Starting An FX Managed Account Programme

In this article we will be walking through the set up of your very own FX managed account investment programme.

This will give you the information you need to offer professional clients a cost effective way to invest into your trading strategy.

Trading for clients will help you grow your AUM and increase the credibility of your FX trading business.

We will be focusing on the following points:

  • Pros and cons of a managed account programme
  • The cost and structure involved in getting set up

The structure of a managed account programme make it the perfect stepping stone for your money management business.

The basis for managed accounts are that your investors and clients can have their money traded by you without releasing the funds out of their control.

They simply set up a trading account with a broker and then sign a document that gives you the authority to access that account and trade the money.

The broker usually acts as a custodian between you and the investor. They ensure that all of the agreed fees are paid and that the risk parameters are kept.

This structure soothes the main concerns that many investors have regarding the safety of their funds under management.

In some circumstances it is even possible for the client to keep their capital in a bank account while opening a line of credit through to the broker.

Interactive brokers describes this type of account as a tri party agreement between the broker, a bank and the trader.

Fundamentally, it allows the client to invest with profitable traders while eliminating the risk of fraud or theft of funds.

Pros And Cons Of Managed Accounts

One of my first money management businesses was a managed account programme. Over time I developed it to make it more credible and attractive to professional investors.

This business eventually evolved into a hedge fund which was the perfect platform for attracting institutional investors.

If you’re a trader with an AUM of under $1 million USD then managed accounts could be the perfect starting point.

As already mentioned the biggest benefit of managed accounts is the fact that clients can maintain control of their funds.

It can also be extremely cost effective to set up a managed account programme when compared to the cost of a hedge fund.

Because you are not handling client funds directly the regulatory requirements are also a little lighter. This is especially true if you can utilise regulatory hosting providers.

It is important to highlight that even with the simpler structure of managed accounts it is still normally a requirement to be regulated.

There are also some downsides to running this type of programme. One of these is the fact that it is notoriously difficult to fully verify trading performance.

The client will always have the ability to access the account for any reason, including to trade on it. After all, it is their money, held in their name with the broker.

The fact that you have their permission to trade it doesn’t mean that you are the only person accessing and trading the account.

This makes it difficult to obtain a full audit for managed account programmes. Verification letters are possible but they are not as comprehensive and will not be enough for some investors.

This can make it very difficult to expand a managed account programme beyond groups of individual investors.

How Managed Accounts Are Structured

Before advertising to investors you will need to ensure that you have multiple components of your business in place.

The first thing you will need is a verified track record of trading performance.

My advice is to have a minimum of 12 months track record with a single broker. You should then have the returns verified by an independent third party.

This could be a large accounting firm or even a professional fund administration company. The more credible the entity conducting the verification the more credible the verification itself will be.

The longer the track record is, the easier it will be to convince professional clients to invest.

The next thing you will need is a relationship with a high quality professional broker. The most important thing is that you have access to a range of liquidity providers.

Your broker can assist with verifying your trading performance and also introducing you to potential clients once you have proven your abilities.

Your broker will also help you draw up trade authorisation documents that you can present to your clients. This allows the broker to pay you directly for all agreed fees on each client account.

When selecting a broker it is a good exercise to think about it from your client’s perspective. Would you place a significant amount of capital there? Do they seem credible and reliable?

A broker that is regulated in a credible jurisdiction is a must. A bonus is one that allows custodian accounts for your client funds. This extra safety will appeal to many investors.

Finally, you will need to be regulated in whatever jurisdiction you are operating your business in. This generally means the country in which you live and trade the accounts from.

Once you have these things you can start soliciting clients.

Costs Of A Managed Account Programme

The cost of verification in 2018 was around £2,000 GBP per year as a guide figure. A full annual audit of trading performance will usually cost around £10,000 GBP from a big accounting firm.

If you are based in the UK then you will need to become FCA regulated. Similar rules apply for citizens of any major economy and you will need to adhere to their specific restrictions.

You can either apply to become directly regulated or work with a hosting company to reduce the costs.

For a standard investment programme in 2017, the cost of regulatory hosting was around £3,000 GBP per month. This was for a main activity of basic FX trading.

Direct regulation can cost up to £200,000 for the first year of operations. For most small managers, hosting is the preferred route.

Almost all regulatory coverage whether it is hosted or direct coverage will only allow you to trade for professional clients.

The FCA handbook provides the scope and definition for professional clients. This means that your marketing must be highly specific and targeted away from retail individuals.

Finding and acquiring investors will be your other main expense when running a managed account programme.

The costs of your marketing activities can vary dramatically and will depend on the budget that you have available.

There are many free resources that you can utilise online and the cost of setting up websites and social media channels is now competitively low.

When I launched my first managed account programme in 2009 my budget was virtually zero. I focused on online networking via free forums and websites to attract my initial clients.

At its peak, my overall spending on marketing for the business was at around $20,000 per month. As my business grew so did my marketing outlay.

Marketing Channels

There are three main ways to build up your network of potential clients and investors. The first of these is through offline networking.

The second is through online marketing channels which include websites, social media channels and third party industry websites.

The third way is through introductions via financial advisors, wealth managers and capital introducers.

These routes can be highly effective and is where the bulk of your business spend will come during your early money management years.

When finding clients, it is prudent to invest at least a small amount of time and resources into all three marketing routes.

Meeting potential clients face to face allows you to quickly build trust and identify those people that are actively looking for investment opportunities.

You will need to think creatively for this channel but places like golf and social clubs and even business networking events can be effective.

You could even approach wealthy neighbourhoods and make people aware of your business.

You will need to always clarify their status as a professional investor before releasing any detailed marketing material.

Although I met a lot of clients through face to face introductions I generally found online based marketing to be the most effective.

Online Marketing

There are numerous tactics that you can utilise for finding professional clients online. It starts with having a central website through which all of your business can flow.

Your site will clearly explain who you are and why you are someone that potential investors can trust.

This is the perfect place for clients to get to know you as a person and also understand your trading strategy.

Your next task is to drive traffic to that website. This is where social media channels will help you greatly.

The key here is to simply create content that your target clients might be searching for. When they find it they will be drawn to you through the quality of that content and desire more from you.

Over the years my blog has helped me find lots of investors and something similar will help you too.

There are also data bases that you can sign up to and post your trading performance. Some of these include, Barclay Hedge, AISG and Morningstar. Sum Zero is also an interesting concept.

These are all places where professional investors congregate online, searching for a good trader to manage their money. The key is that you go and meet them.

The final tactic you can employ is that of enticing professional advisors to introduce their clients to your trading strategy.

Build a relationship with financial advisors, capital raisers and introducing brokers so that it is your managed account programme that they are recommending.

Each one will want a slightly different compensation structure so you need to negotiate based on what you can afford to give away.

A very important rule of thumb is that investors will allocate capital based on how much you already have under management. Getting your AUM up is vital early on.


This article was written based on my own experience running a professional managed account programme for over seven years.

This business is a stepping stone to having your own fund and is a cost effective way to enter the money management business.

You will need a verified track record, a credible broker, regulatory coverage and some basic marketing strategies.

Your life will become much easier once you have 3 years or more of verified performance.

If you would like more articles related to getting your money management business up and running then please leave your comment below.

I read every one and try and reply or create new posts based on as many as possible.

If you are ready to set up your managed account business, our online network has industry contacts that you may find useful.

If you’re a professional investor looking to work with credible traders then this is also something our network can assist you with.

Please contact my support team through the chat app on this site. They will be more than happy to offer any tips, tricks or guidance that will help you.