

Good wishes to everyone who will benefit from them.

Rich Richard W. Burrill [pronounced "Burl"] Certified Public Accountant P.O.Box 458 (mail does not deliver to Main St) 642 Main St #3 Etna, California 96027-0458 Land line 530.467.3250 fax 815.572.9599 (Chicago suburb area code, so only $15/year) email: oneness@post.harvard.edu and 3250@sisqtel.net oneness@post.harvard.edu is free to us alumni, so is likely to always work to reach me.