Is CFA Beneficial For Hedge Fund Startup? (Non-Traditional Background: Advice Needed)

CFA General
#1

I’m looking for some direction regarding pursing the CFA designation with regards to my future hedge fund plan. I have a non-traditional professional background, so looking for some advice on my situation.

I am 36, and graduated with a finance degree in 2001. After school, I spent 1.5 years working at a major warehouse. I didn’t enjoy the sales part of it so I left the industry. On the side, I’ve been trading my personal account/funds since 2001 with varying levels of success…but have always loved trading and following the markets. The past 3 years I have specialized in an index derivatives strategy that is producing very solid/consistent returns. I’ve recently decided to start an incubator fund to get around 2 years of verifiable results with the intention of launching a small hedge fund in 2021.

I’m not looking to manage billions, and probably not even institutional money, but planning to stick with HNW individuals and family offices. I also am not planning to employ dozens of staff, but instead envision a small/lean operation. Even capping out under 50m AUM would be fine by me.

I’m not asking for advice about the above…that is just the background, which brings me to my question.

Would it be beneficial to pursue the CFA designation knowing that it won’t directly impact my trading strategy (I’ve been studying options for 7+ years now, and am comfortable with where I am there), but doing it to mainly to provide credibility to me and my future fund, primarily with raising funds.

I know I would learn and gain more understanding of the investment arena in general, and it would not be a waste of time, but I know how difficult it is and the also know the time commitment involved (I have 5 kids under the age of 8). So in general, I’m sure it would be a positive, but I’m mainly trying to weigh the benefits down the road, versus the costs to acquire it.

Also, to provide a little more detail that may alleviate a bit of potential worry about my home/family/job life…the next 6 months I am working from home 5 days a week and would have all sorts of time to study. Once July hits, I’m moving for my current job, but will still work from home on Monday’s and Friday’s. I know I would need to be efficient in my studying (having 5 kids in the house), but I think my current job setup would allow it.

Also, while working at Merrill back in the day, I made a 98% on the Series 7, and scored well on the 63/65 also. I know that’s nothing compared to the CFA, but I also know I usually test pretty well, and enjoy this type of material in general.

Any other insight is also welcomed…

#2

A follow-up question to my initial post:

I know to obtain the charter, you have to have 4 years of “professional work experience in the investment decision-making process.”

Am I able to still take the tests over the next 2.5-3 years, as I accrue the 4 years needed to officially be granted the charter? I spent 16 months at Merrill after graduating, as well as doing a 5 month internship at Smith Barney during my senior year.

#3

I guess it will help to show your credibility, i.e. attract clients.

#4

I think networking, marketing, and sales are more important for you. Where are your HNW’s coming from? Direct networking and sales by you or from other advisors? I use 3rd party managers for my clients but all of the managers I use are vetted through a due diligence platform or “TAMP”.

Way back when I worked on a HF startup. I was marketing to pension funds. They didn’t care so much about CFA credentials. They were more concerned about the strategy and the managers performance history. Of course, I got in the door because of who I knew at the time.

Don’t get me wrong, having the CFA might help but it’s your marketing that really matters. Focus on the package. Are you selling cheeseburgers, or kobe beef wellington?

#5

You need to know big pocketed folks and years of track record at reputable hedge fund doing the same strategies. Most importantly, you need connections with institutional investors such as pensions, endowments, trusts, mutual funds, insurance companies, etc etc…you dine and golf with these insti guys and/or see them annually at your alum parties…It’s more about who you know than what you know…

CFA might attract retail clients for their 100k account…but for big money? no way…case in point, my financial advisor at US Trust has a law degree from a very good school…no cfa, cpa, cfp or mba…But he manages hundreds of millions. It’s about the optics and optics will get you in front of people you need to be around with.

#6

I’d think that you would want to pursue all the knowledge that you can, no matter how incremental the return. What you are proposing is not something that can be done easily without comprehensive preparation.